Phony business owner tried to steal $5 million in coronavirus aid in Texas, feds say
Federal prosecutors say an East Texas man created a fake company and pretended to have 400 employees to try to steal $5 million in coronavirus relief funding.
Samuel Yates, 32, is accused of trying to apply for $5 million in forgivable loans from the Small Business Administration’s Paycheck Protection Program, known as the PPP. Prosecutors with the Eastern District of Texas said he tried to apply to two different banks for relief funding.
Yates, of Maud, Texas, near the Arkansas border, is charged with wire fraud, bank fraud and other federal charges, according to a Department of Justice news release.
Prosecutors said Yates first tried to apply for $5 million in relief funding. He pretended to have 400 workers and a monthly payroll of $2 million, prosecutors say.
When the first scheme didn’t work out, prosecutors said, he tried again but this time said he only had 100 employees. The second try worked, according to the Justice Department, and a bank gave Yates $500,000.
Yates is accused of forging tax documents for both applications. To come up with the employees’ names on the applications, prosecutors said he used an online random name generator.
The PPP is a new program created under the CARES Act, the $2 trillion coronavirus relief package signed into law in late March. The program gives forgivable loans to small businesses to keep employees on the payroll during the coronavirus pandemic.
“Any time the government provides large amounts of money to the public there are people who will try to cheat the system,” said Joseph Brown, U.S. Attorney for the Eastern District of Texas. “We encourage lenders to be very careful, and to report suspicious applications. It is a priority of the Department of Justice to deter and prosecute this type of fraud.”
“Today’s arrest should serve as a strong deterrent to anyone considering exploiting the COVID-19 pandemic to enrich themselves through fraud. These individuals have no concern for legitimate businesses whose employees and their families are hurting financially during these unprecedented times,” said Homeland Security Investigations Special Agent in Charge Ryan Spradlin.
