Jefferson County engineer guilty of $10M+ COVID relief fraud

Published 12:15 am Thursday, February 11, 2021

Getting your Trinity Audio player ready...

BEAUMONT — Jefferson County engineer Shashank Rai did not pay any employee wages nor did his purported business, Rai Family LLC., in 2020, according to the Texas Workforce Commission.

That did not stop the 30-year-old Beaumont engineer, authorities said, from seeking $13 million in fraudulent payroll protection loans from the federal government during the initial stages of the coronavirus pandemic.

He was charged May 13, 2020, with violations of wire fraud, bank fraud, false statements to a financial institution and false statements to the Small Business Administration.

Subscribe to our free email newsletter

Get the latest news sent to your inbox

On Tuesday, he pleaded guilty in federal court to making false statements to a bank.

“The Payroll Protection Program was designed to help struggling businesses and hardworking Americans, not individuals who concoct imaginary businesses and employees,” Acting U.S. Attorney Nicholas J. Ganjei said. “We will continue to work diligently with our law enforcement partners to investigate and prosecute those who exploit this critical, taxpayer-funded program.”

A release sent out this week from federal authorities touting Rai’s plea did not include information on the man’s potential penalty or sentencing date.

Rai admitted he sought millions in forgivable loans guaranteed by the SBA from two banks by claiming to have 250 employees earning wages when, in fact, no employees worked for his purported business.

In the application submitted to the first lender, Rai 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 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, materials recovered from the trash outside of Rai’s home included handwritten notes that appear to reflect an investment strategy for the $3 million.

The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1 percent. PPP loan proceeds must be used by businesses for payroll costs, interest on mortgages, rent and utilities.

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