Bogus Paycheck Protection claims
By: City News Service
A Santa Clarita Valley man was sentenced this week to 51 months in federal prison for scheming to fraudulently obtain about $1.8 million in COVID-19 relief funds.
Hassan Kanyike, 30, was sentenced by U.S. District Judge Virginia A. Phillips, who also ordered him to pay a $20,000 fine and over $1.3 million in restitution to the Small Business Administration and four victim lenders, according to the U.S. Attorney’s Office.
Kanyike pleaded guilty on March 29 to one count of wire fraud.
From April 2020 to June 2020, Kanyike submitted six fraudulent Paycheck Protection Program loan applications and two fraudulent Economic Injury Disaster Loan applications. The applications sought funds to purportedly pay the salaries of employees whom he claimed worked for two of his businesses
Kanyike successfully obtained about $1 million through four PPP loans, and another $300,000 through two EIDL loans.
In support of the fraudulent PPP loan applications, Kanyike submitted fake federal tax filings and payroll reports for a used-car business, the Van Nuys-based Falcon Motors. For example, in one loan application, Kanyike falsely claimed the business had 26 employees and an average monthly payroll of $168,000, and he submitted a fabricated IRS tax form claiming Falcon Motors had paid $2,022,300 to employees in 2019.
In reality, Falcon Motors had no employees on payroll. Kanyike further admitted that he obtained additional Employer Identification Numbers from the IRS in April and May 2020 so he could apply for multiple loans for the same used-car business. Kanyike then used a substantial portion of the PPP loan proceeds for his own personal benefit, according to his plea agreement filed in Los Angeles federal court.
Kanyike schemed to fraudulently obtain eight loans totaling nearly $1.8 million, of which six loans worth a total of about $1.3 million were approved.
At the time of his arrest in December, Kanyike had transferred about $762,000 to Uganda, his country of citizenship, from one of the business accounts that had received the loan proceeds, in violation of the terms of the PPP and EIDL program.
