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Fairy Tale Businesses

Senior Director of Strategic Alliances
LexisNexis Risk Solutions - Government

Early in the pandemic, optimists suggested that the pandemic would be the catalyst that would bring people together. Needless to say, this is not the rosy picture we ended up with. Because when opportunity is provided, a fraudster is going to fraud. No matter what. The COVID-19 pandemic CARE’s Act programs flooded businesses with easy access to cash that likely rescued the economy. But for all the jobs they helped rescue, these programs’ provided unprecedented opportunities for fraudsters like Rami Saab. Who had nothing better to do during a pandemic than to create fairy tale businesses.

Between May 2020 and May 2021, Saab applied for over twenty Paycheck Protection Program (PPP) and Economic Injury Disaster Loan Program (EIDLP) loans. However, the businesses Saab claimed ownership of on the applications were all fake. A made-up fairy tale. Also called “shell companies,” these entities claimed fraudulent numbers of employees, payroll costs, and even how the company planned to use the relief money. These applications were purposefully designed to mislead both the SBA and banks who were administering the relief loans. Easy to do when creating fairy tales.

In all, the twenty loans Saab applied for and received for the fake companies’ fraudulent proceeds in excess of $9.5 million.

Excellent job by the Justice Department’s COVID-19 Fraud Enforcement Task Force. To date, the efforts of the task force’s member agencies has led to criminal charges against more than 3,500 defendants for losses of over $2 billion, civil enforcement actions resulting in more than 400 civil settlements and judgments of over $100 million, and over $1.4 billion seized or forfeited.

Today’s Fraud of The Day is based on article “Long Islander sentenced in $9.6M COVID-loan fraud scheme” published by Long Island Business News on March 18, 2024.

Rami Saab, also known as Rami Hasan, who was living in Glen Cove, was sentenced to 10 years in prison for leading a “sprawling conspiracy” to fraudulently secure disaster relief loans during the pandemic, according to U.S. Attorney for the Eastern District of New York.As part of the sentence he is also required to pay restitution of approximately $9.6 million, officials said.

Saab, who had pleaded guilty in July 2023 to conspiracy to commit wire fraud, stemming from his operation of a yearlong scheme to defraud banks and the Small Business Association of millions of dollars’ worth of small business loans under the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan Program (EIDL), officials said.

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