fraud

TEXARKANA, Texas — A Texas man has been charged by federal complaint for allegedly filing bank loan applications in an attempt to fraudulently obtain more than $5 million in Small Business Administration (SBA) Paycheck Protection Program (PPP) loans under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

32-year-old Samuel Yates was charged with violations of wire fraud, bank fraud, false statement to a financial institution, and false statements to the SBA.

Federal prosecutors allege Yates sought more than $5 million in PPP forgivable loans in two loan applications at two different banks by claiming, in part, to having over 400 employees when, in fact, no employees worked for his purported businesses.

According to a federal complaint unsealed today in the U.S. District Court of Texarkana, Yates sought $5 million in his first loan application — claiming to have 400 employees and an average monthly payroll of $2 million.

In his second loan application, Yates sought and was able to obtain a $500,000 loan in claiming to have over 100 employees.

"With each application, Yates submitted a list of purported employees that he obtained from a publicly available random name generator on the internet," according to prosecutors. "He also submitted forged tax documents with each application."

The CARES Act was enacted on March 29, 2020, and provided, among other things, emergency financial assistance to millions of Americans suffering from economic effects brought on by the COVID-19 pandemic. The act authorized the distribution of up to $349 billion in forgivable loans, including the PPP loan program, to small businesses for qualified expenses, job retention with payroll assistance, mortgages, rents, and utilities. In April 2020, Congress authorized over $300 million in additional PPP funding.

In Bowie County, where Yates resides, he had previously been charged with burglary of a vehicle, theft of a firearm, more than 20 charges for  issuance of a bad check, and theft by check, according to court records.

Yates is being held at the Bowie County Jail on a federal hold.

“Any time the government provides large amounts of money to the public there are people who will try to cheat the system,” said U.S. Attorney Joseph D. Brown of the Eastern District of Texas. “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.”

“This defendant allegedly sought to steal millions of dollars in loans intended to aid legitimate small businesses grappling with the economic effects of COVID-19,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division. “The department and our law enforcement partners will use all the tools at our disposal to investigate and prosecute frauds against the Paycheck Protection Program.”

“Providing false statements to gain access to SBA’s programs will be aggressively investigated by our office,” said Special Agent in Charge Donald Abram of SBA OIG’s Central Region. “SBA OIG and its law enforcement partners are poised to root out wrongdoers in the Paycheck Protection Program and maintain its integrity. I want to thank the U.S. Attorney’s Office and our law enforcement partners for their dedication and pursuit of justice.”

“Today’s arrest should serve as a strong deterrent to anyone considering exploiting the COVID-19 pandemic to enrich themselves through fraud. These individuals have no concern for legitimate businesses whose employees and their families are hurting financially during these unprecedented times,” said Special Agent in Charge Ryan L. Spradlin of U.S. Immigration and Custom’s Homeland Security Investigations (HSI) Dallas. “HSI stands at the ready to utilize its ample investigative mandate to assist in rooting out such unscrupulous individuals, and hold them accountable for their crimes.”

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