Man Charged With Fraudulently Obtaining Millions In COVID Relief

STAMFORD, CT—A Stamford man was arrested on Monday on a federal complaint charging him with bank and wire fraud offenses related to his receipt of $2.9 million in COVID-19 relief funds from the U.S. Small Business Administration (SBA), according to a news release. The funds were guaranteed by the SBA under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Moustapha Diakhate, 45, appeared Monday afternoon before a U.S. Magistrate court in Bridgeport, and was ordered to be detained.

According to the news release, in April 2020, Congress authorized more than $300 billion in additional Paycheck Protection Program funding. The PPP allowed qualifying small businesses and other organizations to receive unsecured loans at an interest rate of 1%. PPP loan proceeds must be used by businesses on payroll costs, interest on mortgages, rent and utilities.

The PPP allowed the interest and principal to be forgiven if businesses spent the proceeds on these expenses within a certain period of time of receipt and used at least a certain percentage of the amount to be forgiven for payroll.

The PPP was overseen by the SBA, which has authority over all PPP loans. Individual PPP loans, however, were issued by private approved lenders, such as Citibank, which received and processed PPP applications and supporting documentation, and then made loans using the lenders’ own funds, which were guaranteed by the SBA.

As alleged in a criminal complaint, Diakhate maintained an ownership or management interest in certain small business entities, including Ansonia Developers LLC, Winsbay Inc., Buyers Association Group LLC, Washington Management LLC and Diakhate Capital, Inc.

Beginning in May 2020, according to a news release, Diakhate provided Citibank with false and fraudulent information during the PPP loan application process in order to obtain Paycheck Protection Program (PPP) loans for each of his five entities totaling $2,897,100.

Diakhate then used a portion of the funds for various personal expenses, including to pay off a loan he had been provided to purchase of a 2010 Porsche Panamera Turbo, and to purchase both a Mercedes and BMW. He also purchased a $50,000 certificate of deposit with PPP funds, and disbursed funds to various individuals unrelated to his business entities.

"Congress authorized the Paycheck Protection Program to help small businesses and their employees withstand a devastating pandemic, not so individual recipients can illegally reap a financial windfall,” said Acting U.S. Attorney Leonard C Boyle, in a news release on Monday. “The Justice Department and our federal law enforcement partners are actively working to identify those who are taking advantage of COVID relief programs to line their pockets in violation of the law, and we will ensure that wrongdoers are prosecuted in federal court."

Special Agent in Charge Amaleka McCall-Brathwaite of the SBA Office of Inspector General’s Eastern Region, said Diakhate's conduct was "unacceptable."

“SBA OIG will relentlessly pursue evidence of fraud against SBA’s programs aimed at assisting the nation’s small businesses struggling with the pandemic challenges. I want to thank the U.S. Attorney’s Office for its leadership and dedication to pursuing justice," McCall-Brathwaite added in the news release.

FBI Special Agent in Charge David Sundberg, commended the "diligent efforts by all involved," and said, "This level of deceit must face the full gravity of the judicial system."

This matter is being investigated by the SBA Office of Inspector General, FBI, and Internal Revenue Service – Criminal Investigation.

The case is being prosecuted by Assistant U.S. Attorney Christopher W. Schmeisser.

Individuals with information about allegations of attempted fraud involving COVID-19 are encouraged to 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 here.

Boyle stressed in the news release that the complaint against Diakhate is only a charge and is not evidence of guilt.

"Charges are only allegations and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt," the news release said.