The United States filed a civil complaint against two brothers last week, alleging that they obtained more than $8 million in pandemic-related loans by lying on applications and fraudulently claiming funds for businesses that did not exist.
The civil complaint alleges that between March 25 and April 28, 2021, brothers Duraid A. Zaia and Kusay Karana received four Pandemic Protection Program loans for four businesses, two purportedly owned by Zaia and two by Karana — receiving a total of approximately $8.3 million dollars in PPP loans as a result.
“COVID-relief programs were designed to help people and businesses under extreme financial stress during the pandemic,” said U.S. Attorney Adam Gordon in a statement.
“This complaint seeks to hold accountable those who took advantage of those programs by fraud. My office will continue to pursue those who knowingly cheat taxpayers by abusing the Paycheck Protection Program and other pandemic-related programs.”
The complaint alleges that the businesses were either nonexistent or that their sizes were grossly exaggerated, such as paperwork filed for Zaia’s “Ramona Egg Ranch,” which claimed that the business had annual payroll costs of more than $9.5 million, but federal tax returns showed annual payroll costs of just $62,848.
The complaint also alleges that Zaia and Karana bolstered their loans by fabricating lists of employees who worked at their businesses.
This case is being handled by Assistant U.S. Attorney Stephen H. Wong of the Civil Division of the U.S. Attorney’s Office for the Southern District of California.
The Paycheck Protection Program offered relief by authorizing hundreds of billions of dollars in potentially-forgivable loans to small businesses for job retention and certain other expenses.
The loan applications required the borrower to certify the type of business, the number of employees the business supported, and that the business was in operation as of February 15, 2020.
Borrowers were eligible to seek loan forgiveness if they spent it on employee payroll and other eligible expenses.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at (866) 720-5721 or via the NCDF Web Complaint Form.
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