Fourteen people, including several Southern California residents, were arrested Wednesday, May 28, and accused of scamming the government out of more than $25 million in COVID-19 relief funds and federal small business loans, according to the U.S. Department of Justice.
Two federal criminal complaints named 18 defendants, four of whom are believed to be in Armenia and haven’t been arrested. The defendants are charged with conspiracy to defraud the government with respect to claims; false, fictitious or fraudulent claims; wire fraud and attempted wire fraud; bank fraud and attempted bank fraud; money laundering conspiracy and other charges related to money laundering.
The defendants include a 42-year-old Tujunga man accused of leading a scheme in which he encouraged leaders of sham corporations to open bank accounts, make false statements and create phony documents, like resumes and financial statements, for loan applications to buy other sham corporations. Prosecutors accuse the man of paying for phony tax returns that falsely reported millions in revenue and thousands in taxes due and owed. The scam defrauded multiple banks and the Small Business Administration’s Preferred Lender Program of millions, officials said.
Prosecutors accused a 37-year-old Glendale man of falsifying an application to the Paycheck Protector Program, which gave low-interest, forgivable loans to businesses during the COVID-19 pandemic. He allegedly applied for the program in 2021 using a false business and collected more than $700,000 in funds.
A 32-year-old Van Nuys woman and two co-defendants allegedly defrauded a bank by faking a sale of a sham business to another sham company to get an approximately $3 million federally guaranteed loan through the SBA.
During the arrests Wednesday, law enforcement seized $20,000 cash, two money-counting machines, paper cash bands in amounts of $2,000 or $10,000, multiple cellphones, multiple laptops, two loaded semi-automatic 9mm handguns and boxes of ammunition.
If convicted, each defendant could face a maximum sentence of decades in federal prison.
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