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  1. #1
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    YIKES!!! Another PPP Fraud!

    Chinese national, Muge Ma (a/k/a "Hummer Mars") was arrested on May 21, 2020 for allegedly attempting to obtain over $20 million in U.S. government-guaranteed loans designed to provide relief to small businesses during the coronavirus pandemic. According to the charges, Ma allegedly received multiple Paycheck Protection Program ("PPP") and the Economic Injury Disaster Loans ("EIDL") by falsely representing that his two companies, New York International Capital and Hurley Human Resources, had hundreds of employees and paid millions of dollars in wages.

    Over a span of about two months, Ma applied to at least five banks for a total of over $20 million in government-guaranteed loans. In connection with the loan applications, Ma allegedly claimed that he was the sole owner and executive director of two businesses that were located on the sixth floor of a luxury condominium building in New York City. He further claimed that his businesses had hundreds of employees. However, an FBI investigation suggests that Ma was the only employee at New York International Capital since 2019 and that Hurley Human Resources never had employees.

    In order to support the fraudulent loan applications, Ma allegedly submitted altered bank records, tax records, insurance records, payroll records, and audited financial statements. In the course of the loan applications, Ma also allegedly misrepresented that he was a United States citizen, when, in fact, he is a Chinese national with lawful permanent resident status in the United States.

    Before the alleged fraud scheme was discovered, the SBA approved over $650,000 in EIDL funds and a bank approved and disbursed approximately $800,000 in PPP loan funds.

    Ma is being charged with bank fraud, wire fraud, making false statements to a bank, major fraud against the United States, and making false statements to the SBA. In addition to facing bank fraud charges, Ma is also being charged for falsely representing to a COVID-19 test kit manufacturer that one of his companies was a registered vendor for the State of New York.
    Hedley Lamarr......That's Hedley

  2. #2
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    This guy isn't a very good crook....

  3. #3
    Senior Member Reputation points: 32550 Funder Mark's Avatar
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    And I would guess after he goes to jail, he will be taken straight to the airport....

  4. #4
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    The wedding planning business his wife owned went bust in 2018, but that did not stop Fahad H. Shah from allegedly using the company's name to apply for a $3 million PPP loan. Shah was indicted last week in the Eastern District of Texas with three counts of wire fraud, one count of false statements to a bank, and four counts of money laundering.

    According to the indictment, Shah allegedly submitted two different applications on behalf of his wife's defunct wedding planning business, WBF Weddings by Farah Inc. On the PPP application, Shah allegedly claimed that between 2019 and 2020, WBF had between 92 and 126 employees that had been paid between $1.7 million and $2.4 million in wages, tips and other compensation. However, evidence presented in court shows that WBF did not have any employees at the time of the application and that the company had forfeited its corporate status in 2018 after failing to pay state franchise taxes.

    Although Shah's first application was denied, he was eventually approved for a $1.3 million PPP loan when he applied again at a different bank. Just days after the loan was wired into the Shah's business account, Fahad and his wife allegedly used the funds to pay off their $335,260 mortgage, purchase a new Tesla, and boost their E-Trade investment account by $550,000.

    On or about June 12, 2020, a federal agent contacted Shah. On the recorded call, Shah allegedly falsely stated that the PPP loan had allowed him to continue to pay 123 employees at their regular hours. He also allegedly stated that he expected to apply for another $1.5 million forgivable loan in the future.

    Shah was indicted last week and taken into custody on Tuesday. His case is being investigated by the SBA OIG, the Treasury Inspector General for the Tax Administration, the Federal Housing Finance Agency OIG, the IRS, and the FDIC OIG. His trial date has not yet been set.
    Hedley Lamarr......That's Hedley

  5. #5
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    "It's not a lie if you believe it"

    George Costanza

  6. #6
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    The owner of Frisbu Trucking, Hubert Ivan Ugarte, is now facing multiple fraud charges for lying on a PPP loan application about his other pending federal criminal charges.

    On October 24, 2019, a federal grand jury in Utah returned an indictment charging Ugarte and others following a multi-year wire fraud and bribery scheme investigation in which it is alleged Ugarte bribed employees at the Salt Lake City Hub of FedEx ground to obtain preferential treatment for his trucking companies. Ugarte faces four counts of wire fraud and six counts of money laundering in the pending case.

    In May 2020, Ugarte and of the controller of Frisbu, Lisa Bradshaw Rowberry, allegedly applied for a $210,000 PPP loan. According to court documents, Ugarte and Rowberry, falsely answered "no" when asked if Ugarte was under formal criminal charges in any jurisdiction when filling out the PPP loan application. Ugarte also answered "no" when asked if he had been placed on pretrial diversion, which federal prosecutors also say is false because he entered into a two-year pretrial diversion to resolve a felony drug possession charge in 1988.

