An Orange County man was arrested on federal charges for fraudulently obtaining approximately $ 5 million in Paycheck Protection Program (PPP) loans for his bogus business and then used the money for himself, including buying sports cars from Ferrari, Bentley and Lamborghini.
Mustafa Qadiri, 38, of Irvine, was named in a federal grand jury indictment on Wednesday indicting four cases of bank fraud, four cases of wire fraud, one case of aggravated identity theft and six cases of money laundering.
Qadiri surrendered to law enforcement this morning and is expected to appear in the United States District Court in Santa Ana this afternoon.
According to the indictment, Qadiri operated four Newport Beach-based companies, none of which are currently in operation: All American Lending, Inc., All American Capital Holdings, Inc., RadMediaLab, Inc., and Ad Blot, Inc.
In May and June 2020, Qadiri allegedly filed false and fraudulent PPP loan applications with three banks on behalf of these companies. The false information allegedly included the number of employees to whom the companies had paid wages, changed bank account details with excessive balances, and fictitious quarterly federal tax return forms. Qadiri also reportedly used someone else’s name, social security number and signature to fraudulently apply for one of the loans.
Citing this false information, the banks funded the PPP loan applications and, according to the prosecution, transferred around US $ 5 million to accounts controlled by Qadiri. Qadiri allegedly used the fraudulently obtained PPP loan proceeds for his own benefit, including spending prohibited under the requirements of the PPP program, such as buying luxury vehicles, lavish vacations, and paying for his personal expenses.
Federal agents have seized the Ferrari, Bentley and Lamborghini cars that Qadiri allegedly bought using the fraudulently obtained PPP loans, along with $ 2 million in allegedly illicit profits from his bank account.
The Aid, Aid, and Economic Security (Coresavirus, CARES) Act is designed to provide emergency financial aid to millions of Americans suffering from the economic impact of the COVID-19 pandemic. One source of relief under the CARES Act is the approval through the PPP of up to $ 349 billion in unsuccessful small business loans for job retention and certain other expenses. In April, Congress approved more than $ 300 billion in additional PPP funding.
The PPP enables qualified small businesses and other organizations to obtain loans with a term of two years and an interest rate of 1 percent. Businesses must use PPP loan proceeds for labor costs, mortgage interest, rents, and utilities. The PPP enables the forgiveness of interest and principal when companies spend the proceeds on these expenses within a specified period of time and use at least a certain percentage of the loan for wages and salaries.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until found guilty beyond any doubt.
Homeland Security Investigations, the Inspector General’s Small Business Administration Office, the FBI and IRS Criminal Investigation were investigating this matter as part of the El Camino Real Financial Crimes Task Force.
United States Assistant Attorney Jennifer L. Waier of the Santa Ana office is pursuing this case.