Federal charges have been filed against fourteen individuals, including several Indian-Americans who are accused of defrauding the Paycheck Protection Program (PPP) and multiple financial institutions, resulting in over $53 million in illicit loan proceeds, announced U.S. Attorney for the Northern District of Texas, Leigha Simonton. This particular case marks the largest investigation conducted by the Pandemic Response Accountability Committee (PRAC) Fraud Task Force thus far, according to the press release.
Special agents from the Federal Bureau of Investigation (FBI), the Treasury Department’s Special Inspector General for Pandemic Recovery (SIGPR), and the Federal Deposit Insurance Corporation, Office of Inspector General (FDIC-OIG) successfully apprehended the defendants across Texas, California, and Oklahoma on Tuesday and Wednesday.
U.S. Attorney Leigha Simonton expressed her strong condemnation of defrauding the government, particularly during a pandemic when countless hardworking entrepreneurs faced financial hardships. Simonton stated that the alleged actions of the defendants, who are accused of conspiring to embezzle tens of millions of dollars from the Paycheck Protection Program (PPP), worsened an already difficult situation for legitimate businesses struggling to meet their financial obligations and support their employees.
She commended the officers and agents involved in the meticulous investigation, especially acknowledging the data scientists at the Pandemic Analytics Center of Excellence for their advanced analysis that ensures the perpetrators of PPP abuse will face legal consequences.
Brian Miller, the Special Inspector General for Pandemic Recovery, also denounced the accused individuals, emphasising that their actions resulted in defrauding taxpayers of millions of dollars and took advantage of a crucial federal program designed to assist struggling small businesses affected by the pandemic. Miller expressed satisfaction in working alongside other law enforcement agencies and the U.S. Attorney’s Office to hold the defendants accountable for their alleged crimes.
FBI Dallas Special Agent in Charge Chad Yarbrough revealed that the accused individuals allegedly collaborated to carry out multiple fraudulent schemes, exploiting financial institutions and government programs for their own personal gain. Yarbrough emphasised the FBI’s commitment to working alongside its partners to ensure that taxpayer dollars, intended to protect the most vulnerable and foster economic stability during a critical time of need, do not fund the lavish lifestyles of criminals.
Based on a series of indictments that were made public on Wednesday, it is alleged that some of the defendants operated a network of affiliated recycling companies, namely Mammoth Metal Recycling, Elephant Recycling, Gulf Coast Scrap, 4G Metals, 4G Plastics, 5G Metals, Level Eight, Sunshine Recycling, L.K. Industries, NTC Industries, West Texas Equipment, and West Texas Scrap.
As per the release, the defendants are accused of submitting at least 29 fraudulent loan applications under the Paycheck Protection Program (PPP), where they allegedly inflated payroll expenses by manipulating bank statements and Internal Revenue Service (IRS) tax forms to falsely represent business income.
They allegedly funnelled the PPP loan funds through a series of bank accounts, creating a deceptive paper trail of payroll expenses. According to the allegations, at least two of the defendants are accused of submitting false applications to financial institutions on behalf of their recycling companies, aiming to fraudulently obtain millions of dollars in business loan proceeds.
Additionally, one of the defendants allegedly provided false information to the Federal Deposit Insurance Commission (FDIC), falsely claiming not to have knowledge of several other alleged co-conspirators.
The individuals listed below are named in the sixteen-count indictment filed last week:
1. Mihir Patel – Chief Financial Officer of Sunshine Recycling, and owner of Mammoth Group, R.A. Industries, and L.K. Industries: charged with conspiracy to commit bank fraud, bank fraud and aiding and abetting, and conspiracy to commit money laundering.
2. Kinjal Patel – Controller at Sunshine Recycling: charged with conspiracy to commit bank fraud, bank fraud and aiding and abetting, and conspiracy to commit money laundering.
3. Prateek Desai – Owner of West Texas Scrap: charged with conspiracy to commit bank fraud and bank fraud and aiding and abetting.
4. Wajahat Khan, also known as Ray Khan – President and owner of Gulf Coast Scrap: charged with conspiracy to commit bank fraud, bank fraud and aiding and abetting, and conspiracy to commit money laundering.
5. Imran Khan, also known as Ron Khan – Operations Director and owner of 4G Metals and West Texas Equipment: charged with conspiracy to commit bank fraud and bank fraud and aiding and abetting.
6. Chirag Gandhi, also known as Chris Gandhi – Controller of NTC Industries, and President and owner of 5G Metals and Sunshine Recycling: charged with conspiracy to commit bank fraud and bank fraud and aiding and abetting.
7. Bhavesh Patel, also known as Bobby Patel – Chief Business Development Officer for Sunshine Recycling and owner of Level Eight: charged with conspiracy to commit bank fraud, bank fraud and aiding and abetting, and making a false statement to the FDIC.
8. Dharmesh Patel, also known as Danny Patel – Co-President and co-owner of Elephant Recycling: charged with conspiracy to commit bank fraud and bank fraud and aiding and abetting.
9. Mitra Bhattarai – Co-President and co-owner of Elephant Recycling: charged with conspiracy to commit bank fraud and bank fraud and aiding and abetting.
10. Bhargav Bhatt, also known as Brad Bhatt – NTC Industries employee: charged with conspiracy to commit bank fraud and conspiracy to commit money laundering.
In addition to the above, the following individuals are charged in separate indictments:
1. Mrunal Desai: charged with bank fraud and aiding and abetting.
2. Chintak Desai – President of Nanosoft Technologies: charged with bank fraud and aiding and abetting.
3. Ambreen Khan: charged with wire fraud.
4. Usha Chapain, also known as Usha Sharma: charged with bank fraud.
It is important to note that an indictment represents an accusation of criminal behaviour and does not serve as evidence. All defendants are presumed innocent until proven guilty in a court of law.
If convicted, the defendants could potentially face severe penalties, including up to 30 years in federal prison for each count of conspiracy to commit bank fraud, bank fraud and aiding and abetting, bank fraud, and making a false statement to the FDIC. They may also face up to 20 years for wire fraud and 10 years for conspiracy to commit money laundering.
The investigation of this case involved a special agent from the Special Inspector General for Pandemic Recovery (SIGPR) assigned to the Pandemic Response Accountability Committee (PRAC) Fraud Task Force, as well as special agents from the Dallas field offices of the Federal Deposit Insurance Corporation Office of Inspector General (FDIC OIG) and the Federal Bureau of Investigation (FBI). Assistant United States Attorney Fabio Leonardi is responsible for prosecuting the case.
The PRAC was established to promote transparency and coordinated oversight of the federal government’s response to the COVID-19 pandemic. With its 21-member Inspectors General, the PRAC identifies significant risks that cut across different programs and agencies to uncover fraud, waste, abuse, and mismanagement in the over $5 trillion spent on COVID-19 relief efforts, including the Paycheck Protection Program.
The PRAC’s Pandemic Analytics Center of Excellence played a supportive role in this case by utilising advanced analytics and forensic technologies to aid in data-driven investigations of pandemic-related fraud.
The Paycheck Protection Program, authorised by the federal law known as the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), was enacted on March 29, 2020, to provide emergency financial assistance to individuals and businesses facing economic hardship due to the COVID-19 pandemic. The PPP offered forgivable loans to small businesses to cover payroll, rent, and other eligible business expenses, with the program concluding in May 2021.