Three from Mount Vernon convicted in $7.8 million pandemic relief fraud

Two Mount Vernon brothers and a city native were convicted Friday in a pandemic relief fraud that steered nearly $8 million meant for small businesses to unqualified individuals who then paid the trio some of the money they received.

The jury took just over two hours to find Jacob Carter, 38, of Maryland and Quadri and Anwar Salahuddin, 28 and 38, respectively, guilty of wire fraud, conspiracy to commit wire fraud and aggravated identity theft following a weeklong trial in federal court in White Plains They face a minimum of two years in federal prison and could be sentenced to up to 20 years.

The three had been free on bond but U.S District Judge Nelson Roman ordered them detained pending sentencing. No sentencing date was announced.

The case centered on applications the trio filed with the Small Business Administration for $10,000 grants to individuals with businesses Carter and the Salahuddins made up.

"The defendants did this over and over again, lies on top of lies, more than one thousand times, and they did this out of greed," Assistant U.S. Attorney Courtney Heavey told the jury in her summation Thursday.

The defendants chose to represent themselves and did not call any witnesses. Carter seemed to take his role seriously, objecting frequently and cross examining the government's witnesses. Roman, though, sometimes cautioned he was stepping out of bounds in his line of questioning, like when he repeatedly sought to link two FBI special agents who worked the case to spurious reports of a cover-up of a child pornography ring within the agency.

The brothers barely involved themselves in the trial, questioning no witnesses. On Wednesday, a week into the trial, they even stopped standing when the jury entered and left the courtroom as is customary, and refused to speak to the judge, ignoring him when he asked them questions.

They broke their silence and again stood for the jury starting on Thursday. Anwar Salahuddin did not give a summation and Quadri Salahuddin's brief closing argument addressed no evidence and seemed only to question the authority of the court in handling the case.

The fraud dealt with the SBA's Economic Disaster Injury Loan program that added an emergency grant in the first months of the pandemic to help keep small businesses afloat. The program offered $1,000 per employee, up to $10,000, and that money did not have to be repaid.

Carter learned of the program in May 2020 and submitted a pair of applications that did not yield money, the first because he put down no employees and the second because he had already used his social security number on the first application. But when he applied for the brothers - Anwar was a childhood friend - and they got their full payments, the three saw an opportunity to make money.

They started collecting personal details - pedigree information, bank account and routing numbers and social security numbers - from interested relatives, friends and co-workers. They told them they would submit the applications and once the funds were obtained the recipients would have to pay them a fee of $4,000.

The applications required details about the types of businesses and details like gross revenue. But the defendants never asked any of the people about businesses and employees "because they knew they would make that up" on their own, Heavey told the jury.

None of the people had businesses or employees and those who testified said they never told the defendants they did.

The three men submitted 1,043 applications. Most claimed sole proprietorships with the business name that of the applicant and all but five claiming to employ 10 to 15 people. More than 75 percent were approved, with the SBA sending out more than $7.8 million on those.

For the first several weeks, they indicated the applicants owned agricultural businesses - which should have been one of the red flags for the SBA since so many of the "businesses" were based in Mount Vernon. The agency had deemed small farms and the agriculture sector a priority at the outset. When the priority was removed, the defendants started citing other business types like communications.

The defendants paid finders fees of at least $1,000 to others who provided information from applicants, including Christal Ranson, a close friend of Quadri Salahuddin who was charged with the trio in October 2021. She pleaded guilty in the case two months ago.

Another person who got involved, Ousman Jobe, pleaded guilty last month, agreed to cooperate and testified for the government.

The exact amount that the defendants received in fees was not provided during the trial. Part of the reason for that was they demanded cash in many instances, fearful of the paper trail the FBI eventually relied on. But if they received between $3,000 and $4,000 each time, that would have been between $2.3 million and $3.1 million.

Detailed financial records of the defendants bank and cash-transfer accounts showed thousands of dollars in transactions that corresponded to the receipt of funds from the SBA.

The prosecution was able to show how the applications originated from computer devices linked directly to Carter and the brothers or to their relatives, and that many were filed from the Salahuddin home and the home of a relative of Carter's fiancee, both on Washington Boulevard.

Records of Carter's iCloud account showed he had hundreds of screenshots taken of application confirmations, with the pictures taken seconds after the applications were filed. And the FBI also found pictures showing bundles of $100, $50 and $20 bills and expensive jewelry and a Mercedes Benz Carter bought that year. They also had records showing he leased a Lamborghini.

Carter's primary defenses were that the FBI agents who testified against him had no direct knowledge of the alleged fraud; the certifications of the financial records had not been properly authenticated; that there was no one who came forward claiming to be the victim of identity theft; and that the government relied on witnesses who themselves had committed fraud in the case and were seeking leniency.

He said the FBI had not looked into his own employment history and offered that "Mr. Carter" was the author of a successful children's book and a commissioned artist, suggesting the money he had was legitimate.

"That would not fit the greed, fraud and theft narrative," he told the jury.

Prosecutors also had audio and video recordings of the Salahuddin brothers, including a video of Quadri discussing the scheme with a confidential informant and both brothers making admissions to FBI agents following their arrests.

And the financial records showed one particularly telling graph of Quadri Salahuddin's checking account history. There was no money or a negative balance from January to mid May 2020 - at which point it exploded into the tens of thousands of dollars over the next few months.

In urging the jury to find the case was "not a close call" Heavey said a recording of Anwar Salahuddin complaining about his brother holding too much money in his accounts best summarized the case.

"Greed is always people's downfall," he was heard saying.

This article originally appeared on Rockland/Westchester Journal News: Mount Vernon NY brothers, friend convicted in pandemic relief fraud