Texas participated in a joint-effort national enforcement surge that found over $245 million stolen in COVID-era loans intended for small businesses.
The national takedown surge, dubbed “Operation No Doze,” revealed that over $245 million in COVID-era loans had been obtained through false claims to Small Business Administration’s COVID-era programs.
The COVID-era programs were the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan. The PPP offered services such as forgivable loans intended for payroll until May 2021. The Economic Injury Disaster Loan (EIDL) provided loans and advances and stopped accepting new applicants in May 2022.
However, fraudulent claims abounded nationwide. Forty U.S. Attorney’s Offices, including three from Texas, collaborated with twenty federal and state investigative agencies in Operation No Doze.
“Six years after our first PPP fraud case was charged in Austin, we are still finding fraudsters and holding them accountable for their greed-driven schemes that undermined a federal program and stole from American taxpayers in the midst of the chaos that was the COVID-19 pandemic,” said U.S. Attorney Justin R. Simmons for the Western District of Texas. “This surge, led by the National Fraud Enforcement Division, highlights our commitment to protecting the integrity of our government programs and ensuring no one gets away with defrauding the public.”
Simmons’ Western District played an active role in Operation No Doze. He reported that defendants Arun Mago and Eve Zou pleaded guilty in separate fraud cases.
Court documents allege that Arun Mago, a known money launderer, applied for and received multiple fraudulent PPP loans. The loans allegedly totaled $905,264.
Eve Zou was charged with making false and fraudulent representations to the U.S. Small Business Administration to obtain EIDL funds and grants. Zou allegedly used EIDL funds for personal benefit, including real estate in Austin and investments in brokerage accounts. The three SBA loans she allegedly received totaled $319,000.
Assistant U.S. Attorney Brandy Gann for the Western District of Texas prosecuted the case. Zou pleaded guilty.
The two Western District cases totaled approximately $1.2 million.
The Eastern District of Texas also participated in the surge effort.
“In the Eastern District of Texas, we will spare no effort to recover ill-gotten gains,” said U.S. Attorney Jay R. Combs. “These funds were intended to keep small businesses alive, not fund the lifestyles of individuals taking advantage of the programs.”
According to Combs, three defendants have pleaded guilty and await sentencing, and two others await their trials.
Defendants Craig and Chemika Bennett of Celina pleaded guilty to conspiracy to commit wire fraud. They fabricated employees and business expenses, causing the SBA to lose $697,000.
The DOJ Fraud Division reported a loss of at least $15,388,355 for American taxpayers from Texas’ Western, Eastern, and Northern Districts.
“Pandemic loan relief was meant to keep American small businesses alive during government lockdowns—not line the pockets of fraudsters,” said Attorney General Todd Blanche. “The defendants charged during our summer surge allegedly fabricated businesses, submitted false payroll and revenue claims, stole identities, and concealed foreign ties on their applications— but they will now be prosecuted to the fullest extent of the law.”
