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Area engineer fraudulently sought more than $10M in COVID loans

A Beaumont engineer has been charged with allegedly filing bank loan applications fraudulently seeking more than $10 million in forgivable loans guaranteed by the Small Business Administration under the Coronavirus Aid, Relief and Economic Security Act.

Shashank Rai, 30, allegedly sought millions of dollars in forgivable loans from two different banks by claiming to have 250 employees earning wages when, in fact, no employees worked for his purported business, authorities said.

According to court documents unsealed today in U.S. District Court in Beaumont, Rai allegedly made two fraudulent claims to two different lenders for seek loans guaranteed by the SBA for COVID-19 relief through the PPP.  In the application submitted to the first lender, Rai allegedly sought $10 million in PPP loan proceeds by fraudulently claiming to have 250 employees with an average monthly payroll of $4 million.  In the second application, Rai allegedly sought approximately $3 million in PPP loan proceeds by fraudulently claiming to have 250 employees with an average monthly payroll of approximately $1.2 million.

According to court documents, the Texas Workforce Commission provided information to investigators of having no records of employee wages having been paid in 2020 by Rai or his purported business, Rai Family LLC.

In addition, the Texas Comptroller’s Office of Public Accounts reported to investigators that Rai Family LLC reported no revenues for the fourth quarter of 2019 or the first quarter of 2020.

According to court documents, materials recovered from the trash outside of Rai’s residence included handwritten notes that appear to reflect an investment strategy for the $3 million, which is the amount of money that Rai allegedly sought from the second lender.

The CARES Act is a federal law designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic.

Rai is charged by way of a federal criminal complaint with violations of wire fraud, bank fraud, false statements to a financial institution and false statements to the SBA.

U.S. Attorney Joseph D. Brown of the Eastern District of Texas said Rai’s behavior was “very brazen.”

“Those who submit these applications for loans or other assistance need to understand that there are people checking on the representations made, and those representations are made under oath and subject to the penalties of perjury,” Brown said. “Federal agencies are watching for fraud, and people who lie and try to cheat the system are going to be caught and prosecuted.”

Lou Manzo of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Frank Coan for the Eastern District of Texas are prosecuting the case.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling 866-720-5721.