Home Business Feds say Murphy man lied about having a business to pocket a...

Feds say Murphy man lied about having a business to pocket a $1.6 million Paycheck Protection loan – The Dallas Morning News

39
0

The wedding-planning business his wife owned went bust in 2018. But that didn’t stop Fahad H. Shah from using the company to apply for a $1.6 million federal Paycheck Protection Program loan, prosecutors say.

Shah, 44, of Murphy was charged last Thursday with fraud, accused of using the PPP loan proceeds to pay off the couple’s mortgage, buy a Tesla vehicle and boost his E-Trade investment account by $550,000, court records show.

Shah falsely claimed on the application that WBF Weddings by Farah Inc. had as many as 123 employees and an average monthly payroll of $701,550, according to the indictment.

The business was formed in 2011. His wife was listed in corporate documents as the director. But the indictment said Shah “purported to be the 100% owner.”

The indictment, unsealed Tuesday, charges Shah with wire fraud, making a false statement to a bank, and engaging in a monetary transaction with criminally derived property. Four of the eight counts carry a maximum sentence of 30 years in prison.

The government, in a separate civil case, is trying to have the couple’s Murphy house forfeited.

The indictment is the third such fraud prosecution in the Eastern District of Texas in connection with the emergency business rescue loans, officials said.

An engineer was charged last month in Beaumont with fraud for allegedly applying for $10 million in PPP loans and falsely claiming to have 250 employees. Shashank Shekhar Rai, 30, is charged with wire fraud, bank fraud, making a false statement to a financial institution and making a false statement to the Small Business Administration about his “purported business.”

And last month, Samuel Yates, 32, of Maud, in northeast Texas, was charged with seeking more than $5 million in PPP loans after claiming to have more than 400 employees when in fact he had none, prosecutors said.

“The Paycheck Protection Program is a vital tool for American small businesses and their employees who are struggling with the economic fallout from this pandemic,” U.S. Attorney Stephen J. Cox said in a statement. “The Eastern District of Texas is committed to pursuing fraudsters who exploit this program to the detriment of others.”

Authorities say Shah applied for about $3 million in emergency loans beginning in April and received about half of that in early May. His other application was rejected.

He was arrested Tuesday morning and appeared before a U.S. Magistrate judge in Sherman, where he entered a not guilty plea. His attorney could not immediately be reached for comment.

The PPP loans are guaranteed by the Small Business Administration and provided under the Coronavirus Aid, Relief, and Economic Security Act.

Congress passed the CARES Act in March to, among other things, provide forgivable loans to businesses suffering hardships caused by the COVID-19 pandemic.

Shah claimed that between 2019 and 2020, the wedding-planning business paid as much as $2.5 million in wages, tips and other compensation, the indictment says.

But WBF Weddings by Farah forfeited its corporate status in 2018 after “failing to file a state franchise tax return and/or to pay state franchise taxes,” according to the indictment.

Fahad Shah and his wife, Farah Modi-Shah, purchased a home at 308 Post Oak Trail in Murphy in March 2018, obtaining a mortgage in the amount of $335,266, according to the civil forfeiture lawsuit.

Just days after the PPP loan was wired into Shah’s business account, the mortgage was paid off, the lawsuit says.

Modi-Shah is listed in property records as the owner of the 3,873-square-foot house, which is assessed at more than $400,000 for tax purposes.

A top Justice Department official said earlier this year that the agency was embarking on a significant effort to crackdown on fraud related to the coronavirus pandemic. The official said “multiple ongoing investigations” of individuals and small businesses were underway.

Let’s block ads! (Why?)

Original Post Source link