DOJ arrests 14 California residents for $25 Million COVID-19 relief and small business loan fraud

CALIFORNIA – The U.S. Department of Justice (DOJ) announced May 29 that it arrested 14 California residents on two federal criminal complaints.

The complaints alleged that they fraudulently obtained more than $25 million in taxpayer-funded COVID-19 relief funds and federally-guaranteed small business loans.

Law enforcement seized $20,000 in cash, money-counting machines, money bands, multiple cell phones and laptops, two loaded 9mm handguns and ammunition.

United States Attorney Bill Essayli said the enforcement action is intended to send a message to all criminals who take advantage of government programs designed to help those who need them most.

“If you took COVID-19 or SBA money you weren’t entitled to, your door could be the next one we visit,” said Essayli.

Defendants accused of fraud and money laundering

The 18 defendants, including 4 believed to be in Armenia, face charges of fraud, money laundering, and structuring financial transactions to evade reporting requirements.

One defendant allegedly orchestrated a scheme defrauding banks and the SBA’s Preferred Lender Program by using sham corporations, false documents, and fake tax returns to secure loans and launder millions in fraud proceeds from 2018 to 2025.

Another defendant allegedly submitted a false application and bogus documents to obtain a loan under the Paycheck Protection Program (PPP) on behalf of a fake business that received more than $700,000 in PPP funds.

A third defendant allegedly defrauded a bank by representing the nonexistent sale of a sham business to another sham company to obtain an approximately $3 million federally guaranteed loan through the SBA’s Preferred Lending Program.

If convicted, defendants face decades in federal prison

The U.S. Department of Homeland Security’s Office of Inspector General and Homeland Security Investigations’ (HSI) El Camino Real Financial Crimes Task Force investigated the cases.

A criminal complaint contains allegations. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

If convicted, each defendant would face a statutory maximum sentence of decades in federal prison.