Texas tied to $15.3M in pandemic loan fraud cases, DOJ says
Texas is tied to at least $15.3 million in pandemic loan fraud cases that federal prosecutors recently wrapped up in a nationwide “summer surge” of indictments, the Department of Justice said Monday. More than 160 suspects face charges for an alleged combined $245 million in losses to U.S. Small Business Administration COVID-era loan programs.
“The defendants charged during our summer surge allegedly fabricated businesses, submitted false payroll and revenue claims, stole identities, and concealed foreign ties on their applications, but they will now be prosecuted to the fullest extent of the law,” U.S. Attorney General Todd Blanche said in the release.
The Texas total of $15,388,355 covers the state’s federal court districts, according to the DOJ. The department’s website did not have data from the Southern District of Texas.
One of the cases involves Eve Zou, a former Texas Department of Family and Protective Services employee, who pled guilty to fraudulently receiving a total of $319,000 from three Economic Injury Disaster Loans. The DOJ said she used the proceeds for personal benefit, including the purchase of real estate in Austin, Texas, and investments in brokerage accounts.
She also allegedly made multiple false statements in the applications, according to the DOJ, including using her daughter’s identity without her daughter’s knowledge or permission, falsely claiming to have 50 employees, and falsely claiming lost rental income.
A federal judge will sentence Zou at an Oct. 22 hearing, according to court records. She agreed to forfeit the properties she purchased with the loans, which have appreciated in value.
“As a result, the government intends to recoup more than Zou stole,” the release says.
Another case highlighted by the DOJ involves $55.9 million and is being prosecuted in a Missouri federal district. The defendant is accused of applying for loans for “dozens” of businesses. Only one actually existed: Fur Lives Matter, a company in Perryton, Texas, that allegedly had no knowledge of the defendant, per the DOJ. The Texas Secretary of State’s online records currently list the business as inactive.
Three wire fraud cases were filed in Texas’ Eastern and Western Districts during the surge, KXAN found, though the indictments remain sealed.
The Texas Northern District has indictments filed in similar cases, one sealed and two unsealed. The defendants in the two unsealed cases allegedly defrauded $369,581 and $11,049,548 from the federal government via PPP loans.
The $11 million case, filed Aug. 19, involves two defendants, a Dallas resident and a Chicago resident. According to the DOJ’s indictment, they recruited ineligible applicants for loans, then falsely indicated those individuals were eligible on applications sent via online lenders.
“The lenders then funded the forgivable loans and electronically deposited PPP loan proceeds into financial accounts controlled by the applicants,” the indictment says. “The applicants then paid a fee … ranging from $2,000 to $5,000. The payments would be made in cash, Zelle payments or electronic means.”
The pair received 561 loans between June 2020 and September 2022, and sometimes kept a portion of the PPP loans, according to the indictment.