    Court filings state Ugarte's PPP loan application was rejected or denied by two banks after they discovered he was under federal indictment in the FedEx bribery case. However, Rowberry eventually reached out to a friend she knew in the banking industry and reapplied for the PPP loan third time. As a result of providing materially false information on the loan application, Rowberry was able to convince Transportation Alliance Bank (TAB) to accept the loan.

    Just four days after the loan was disbursed, $126,965.27 were allegedly diverted to Kenworth Sales. The complaint alleges Ugarte's company owed approximately $66,000 a month in lease or purchase payments to Kenworth for 13 tractors. Records show Kenworth received the money for truck payments and a small amount for various truck parts. The complaint alleges Ugarte used 60% of the loan to pay the past due truck payments, leaving only 40% for payroll costs.

    Ugarte's initial court appearance was on Tuesday, July 14, 2020 and Rowberry's preliminary hearing is set for July 28, 2020. Both defendants are presumed innocent until proven guilty.

    OOOPS!
    Hedley Lamarr......That's Hedley

  7. #7
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    Gone Fishing
    Last edited by Yankeeman07; 03-31-2022 at 12:41 PM.
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  8. #8
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    Quote Originally Posted by Yankeeman07 View Post
    He allegedly lied on his application - that is a no-no.

    "The complaint alleges Ugarte used 60% of the loan to pay the past due truck payments, leaving only 40% for payroll costs." Therefore, the PPP will not be forgiven and he has a 1% loan for 2 years ?

    Payments are also deferred for 6 months, so they seem to be jumping the gun on the usage of $$.

    What am I missing?
    Not abiding by know your customer rules and NOT doing thorough back ground checks will bite you on the ass every time. Wait till all the banks that did these PPP loans to "new" customers get audited for KYC and AML.
    Last edited by Hedley Lamarr; 07-17-2020 at 10:08 AM.
    Hedley Lamarr......That's Hedley

  9. #9
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    Sheng-wen Cheng, aka Justin Cheng, the CEO of Celeri Network, was arrested on Tuesday by the FBI. Celeri offers business loans, merchant cash advances, SBA loans, and student loans.

    Cheng applied for over $7 million in PPP funds, federal agents allege, on the basis that Celeri Network and other companies he owns had 200 employees. In reality he only had 14 employees, they say.

    Yikes!!!
    Hedley Lamarr......That's Hedley

  10. #10
    Quote Originally Posted by Kevin Henry-Seacoast View Post
    Chinese national, Muge Ma (a/k/a "Hummer Mars") was arrested on May 21, 2020 for allegedly attempting to obtain over $20 million in U.S. government-guaranteed loans designed to provide relief to small businesses during the coronavirus pandemic. According to the charges, Ma allegedly received multiple Paycheck Protection Program ("PPP") and the Economic Injury Disaster Loans ("EIDL") by falsely representing that his two companies, New York International Capital and Hurley Human Resources, had hundreds of employees and paid millions of dollars in wages.

    Over a span of about two months, Ma applied to at least five banks for a total of over $20 million in government-guaranteed loans. In connection with the loan applications, Ma allegedly claimed that he was the sole owner and executive director of two businesses that were located on the sixth floor of a luxury condominium building in New York City. He further claimed that his businesses had hundreds of employees. However, an FBI investigation suggests that Ma was the only employee at New York International Capital since 2019 and that Hurley Human Resources never had employees.

    In order to support the fraudulent loan applications, Ma allegedly submitted altered bank records, tax records, insurance records, payroll records, and audited financial statements. In the course of the loan applications, Ma also allegedly misrepresented that he was a United States citizen, when, in fact, he is a Chinese national with lawful permanent resident status in the United States.

    Before the alleged fraud scheme was discovered, the SBA approved over $650,000 in EIDL funds and a bank approved and disbursed approximately $800,000 in PPP loan funds.

    Ma is being charged with bank fraud, wire fraud, making false statements to a bank, major fraud against the United States, and making false statements to the SBA. In addition to facing bank fraud charges, Ma is also being charged for falsely representing to a COVID-19 test kit manufacturer that one of his companies was a registered vendor for the State of New York.
    How do posts like this tie into your roll as VP of Business Development at Seacoast Business Funding ?

