According to one recent study, the Paycheck Protection Program - otherwise known as the PPP for short - had approved more than $521 billion in loans through the end of 2020. That money went to more than 4.8 million organizations at a time when it was desperately needed, as the still-ongoing COVID-19 pandemic began to make its way across the world. There's no debating that this program made a sizable impact, allowing certain organizations to survive that would have otherwise had difficulty doing so.
But as is true with most things, not every element of the PPP was entirely positive.
Case in point: One couple from Tarzana, California are currently on the run from federal authorities after fraudulently obtaining millions of dollars from the COVID-19 relief program. Not only were they found guilty on counts of conspiracy to commit wire and bank fraud, among others, but they also sliced off their ankle bracelets to escape house arrest - making them fugitives in the truest sense of the term.
The Case of the PPP Fraud: An Overview
In June of 2021, four defendants were found guilty of using "fake, stolen, or otherwise synthetic" identities to obtain millions of dollars in PPP loans. At that time they were ordered to turn over not only their bank accounts but also other assets like jewelry, watches, gold coins, residential properties, and more. Roughly $450,000 in cash was also among the assets that were seized by the federal government.
The defendants - all of whom hailed from California - submitted fake applications to the Paycheck Protection Program soon after the COVID-19 pandemic began. Not only that, but they also submitted false supporting documents as well to organizations like the Small Business Administration. This included but was not limited to identity documents, tax information, payroll data, and more.
All told, the four defendants received more than $18 million in COVID-19 relief funds before being caught - but their story doesn't end there.
Two of those criminals - Richard Ayvazyan and Marietta Terabelian, are set to be sentenced in September. The issue is that they've recently cut their ankle bracelets and have gone on the run - making them fugitives in the most literal sense. The FBI in Los Angeles is asking for people to report any information they have about their whereabouts, which you can do so by calling 310-477-6565.
Officials believe that the two fled the state after being placed on house arrest in a $3.25 million mansion in the Tarzana area that they bought with the fraudulent loan money. At the very least, people can rest easy knowing that they won't be seeing the inside of that palatial estate ever again.
In the end, let this be a lesson for all of us - for as much good as the Paycheck Protection Program has accomplished, there are still people waiting to take advantage of the goodwill of others. Only by staying vigilant will we collectively be able to prevent this from happening again in the future.
About Bob Mason, CPA
Santa Cruz based Bob Mason, CPA (Coast Financial Services) has been providing the people of Santa Cruz with years of expertise in the tax and accounting industry. He provides a broad range of accounting, bookkeeping and small business services to help your business succeed. Using their expertise in technology they have built an intuitive website with useful tools and calculators and a monthly blog which they post to on a frequent basis. Check back weekly for their next tax or accounting topic.
