WASHINGTON—The Department of Justice has charged two more individuals with allegedly filing fraudulent applications for Paycheck Protection Program (PPP) loans.
The DoJ said it is prioritizing the detection, investigation and prosecution of any illegal activity related to the coronavirus pandemic.
In the first case, software engineer Baoke Zhang, 35, of Issaquah, Wash., was charged with allegedly filing fraudulent bank loan applications seeking more than $1 million in forgivable loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
The charges were included in a federal criminal complaint filed in the Western District of Washington with wire fraud and bank fraud.
“The defendant allegedly submitted false documents in a brazen scheme to acquire over 1.5 million dollars in loan funds made available for legitimate businesses adversely affected by COVID-19,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division. “The department and our law enforcement partners will continue to identify and bring to justice those who commit fraud on CARES Act programs.”
“This defendant tried more than once to defraud the Paycheck Protection Program (PPP) – a program designed to keep people working,” said U.S. Attorney Brian T. Moran for the Western District of Washington. “I am pleased that the systems designed to detect and deny fraudulent payments caught his scheme before federal funds went out the door.”
Film Producer Charged
In the second case, Hollywood film producer William Sadleir, 66, of Beverly Hills, Calif., has been charged with allegedly filing bank loan applications fraudulently seeking more than $1.7 million dollars in forgivable PPP loans. The charges were filed in the Central District of California with wire fraud, bank fraud, false statements to a financial institution, and false statements to the SBA.
“This defendant allegedly used Paycheck Protection Program loans to pay off his personal credit card debts and other personal expenses, rather than using the funds for legitimate business needs,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division. “As the department has made clear, those who defraud the PPP to line their own pockets at the expense of the American people will be brought to justice.”
“This film producer allegedly made a series of misrepresentations to a bank and the Small Business Administration to illegally secure taxpayer money that he then used to fund his nearly empty personal bank account,” said U.S. Attorney Nick Hanna of the Central District of California. “The Paycheck Protection Program was implemented to help small businesses stay afloat during the financial crisis, and we will act swiftly against those who abuse the program for their own personal gain.”
Funds for Personal Expenses
According to prosecutors, Sadleir used the funds to pay off more than $80,000 in personal credit card debt, a $40,000 car loan and other personal expenses instead of using them for payroll and business-related expenses.
The latest charges bring to at least four the number of people charged with attempted PPP fraud.