Texas engineer sentenced for $13 million COVID-Relief fraud

June 18, 2021

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An Indian-American engineer from Beaumont, Texas was sentenced June 17, 2021, for his participation in a scheme to file two fraudulent loan applications seeking more than $13 million in forgivable Paycheck Protection Program (PPP) loans. ,

These loans are guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act,

Shashank Rai, 31, pleaded guilty on Feb. 9, 2021, to making false statements to a bank and was sentenced to 24 months in federal prison by U.S. District Judge Marcia A. Crone, announced Eastern District of Texas Acting U.S. Attorney Nicholas J. Ganjei.

Rai admitted that he sought millions of dollars in forgivable loans guaranteed by the SBA by claiming to have 250 employees earning wages when, in fact, no employees worked for his purported business.

In the application submitted to the first lender, Rai sought $10 million in PPP loan proceeds by fraudulently claiming to have 250 employees with an average monthly payroll of $4 million. In the second application, Rai sought approximately $3 million in PPP loan proceeds by fraudulently claiming to have 250 employees with an average monthly payroll of approximately $1.2 million.

“The Payroll Protection Program was designed to provide financial support during the COVID-19 pandemic to real American businesses with real employees,” Acting U.S. Attorney Ganjei is quoted saying in the press release. “It was not designed to provide loans to individuals for personal investment purposes. Today’s sentence demonstrates our shared commitment to protecting this important, taxpayer-funded program.”

The CARES Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans affected by the economic effects of the COVID-19 pandemic.

One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses, through the PPP. In April 2020, Congress authorized over $300 billion in additional PPP funding, and in December 2020, Congress authorized another $284 billion in additional funding.