Federal charges were filed against a group of fourteen individuals accused of defrauding the Paycheck Protection Program, a financial initiative established during the COVID-19 pandemic, as well as several financial institutions. Their alleged scheme resulted in the illicit acquisition of over $53 million in loan funds.
According to U.S. Attorney for the Northern District of Texas Leigha Simonton, the case is the largest investigated by the Pandemic Response Accountability Committee (PRAC) Fraud Task Force to date.
On July 4 and 5, 2023, law enforcement authorities, including special agents from the Federal Bureau of Investigation (FBI), the Treasury Department's Special Inspector General for Pandemic Recovery (SIGPR) and the Office of Inspector General of the Federal Deposit Insurance Corporation (FDIC-OIG), apprehended the accused individuals in Texas, California and Oklahoma.
Based on recently unsealed indictments, some of the defendants were involved in managing a network of related recycling businesses. These companies — namely Mammoth Metal Recycling, Elephant Recycling, Gulf Coast Scrap, 4G Metals, 4G Plastics, 5G Metals, Level Eight, Sunshine Recycling, L.K. Industries, NTC Industries, West Texas Equipment and West Texas Scrap — are mentioned in the aforementioned charges.
The 14 individuals allegedly engaged in a scheme involving the submission of fraudulent PPP loan applications. Inflating payroll expenses, they manipulated bank statements and Internal Revenue Service tax forms to present false information regarding their business income. To create a misleading trail of payroll expenses, the PPP loan funds were then funneled through a series of bank accounts.
At least two of the defendants, on behalf of their recycling companies, deceitfully applied for loans from financial institutions, resulting in the illicit acquisition of millions of dollars in business loan proceeds. One of the defendants allegedly provided false information to the Federal Deposit Insurance Commission (FDIC), specifically denying any knowledge of several other individuals involved in the alleged conspiracy.
“These individuals allegedly conspired to orchestrate multiple fraud schemes which exploited financial institutions and government programs, solely to enrich themselves,” said FBI Dallas Special Agent in Charge Chad Yarbrough. “We will continue to work with our partners to ensure that the American people do not fund the lifestyle of criminals with taxpayer dollars that were intended to protect the most susceptible from financial ruin and promote economic stabilization in a critical time of need.”
If convicted, the defendants face up to 30 years in federal prison for each count of conspiracy to commit bank fraud, bank fraud and aiding and abetting, bank fraud, making a false statement to the FDIC, 20 years for wire fraud and 10 years for conspiracy to commit money laundering.