A 32-year-old Texas man was charged Tuesday in the Eastern District of Texas with bank fraud, wire fraud and making false statements. He allegedly sought millions of dollars in loans meant to help those affected by the coronavirus.
Samuel Yates of Maud, Texas, is accused in a federal criminal complaint of seeking $5 million in forgivable Small Business Administration loans, prosecutors said. He also submitted forged tax documents, they added.
"Any time the government provides large amounts of money to the public there are people who will try to cheat the system," U.S. Attorney Joseph D. Brown of the Eastern District of Texas said in a press release. "We encourage lenders to be very careful, and to report suspicious applications. It is a priority of the Department of Justice to deter and prosecute this type of fraud."
According to court documents filed in U.S. District Court in Texarkana, Texas, Yates used an internet random name generator to come up with his list of employees. Yates allegedly filed applications with two lenders. The first application sought $5 million in Paycheck Protection Program loans by claiming to have a business employing more than 400 people, with a monthly payroll of $2 million. In the second application, made to a different lender, Yates claimed more than 100 employees and obtained a loan for more than $500,000.
Paycheck Protection Program
The Paycheck Protection Program is part of the CARES Act, enacted in March. The PPP allows qualified small businesses and other organizations to receive loans with a low interest rate for two years. They must be used to pay business payroll costs, interest on mortgages, rent and utilities.
"Today's arrest should serve as a strong deterrent to anyone considering exploiting the COVID-19 pandemic to enrich themselves through fraud," agent Ryan Spradlin of U.S. Immigration and Custom's Homeland Security Investigations said. "These individuals have no concern for legitimate businesses whose employees and their families are hurting financially during these unprecedented times."
The Justice Department is urging all U.S. financial institutions to immediately report all suspicious applications or suspected fraud.