A Texas engineer and businessman, Shashank Rai has pleaded guilty for filing fraudulent bank loan applications seeking more than $10m in forgivable loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Rai pleaded guilty to one count of making false statements to a bank, he was charged on May 13, 2020, with violations of wire fraud, bank fraud, false statements to a financial institution, and false statements to the SBA.
As part of his guilty plea, Rai admitted that he “sought millions of dollars in forgivable loans” guaranteed by the SBA from two different banks by claiming to have 250 employees earning wages when, in fact, no employees worked for his purported business.
Rai made two fraudulent claims to two different lenders for loans guaranteed by the SBA for Covid-19 relief through the Paycheck Protection Program (PPP).
In the application submitted to the first lender, Rai sought $10m in PPP loan proceeds by fraudulently claiming to have 250 employees with an average monthly payroll of $4m.
In the second application, Rai sought approximately $3m in PPP loan proceeds by fraudulently claiming to have 250 employees with an average monthly payroll of approximately $1.2m.
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 $3m, which is the amount of money that Rai allegedly sought from the second lender.