Ex-Banker Sentenced To Prison In LA For $2.7M COVID-19 Benefits Fraud Scheme

LOS ANGELES, CA — A former Wells Fargo banker was sentenced Monday in downtown Los Angeles to five years in federal prison and his brother to two years for their roles in a scheme that fraudulently obtained nearly $2.7 million in COVID-19 relief funds and small-business loans partly using stolen identities, including those of developmentally disabled people.

Norayr Madadi, 41, of Burbank, pleaded guilty last year to one federal count of conspiracy to commit wire fraud.

According to the indictment, the former banker opened fraudulent accounts in the names of shell companies and persons using stolen and phony identities.

From March 2020 through April 2021, the defendant obtained millions of dollars in Paycheck Protection Program and Economic Injury Disaster Loan Program loans by submitting loan applications with false statements about revenues, operations and employees, prosecutors said.

Madadi used fake and stolen identities to further the scheme, including the stolen identities of two victims who are developmentally disabled and live in long-term care facilities, papers filed in Los Angeles federal court show.

The funds were disbursed into bank accounts controlled by the defendant, including Wells Fargo accounts, prosecutors said. Madadi spent the loan proceeds at casinos, paying for luxury cars and jewelry, and cash withdrawals, authorities said.

Law enforcement believes the losses caused by the scheme reached nearly $2.7 million.

Norayr Madadi's brother, Vazrik, 45, of Glendale, also pleaded guilty to the conspiracy count and was sentenced Monday to two years in federal prison.

In addition to prison time, U.S. District Judge Percy Anderson ordered Norayr Madadi to pay restitution of $2.7 million and his brother to pay $521,820, according to the U.S. Attorney's Office.