IRVINE, Calif. – – An Orange County man was arrested on federal charges for fraudulently obtaining approximately $ 5 million payment protection program loans for his bogus deals and then using the money for himself, including buying sports cars from Ferrari, Bentley and Lamborghini.
Mustafa Qadiri, 38, of Irvine, was named in a federal grand jury indictment returned Wednesday indicting four cases of bank fraud, four cases of wire fraud, one case of aggravated identity theft and six cases of money laundering by US law firm .
Qadiri surrendered to law enforcement and was due to appear in federal court in Santa Ana on Friday afternoon.
According to the indictment, Qadiri operated four Newport Beach-based companies, none of which are currently in operation: All American Lending Inc., All American Capital Holdings Inc., RadMediaLab Inc., and Ad Blot Inc. in May and June, according to court records Last year he filed false and fraudulent PPP loan applications with three banks on behalf of these companies.
According to the Federal Prosecutor’s Office, the wrong information included the number of employees to whom the companies paid wages, changed bank account details with excessive credit and fictitious quarterly federal tax return forms. Qadiri also reportedly used someone else’s name, social security number and signature to fraudulently apply for one of the loans.
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Citing false information, the banks funded the PPP loan applications and, according to the prosecution, transferred around US $ 5 million to accounts controlled by Qadiri.
Qadiri is alleged to have used the fraudulently obtained PPP loan proceeds for his own benefit, including spending that is prohibited under the requirements of the PPP program, such as buying luxury vehicles, lavish vacations, and paying for his personal expenses.
Federal agents have confiscated the Ferrari, Bentley and Lamborghini cars that Qadiri bought using the allegedly fraudulently obtained PPP loans, along with $ 2 million in allegedly illicit profits from his bank account.
The Coronavirus Aid, Relief and Economic Security Act is designed to provide emergency financial aid to millions of Americans suffering from the economic impact of the COVID-19 pandemic. One source of relief under the CARES Act is the approval through the PPP of up to $ 349 billion in unsuccessful small business loans for job retention and certain other expenses. In April, Congress approved more than $ 300 billion in additional PPP funding.
The PPP enables qualified small businesses and other organizations to obtain loans with a term of two years and an interest rate of 1%. Businesses must use PPP loan proceeds for labor costs, mortgage interest, rents, and utilities. The PPP enables the forgiveness of interest and principal when companies spend the proceeds on these expenses within a specified period of time and use at least a certain percentage of the loan on wages and salaries.