Since the government enacted the CARES Act in 2020 to counter the economic effects of the COVID-19 pandemic, Chilivis Grubman attorneys have warned about government enforcement actions related to CARES Act programs. One such program is the Paycheck Protection Program (“PPP”), which has provided hundreds of billions of dollars in forgivable loans to small businesses.
On November 8, 2021, the U.S. Department of Justice (“DOJ”) announced that two men pleaded guilty to PPP loan fraud. According to the government, Siddiq Azeemuddin of Illinois and Raheel Malik of Texas submitted fraudulent PPP loan applications. The scheme also involved laundering approximately $3 million in PPP loan funds through Azeemuddin’s business, Fascare International, Inc.
Besides submitting fraudulent PPP loan applications, Azeemuddin instructed Malik to fill out blank checks from companies that received PPP loan funds. Malik was also instructed to make the checks payable to fake employees and to cash the checks. Once cashed, Malik distributed the cash to other members of the conspiracy. For his participation, the government alleged that Malik received up to 2% of each check cashed.
Malik and Azeemuddin each pleaded guilty to one count of conspiracy to commit wire fraud and one count of money laundering. Malik faces up to 5 years in prison, while Azeemuddin faces up to 40 years in prison. The press release did not explain the reason for the sentencing difference. However, the judge will consider the federal sentencing guidelines and other factors when sentencing Azeemuddin and Malik. Both Azeemuddin and Malik are scheduled to be sentenced on March 7, 2022.
The scheme was investigated by several government agencies, including the new COVID-19 Fraud Enforcement Task Force. In May 2021, the COVID-19 Fraud Enforcement Task Force was created to manage the DOJ’s resources and partnerships with other government agencies “to enhance efforts to combat and prevent pandemic-related fraud.”
The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with white-collar criminal investigations and health care fraud investigations. If you need assistance with such a matter, please contact us today.