COVID Feature: Come Hell or High Water

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Close-up Of A Businessperson's Hand Calculating Invoice At Workplace

The Paycheck Protection Program is a part of the recent federal bailout of businesses hurt by the COVID-19-related economic disaster. There have been many attempts to take advantage of this lending program. One of the latest alleged attempts came from Samuel Yates of Maud, Texas, who stands accused of fraudulently seeking $5 million in loans through the Small Business Administration. (These programs are meant to support the financially vulnerable. The only thing Yates appeared to be supporting was himself.)   

Yates attempted to apply for loans from two separate lenders, investigators say. (It wouldn’t suffice to try to commit only one fraud at a time.) The Paycheck Protection Program stipulates that the loans must be used to pay payroll costs, interest on mortgages, or rent and utilities. To qualify as an applicant, Yates allegedly created two fictional businesses with employees, payroll expenses, and overhead costs. (If only he’d applied his vivid imagination elsewhere, he probably wouldn’t be facing federal fraud charges.)  Along with his applications, Yates submitted forged tax documents falsely indicating his businesses had been operating for years.

For one of his applications, Yates claimed to have a business supporting more than 400 employees and sought $5 million for fraudulent expenses. On his second application, he claimed to have over 100 employees and sought $500,000 in loans. (Yates used a random name generator to create over 500 fake employees.)

“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,” said U.S. Attorney Joseph D. Brown of the Eastern District of Texas. The Small Business Administration Office of Inspector General also released a statement saying that SBA OIG is working closely with law enforcement to detect fraud and bring to justice those who would abuse these lending programs.

The public is encouraged to report any suspected fraud to OIG’s Hotline at 800-767-0385 or on their website.

Today’s Fraud of the Day comes from an article, “US Charges Texas Man with COVID-19 Loan Fraud,” published by Voice of America on May 19, 2020.

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.

 

 

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.