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Washington Man Accused of Committing COVID-Relief Fraud

pexels-karolina-grabowska-4475523-300x200The Department of Justice announced that Washington man faces criminal charges after he fraudulently sought over $1.1 million in COVID-19 relief funds.

Austin Hsu, 46, of Issaquah, Washington, is charged with one count of wire fraud. It is unclear if he has acquired the services of an attorney.

The criminal complaint alleges that the accused fraudulently sought loans through the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) program. He allegedly submitted nine fraudulent loan applications on behalf of five different businesses.

The accused is reportedly the owner of Blackrock Services P.S., which does business as “Back 2 Health Bellevue.” He purportedly applied for EIDL and PPP loans for Back 2 Health and then used the names of the company’s current and former employees to apply for additional loans on behalf of other companies he owned and controlled. In support of the fraudulent applications, Hsu allegedly submitted doctored federal tax filings.

The complaint further accuses him of making numerous false and misleading statements about the companies’ operations in support of the loan applications. For instance, he allegedly incorporated a company named Blueline Capital LLC in June 2020 for the purpose of applying for an EIDL loan the following month. He then purportedly wrote in his application that the business had been operational since 2017 and that, as of January 31, 2020, the company employed nine people and had gross receipts of $1.5 million. In reality, Blueline Capital was not operational, the complaint claims.

The EIDL and PPP are federal loan programs that are part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was enacted by Congress on March 29, 2020. The forgivable loans, which are backed by the Small Business Administration (SBA), were meant to provide economic relief to American businesses that were negatively impacted by the coronavirus pandemic. Congress approved over $600 billion worth of loans for small businesses through these programs.

The PPP and EIDL are two separate programs with different benefits. The PPP allows qualifying businesses to borrow up to $10 million in loans that are 100 percent forgivable if the businesses don’t lay off any employees or if they rehire employees they have already laid off. The primary purpose of PPP loans is to cover payroll. The EIDL is more geared towards self-employed business owners who don’t have employees. It allows businesses to borrow up to $2 million in loans and includes a grant of up to $10,000. It can be used for a wide array of business-related expenses, including payroll, accounts payable, and fixed debts. EIDL funds cannot be used for the same purpose as PPP funds.

As of early October, the Justice Department has announced charges against over 60 business owners accused of attempting to defraud COVID-19 relief programs and collectively obtain $227 million in loans.

Fraud charges involving coronavirus relief programs will likely continue to increase as the SBA increases its scrutiny of how EIDL and PPP funds are spent by borrowers. Anyone concerned about compliance with the terms of their loan should immediately consult an experienced fraud attorney who can assess the situation and figure out the next step forward.

South Florida Fraud Defense Attorney

Are you accused of committing fraud involving COVID-19 relief programs in South Florida? Contact Brian Silber, P.A. to set up a free initial consultation with one of South Florida’s most experienced fraud defense attorneys.

Source: 10.27.20 Washington man charged with COVID relief fraud.pdf

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