Dive Brief:
- A Seattle-area tech executive was charged Thursday with forging documents to fraudulently receive more than $5.5 million in Paycheck Protection Program (PPP) funds and transferring about $231,000 of it to his Robinhood account, according to a complaint filed by the Justice Department (DOJ).
- Mukund Mohan, 48, submitted "fake and altered documents, including fake federal tax filings and altered incorporation documents" among his eight PPP applications on behalf of six shell companies, according to a DOJ statement.
- In his application for Mahenjo Inc., Mohan claimed to his lender, Peoples Bank, he had dozens of employees and paid more than $2.3 million in payroll in 2019. The $431,250 loan would retain 24 jobs, according to the application on file with the Small Business Administration (SBA). However, the company, which Mohan bought on the internet in May, had no employees and no business activity, according to the Justice Department.
Dive Insight:
Mohan faces one count of wire fraud and one count of money laundering. They are hardly the first fraud charges to result from the PPP. The Justice Department charged a Houston man last week in a plan to obtain two fraudulent PPP loans and invest funds from one of them in a cryptocurrency account. Two New England businessmen were charged in May with conspiracy to commit bank fraud and conspiracy to make false statements to the SBA after they sought more than $543,000 in PPP loans.
Another company for which Mohan submitted a PPP loan application appears to be led in part by his teenage son, according to The Seattle Times. The Justice Department claimed Mohan received $304,830 in PPP loans for Zigantic LLC, a company that matches gamers with developers who need to test their games. Mohan's son is the company's chief marketing officer, according to his LinkedIn profile. However, the company does not have a business license and has never paid employee wages or payroll taxes, the Times reported.
A Government Accountability Office (GAO) report in June said the number of loans approved through PPP, the speed with which they were processed, and the program's limited safeguards leave it open to "significant risk that some fraudulent or inflated applications were approved."
Analysts have found numerous flaws in the PPP loan data the SBA released this month — particularly with regard to the application field that lists the number of jobs retained.
More than 878,000 of the 4.9 million applications processed listed the number of jobs retained by borrowers as zero, or the field was left blank entirely, according to Bloomberg data.
