DOJ experiences {that a} Santa Clarita, California man is responsible of COVID-19 fraud

Mar 30, 2021 – LOS ANGELES – A Santa Clarita Valley man pleaded guilty on Monday to executing a fraudulent plan to obtain approximately $ 1.8 million COVID-19 relief from the Small Business Administration (SBA) through the EIDL program (Economic Injury Disaster Loan) and PPP (Paycheck Protection Program).

According to court records, 29-year-old Santa Clarita-born Hassan Kanyike admitted to filing six fraudulent PPP loan applications and two fraudulent EIDL applications. The filings sought funds to allegedly pay the salaries of employees he claimed had worked for two of his companies. Kanyike successfully raised approximately $ 1 million through four PPP loans and an additional $ 300,000 through two EIDL loans.

In support of the fraudulent PPP loan applications, Kanyike filed fake federal tax returns and pay slips. For example, in a loan application, Kanyike falsely claimed the company had 26 employees and an average monthly payroll of $ 168,000, and he filed a fabricated IRS tax form claiming Falcon Motors had $ 2,022,300 in 2019 paid on payroll. However, Kanyike admitted this during his plea that the company had far fewer employees and a far lower payroll. Kanyike went on to admit that he had received additional employer identification numbers from the IRS in April and May 2020 to allow him to apply for multiple loans for the same used car business. Kanyike then used a substantial portion of the PPP loan proceeds for his own benefit.

Kanyike was arrested at Los Angeles International Airport in December 2020 just before he was about to board a flight to Dubai. At the time of his arrest, Kanyike had transferred approximately $ 762,000 from one of the business accounts to Uganda from one of the business accounts that had received the loan proceeds, in violation of the rules of the PPP and EIDL programs.

Kanyike pleaded guilty before US District Judge Virginia A. Phillips. He is due to be sentenced on August 23 and faces a maximum sentence of 20 years in prison. As part of his guilty plea, Kanyike has to pay approximately $ 1.3 million in restitution.

Homeland Security Investigations and Treasury Inspector General for Tax Administration are investigating the case.

Deputy Chief William Johnston of the Criminal Division Fraud and Deputy US Attorney Richard E. Robinson of the US District Attorney for the Central District of California Main Fraud Department are pursuing the case. The case was previously pursued by former fraud trial attorney Benjamin Saltzman.

The Coronavirus Aid, Relief and Economic Security (CARES) Act is a federal law passed March 29, 2020 designed to provide emergency financial aid to millions of Americans suffering from the economic impact of the COVID-19 pandemic. One source of relief from the CARES Act has been the approval of up to $ 349 billion in unsuccessful small business loans to help keep jobs and certain other expenses through the PPP, as well as $ 10 billion in low interest small business loans through the EIDL program. In April 2020, Congress approved over $ 300 billion in additional PPP funding and an additional $ 10 billion in EIDL funding. In December 2020, Congress approved an additional $ 284 billion in 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%. PPP loan proceeds must be used by businesses 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.

The EIDL program aims to provide economic relief to small businesses that are currently experiencing temporary loss of income. EIDL proceeds can be used to cover a variety of working capital and normal operating costs, such as: B. for continuation of health services, rents, utilities and payments for fixed debt. If an applicant is also receiving a loan under the PPP, the EIDL funds cannot be used for the same purpose as the PPP funds.

The Fraud Department directs the Justice Department’s prosecution of fraud programs that exploit the CARES Act. In the months since the CARES law was passed, lawyers for the Fraud Department have prosecuted more than 100 defendants in more than 70 criminal cases. The fraud department has also seized more than $ 65 million in cash receipts from fraudulently obtained PPP and EIDL funds, as well as numerous real estate and luxury goods purchased with those proceeds. Further information can be found at:

Anyone with information about suspected COVID-19 fraud can report this by calling the National Justice Department’s Disaster Fraud hotline at 866-720-5721 or using the NCDF web complaint form at https: //www.justice. gov / disaster fraud / ncdf disaster complaint form.
Source: DOJ