LOS ANGELES – An Orange County man has been sentenced to 48 months in federal prison for fraudulently obtaining more than $5 million in COVID-relief loans for three shell companies.
According to the Department of Justice, Raghavender Reddy Budamala, 36, was sentenced by United States District Judge Otis D. Wright II, who also ordered Budamala to pay $5,151,497 in restitution.
Budamala pleaded guilty on June 21 to one count of bank fraud and one count of money laundering. As part of his plea agreement, Budamala agreed to forfeit real estate in Orange County, Malibu and Los Angeles, as well as approximately $4,119,662 in funds from bank and investment accounts and cryptocurrency.
From January 2019 to August 2019, Budamala formed or acquired three shell companies with no operations – Hayventure LLC, Pioneer LLC, and XC International LLC. Following the outbreak of the COVID-19 pandemic and the enactment of federal programs designed to address the resulting economic fallout, the DoJ said Budamala submitted to the Small Business Administration seven applications for pandemic-relief loans under the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program.
False Representations
As part of the applications filed from April 2020 through March 2021, Budamala falsely represented to the banks administering the COVID-relief business loan programs that his companies employed dozens of individuals and earned millions of dollars in revenue, and that he needed the money for payroll and business expenses, the DoJ said.
“The addresses listed for the companies were bogus, nonexistent or residential. The states where Budamala’s companies purportedly operated have no records of those companies paying wages to any employees, and bank records for the companies reflect no significant business income or operating expenses,” the DoJ said.
The SBA and the banks funded six of the loans and disbursed a total of $5,151,497. Budamala applied to have several of the loans forgiven and falsely represented that he had used the SBA money entirely for payroll, according to the DoJ.
Big Personal Expenses
Once the loans were funded, Budamala used the money to pay for personal expenses, including a $1.2 million investment property in Eagle Rock, a $597,585 property in Malibu, a personal residence in Irvine, as well as a $970,000 investment in an EB-5 Immigrant Investor Visa Program and a nearly $3 million deposit into Budamala’s personal TD Ameritrade account, the DoJ said.
“Budamala has been in federal custody since his arrest on Feb 23, when he attempted to abscond from the United States to Mexico via the San Ysidro border crossing. A criminal complaint was filed against him on Feb. 24,” the DoJ said.
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