A Seattle man pleaded guilty today to one count of wire fraud for carrying out a scheme to defraud several COVID-19 relief programs.
Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division, U.S. Attorney Brian T. Moran of the Western District of Washington, Special Agent in Charge Weston King of the U.S. Small Business Administration Office of Inspector General’s (SBA-OIG) Western Region, Treasury Inspector General for Tax Administration (TIGTA) J. Russell George, and Special Agent in Charge Raymond Duda of the FBI’s Seattle Field Office made the announcement.
Baoke Zhang, 35, of Issaquah, Washington, pleaded guilty to one count of wire fraud before U.S. Magistrate Judge Brian A. Tsuchida of the Western District of Washington.
As part of his guilty plea, Zhang admitted that he carried out a scheme to defraud several different government and private COVID-19 relief programs intended to assist those facing financial difficulties due to the ongoing pandemic.
Zhang admitted that he submitted four fraudulent applications to three different lenders for forgivable loans under the Paycheck Protection Program (PPP), a SBA program that provided payroll assistance to small businesses. To support the loan applications, Zhang used fake entities for which he created fake payroll and tax records. Two of the fraudulent loan applications sought $600,000 each, a third application sought $325,000, and a fourth sought approximately $41,000. Zhang also submitted a fraudulent application to the SBA for an Economic Injury Disaster Loan (EIDL) in the name of one of the fake entities for which he also had applied for PPP loans. The SBA paid Zhang a $10,000 EIDL advance before his fraud was detected.
Zhang further admitted that he submitted fraudulent applications to two non-profit organizations providing grants to restaurant workers suffering economic hardship due to the pandemic. Zhang submitted the various applications in the names of Zhang, his wife, and his parents, falsely claiming that each were restaurant workers who had either lost their jobs or lost wages due to COVID-19. To support the applications, Zhang created fake letters from purported restaurant owners regarding employment and fake payroll records. In fact, neither Zhang nor his wife or parents worked in restaurants. Zhang obtained $1,500 from one of the non-profits before his fraud was detected.
Zhang also admitted that he submitted a fraudulent application to a multinational technology company headquartered in Seattle, Washington, that was providing grants to qualifying small businesses in the Seattle area. Zhang falsely claimed in his application that he ran a small business in a local shopping center that had suffered economically due to the pandemic. In fact, Zhang did not own any businesses. Zhang obtained $5,000 from the relief program before his fraud was detected.
In total, Zhang admitted to attempting to defraud the various COVID-19 relief programs of more than $550,000.
This case was investigated by the SBA-OIG, the TIGTA, and the FBI. Trial Attorney Amanda R. Vaughn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Brian Werner of the Western District of Washington are prosecuting the case.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.