  11. #11
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    Quote Originally Posted by FlexibleCapitalSolutions View Post
    How do posts like this tie into your roll as VP of Business Development at Seacoast Business Funding ?
    Just keep people up to date on some of the aftermath of PPP. 100% of our ABL and factoring clients received PPP because we are a division of the bank. In a lot of these cases of fraud, the fraudulent prospect applied for PPP at banks where they were not already customers. Not following KYC rules can bite you on the ass. Clearly someone did not due a thorough job vetting this PPP loan and others mentioned on this thread.
    Hedley Lamarr......That's Hedley

  12. #12
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    for every 1 the find there is a thousand they dont

  13. #13
    Quote Originally Posted by Kevin Henry-Seacoast View Post
    Just keep people up to date on some of the aftermath of PPP. 100% of our ABL and factoring clients received PPP because we are a division of the bank. In a lot of these cases of fraud, the fraudulent prospect applied for PPP at banks where they were not already customers. Not following KYC rules can bite you on the ass. Clearly someone did not due a thorough job vetting this PPP loan and others mentioned on this thread.
    Thank you so much

  14. #14
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    Quote Originally Posted by Michael I View Post
    for every 1 the find there is a thousand they dont
    Unfortunately.... There is a large team of investigators looking at transactions. Not to mention, all banks that issued loans to new customers will be reviewed in the normal audit process.
    The program helped a lot of US businesses. Some took advantage of the system in efforts to lie, cheat, and steal. Defrauding the federal government and banks carries some pretty stiff jail time.
    Hedley Lamarr......That's Hedley

  15. #15
    Quote Originally Posted by Kevin Henry-Seacoast View Post
    Unfortunately.... There is a large team of investigators looking at transactions. Not to mention, all banks that issued loans to new customers will be reviewed in the normal audit process.
    The program helped a lot of US businesses. Some took advantage of the system in efforts to lie, cheat, and steal. Defrauding the federal government and banks carries some pretty stiff jail time.
    that is unfortunate

  16. #16
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    Quote Originally Posted by Kevin Henry-Seacoast View Post
    Just keep people up to date on some of the aftermath of PPP. 100% of our ABL and factoring clients received PPP because we are a division of the bank. In a lot of these cases of fraud, the fraudulent prospect applied for PPP at banks where they were not already customers. Not following KYC rules can bite you on the ass. Clearly someone did not due a thorough job vetting this PPP loan and others mentioned on this thread.
    Thanks Kevin for the thoughtful response to Flexible Capital's questions. Great answer.
    Medical Capital Solutions
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  17. #17
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    Common theme to a lot of the PPP frauds being reported: The business owner applied at multiple banks for the program. Wait till the banks that did a lot of these PPP loans for new customers get popped for KYC/AML rules. This is the reason why many banks only worked with current customers.....
    Hedley Lamarr......That's Hedley

  18. #18
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    Quote Originally Posted by Kevin Henry-Seacoast View Post
    Common theme to a lot of the PPP frauds being reported: The business owner applied at multiple banks for the program. Wait till the banks that did a lot of these PPP loans for new customers get popped for KYC/AML rules. This is the reason why many banks only worked with current customers.....
    will kabbage ,bluevine and the such be responsible or crossriver bank

  19. #19
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    Here's a local news report of a guy who needed that $700k boat! https://www.winknews.com/2020/09/03/...t-out-on-bond/

  20. #20
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    Quote Originally Posted by Michael I View Post
    will kabbage ,bluevine and the such be responsible or crossriver bank
    If they are suppose to follow KYC/AML rules....Yes. I would not be surprised that everything involving some of their fraud transactions get clawed back.
    Hedley Lamarr......That's Hedley

  21. #21
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    Quote Originally Posted by Steven_O View Post
    Here's a local news report of a guy who needed that $700k boat! https://www.winknews.com/2020/09/03/...t-out-on-bond/
    Yikes! I bet the institutions that have UCCs on the company are non too pleased......
    Hedley Lamarr......That's Hedley

  22. #22
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    https://www.miamiherald.com/news/sta...245599035.html

    clawbacks coming to the banks who made loans to scammers

    "between $330 million and $340 million in fees on the $7 billion in approved loans the company said it processed."

  23. #23
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    Quote Originally Posted by fundingsmbs View Post
    https://www.miamiherald.com/news/sta...245599035.html

    clawbacks coming to the banks who made loans to scammers

    "between $330 million and $340 million in fees on the $7 billion in approved loans the company said it processed."
    I bet their new parent company is non too pleased about this story......
    Hedley Lamarr......That's Hedley

  24. #24
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    Quote Originally Posted by Kevin Henry-Seacoast View Post
    I bet their new parent company is non too pleased about this story......
    Amex didn't buy the loans... only the tech and people. Separate entity was opened to service the loans.

    My question is: what was the real purchase price? 850M as speculated? And was this huge number made to cover the losses coming down the line?

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