Sink, Sank, Sunk

307

When considering the purchase of a yacht, there are some important details to think about: Do you have the funds for a down payment and can you handle the monthly payments? Can you dock it behind your house, or do you need to store it at a marina? Will you captain your own boat, or will you hire someone to sail it for you? Konstantino Zarkadas, a Glen Cove, New York-based medical doctor, may have thought of these things, but one thing he didn’t consider is what would happen if he was caught using the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act funds to finance his down payment on a $1.75 million yacht. (Yep, believe it or not, he used government disaster funds to purchase a big boat and a few other extravagant items along the way.)

Between March 2020 and July 2020, Dr. Zarkadas fraudulently applied for and received at least 11 loans from the pandemic-related Paycheck Protection Program (PPP) and Economic Injury Disaster Loan Program (EIDLP). These loans, which totaled approximately $3.7 million, were intended to support corporate entities that he controlled. (The funds were actually spent on financing an extravagant lifestyle on the backs of America’s taxpayers who were just trying to stay afloat during the pandemic.)

Zarkadas diverted more than $3 million in COVID-19 disaster relief funds to finance his yacht and the purchases luxury watches and vehicles. He tried to conceal the purchase of the yacht by making the check payable to a relative who was not the beneficiary of the funds. He wrote on the check’s memo line that the funds were for “repayment for payroll”, not for a large vessel. (I suppose he thought that “memo line” would hide the crime, but it was not so.)

Approximately $194,915.42 in PPP funds that were intended for distressed small businesses affected by the pandemic went to pay the down payment on the yacht. The doctor also withdrew tens of thousands of dollars’ worth of loan proceeds and satisfied more than $1 million in judgments against him, in addition to paying for the leasing of luxury vehicles and buying several Rolex and Cartier wristwatches.

Zarkadas pleaded guilty to disaster relief fraud and wire fraud for fraudulently applying for and receiving more than $3 Million in PPP and EIDLP loans. When sentenced, he could receive up to 30 years in prison and be required to forfeit $3,796,849.50 and pay a fine of up to $250,000.

While the CARES Act provided emergency financial assistance in connection with the economic effects of the COVID-19 pandemic, Zarkadas used these forgivable loans for small businesses to live a lifestyle comfortable for the rich and famous. (That is just so wrong.) While the PPP provided forgiveness of the loan if the recipient businesses spent the proceeds on payroll costs, mortgage interest, rent and utilities, it is doubtful that the government will be very forgiving in the end. (I predict this fraudster is sunk.)

Today’s Fraud of the Day comes from a Department of Justice press release, “Long Island Doctor Pleads Guilty to Covid-19 Loan Fraud,” dated November 12, 2021. 

Earlier today, at the federal courthouse in Central Islip, Konstantino Zarkadas, a Glen Cove-based medical doctor, pleaded guilty to disaster relief fraud and wire fraud in connection with his receipt of millions of dollars in small business loans under the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan Program (EIDLP). Today’s proceeding was held before United States District Judge Gary R. Brown.  When sentenced, Zarkadas faces up to 30 years in prison, as well as forfeiture of $3,796,849.50 and a fine of up to $250,000.

Breon Peace, United States Attorney for the Eastern District of New York, Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Thomas Fattorusso, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York (IRS-CI), announced the guilty plea.

 

SHARE
Previous articleVULNERABILITY ALERT: New Disability Fraud Trend
Next articleUnlicensed to Defraud

Larry Benson, Senior Director of Strategic Alliances, LexisNexis Risk Solutions - Government

Larry Benson is responsible for developing strategic partnerships and solutions for the government vertical. His expertise focuses on how government programs are defrauded by criminal groups, and the approaches necessary to prevent them from succeeding.

Mr. Benson has 30 years of experience in sales and business development. Before joining LexisNexis® Risk Solutions, he spent 12 years founding and managing two software technology startups. During the 1990s he spent 10 years as a Regional Director helping to grow a New England-based technology company from 300 employees to 7,000. He started his career with Martin Marietta Aerospace working on laser guided weapons and day/night vision systems.

A sought-after speaker and accomplished writer, Mr. Benson is the principal author of “Fraud of the Day,” a website dedicated to educating government officials about how criminals are defrauding government programs. He has co-authored WTF? Where’s the Fraud? How to Unmask and Stop Identity Fraud’s Drain on Our Government, and Data Personified, How Fraud is Changing the Meaning of Identity.

Benson holds a Bachelor of Science in Physics from Albright College, and earned two graduate degrees – a Master of Business Administration from Florida Institute of Technology, and a Master of Science in Engineering from Lehigh University.