Super Lawyers
The Netional Trial Lawyers - Top 40 Under 40
Avvo Clients Choice
Avvo Top Contributor
Avvo Rating
Published on:

Suburban Chicago Businessman Charged with Bank Fraud Involving Coronavirus Relief Fraud

lance-anderson-uevmkfCH98Q-unsplash-300x200The U.S. Attorney’s Office for the Northern District of Illinois announced charges last week against the CEO of two Evanston-based software companies for allegedly filing loan applications that fraudulently sought more than $400,000 from the federal Paycheck Protection Program (PPP).

Rahul Shah of Evanston was charged with bank fraud and making false statements to a financial institution. His initial appearance in court has not yet been scheduled. Attorney information wasn’t available.

Shah, 51, is the founder and CEO of Katalyst Technologies, Inc., and Boardshare LLC. The affidavit accuses him of submitting applications for a $441,138 PPP loan for his companies using significantly inflated payroll expenses. He allegedly submitted several false and fraudulent Internal Revenue Service (IRS) documents in support of the applications, including IRS Forms 1099-MISC that indicated his company had made payments to former employees who never received such payments. Shah also submitted what he claimed to be IRS Forms 941 representing his company’s payroll for 2019. A comparison of the documents he submitted and his company’s actual IRS filings revealed that his company significantly underreported its payroll expenses, the affidavit states.

PPP loans are guaranteed by the Small Business Administration (SBA) and funded by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was passed in March by Congress to provide emergency financial assistance to Americans struggling because of the economic turmoil caused by the COVID-19 pandemic. The CARES Act authorized up to $349 billion in forgivable loans to small businesses for payroll and other expenses through the PPP.

“The Paycheck Protection Program was designed as a lifeline for small businesses struggling to survive the COVID-19 pandemic,” said U.S. Attorney John R. Lausch. “My office is working closely with our law enforcement partners to hold accountable anyone who seeks to commit fraud in connection with this important program.”

On April 15, Shah purportedly submitted a PPP loan application for Katalyst to a bank in Texas, which stated he owned 42 percent of the company and that it has $845,285 in monthly payroll expenses. On April 30, Shah applied for another loan on behalf of Broadshare. It included multiple IRS forms that falsely claimed the company spent nearly $426,000 on payroll during the last quarter of 2019. However, actual IRS filings show the company reported payroll of less than $10,000 during that period, according to the affidavit. Investigators interviewed at least three people whose identities were falsely used to inflate Boardshare’s payroll. All three allegedly told investigators that they had worked for Katalyst before 2017 but had never worked for Boardshare.

When questioned by investigators, Shah reportedly acknowledged there were “errors” in his documentation. He told agents the documents he attached to his applications were erroneously given to him via email by workers in India. He was unable to provide investigators with proof of this claim.

Shah is the first Chicago-area resident to be charged with fraud related to the federal government’s COVID-19 relief efforts. If convicted, he could face a sentence ranging from probation to up to 60 years imprisonment.

South Florida Bank Fraud Attorney

Have you been accused of COVID-19 fraud? Contact Brian Silber, P.A. for a free initial consultation with one of South Florida’s most experienced bank fraud defense attorneys.

Source: 6.16.20 Suburban Chicago businessman charged with covid-relief fraud.pdf

Contact Information