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Texas man pleads guilty to $24.8 million PPP fraud; IRS touts more COVID investigation successes

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New COVID-19 laws have been a lifeline for many individuals and businesses as the United States.

They've also created new opportunities for crooks.

The Internal Revenue Service, specifically its Criminal Investigation (CI) Division, is well aware of the increased tax-related coronavirus crimes. To mark the one-year anniversary of the Coronavirus Aid, Relief and Economic Security (CARES) Act, CI officials today discussed the unit's success in combatting fraud related to the Economic Impact Payments, Paycheck Protection Program (PPP) loans and claims of the Employee Retention Credit.

The CI's commemoration is particularly timely. It comes just one day after a Texas man pleaded guilty to an almost $25 million COVID-relief fraud scheme.

Texas man's PPP fraud paid for homes, cars: "We have investigated cases of criminals flaunting stolen money to buy fancy cars, boats and pay for luxury apartments while families and businesses struggle to make ends meet," said Jim Lee, Chief of IRS Criminal Investigation, of his division's year-long COVID-19 crime fighting efforts.

Lee didn't mention any case specifics, but the fancy cars and living arrangements focus definitely applies to the case of Dinesh Sah.

The Coppell, Texas, man pleaded guilty on March 24 of orchestrating a fraudulent scheme aimed at obtaining $24.8 million in forgivable PPP loans and laundering the proceeds.

"As the nation was crippled by a global pandemic, Sah fraudulently obtained over $17 million in PPP funds intended to help legitimate small businesses and spent that money on luxury cars and multiple homes," said Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department's Criminal Division, in announcing the plea.

Once he got the illegal coronavirus funds, Sah admitted to diverting the money to himself and using it to purchase multiple homes in Texas, pay off the mortgages on other homes in California and buy a fleet of luxury cars. The vehicles included a Bentley convertible, Corvette Stingray, and Porsche Macan.

Sah also sent millions of dollars in PPP proceeds in international money transfers, according to court documents.

As part of his guilty plea, Sah agreed to forfeit, among other property, eight homes, numerous luxury vehicles, and more than $7.2 million in fraudulent proceeds that the government has seized to date.

Fake companies on PPP applications: The 55-year-old Texan also admitted in his plea that he submitted 15 fake COVID-assistance applications, filed under the names of various purported businesses that he owned or controlled, to eight different lenders.

The Department of Justice (DoJ) said that in seeking these false loans, Sah claimed the businesses had numerous employees and hundreds of thousands of dollars in payroll expenses. In fact, none of the businesses had employees or paid wages consistent with the amounts claimed in the PPP applications.

Sah also admitted that he submitted fraudulent documentation in support of his COVID-19 related relief loans.

This paperwork included fabricated federal tax filings and bank statements for the purported businesses, as well as false listings of other persons, without their authorization, as representatives of certain of these businesses.

UPDATE, March 26, 2021: The DoJ today announced that it has taken an "historic level of enforcement action" in connection with PPP, Economic Injury Disaster Loan (EIDL) program and Unemployment Insurance (UI) programs during this year-long (and counting) national health emergency.

To date, according to Justice Department officials, the law enforcement agency has publicly charged 474 defendants with criminal offenses based on fraud schemes connected to the COVID-19 pandemic. These cases, which have been brought in 56 federal districts around the country, involve attempts to obtain over $569 million from the U.S. government and unsuspecting individuals through fraud.

Multi-agency effort: Officers with the IRS CI division were among the investigators who worked with the DoJ to nab Sah. Other federal agencies involved in the case included the Dallas Field Offices of the Federal Deposit Insurance Corporation–Office of Inspector General (FDIC-OIG) and the U.S. Treasury Inspector General for Tax Administration (TIGTA).

Such multi-agency cooperation in tax and other financial crimes is not unusual. In the case of the new coronavirus-related crimes, the teamwork has paid off thanks in part to a COVID Fraud Task Force.

"The leads come in from many different areas, including the general public. We do see quite a bit come in directly from the public, who may have witnessed or are aware of some kind of fraud going on," said Andy Tsui, Special Agent in Charge for IRS criminal investigations in the division's Denver office.

"There are a lot of different sources and we certainly appreciate the public interest in reporting those kinds of frauds," added Tsui, who also pointed out that defrauding the IRS is itself a federal crime.

If you have information about or suspect a COVID-related or other tax crime, you can find more on how to do that at IRS CI's web page.

Additional IRS COVID crime busting: Such tips are just part of IRS CI's year-long coronavirus crime fighting effort.

Since new pandemic relief laws created the unwanted but not surprising criminal consequences, IRS CI agents have worked on more than 350 COVID-related tax and money laundering cases nationwide.

Those investigations, said Lee, totaled more than $440 million and covered a broad range of criminal activity, from fraudulently obtained loans, credits and payments meant for workers and small businesses struggling with the pandemic's adverse economic effects.

"IRS-CI special agents have done an extraordinary job identifying millions in stolen money and our work is far from over. We will not cease until every fraudulently obtained dollar is accounted for and the individuals behind the schemes are prosecuted to the fullest extent of the law," added the CI chief.

You also might find these items of interest:

 

Coronavirus Caveat & More Information
In 2021, we're still dealing with extraordinary circumstances,
both in our daily lives and when it comes to our taxes.
The COVID-19 pandemic and efforts to reduce its transmission
and protect ourselves and our families means that,
for the most part, we're focusing on just getting through these trying days.

But life as we knew it before the coronavirus will return,
along with our mundane tax matters.
Here's hoping that happens soon!
In the meantime, you can find more on the virus and its effects on our taxes
by clicking Coronavirus (COVID-19) and Taxes.

 

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