Stamford Man Pleads Guilty To COVID-19 PPP Loan Fraud: Prosecutor

STAMFORD, CT — A 46-year-old Stamford man accused of fraudulently obtaining more than $4 million in COVID-19 relief money through the Payroll Protection Program (PPP) pleaded guilty on Wednesday to one count of wire fraud and one count of making an illegal monetary transaction, according to a news release from the U.S. Attorney's Office in the District of Connecticut.

Moustapha Diakhate waived his right to be indicted in front of U.S. District Judge Michael P. Shea via video call on Wednesday. Both charges carry maximum prison terms of 30 years and 10 years respectively. Sentencing is scheduled for April 21.

According to court documents and statements made in court, in April 2020, Congress authorized more than $300 billion in additional PPP funding under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The PPP allowed qualifying small businesses and other organizations to receive unsecured loans at an interest rate of 1 percent. Loan funds must be used by businesses on payroll costs, interest on mortgages, rent and utilities, prosecutors noted in a press release Wednesday.

The PPP allowed interest and principal to be forgiven if businesses spent the money 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.

Prosecutors said 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, Diakhate Capital, Inc., and Poulson & Gold Inc.

Beginning in May 2020, prosecutors said, Diakhate provided Citibank and M&T Bank with false and fraudulent information during the PPP loan application process in order to obtain PPP loans for each of his six entities totaling more than $4 million.

"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," prosecutors said Wednesday in a news release. "He also purchased a $50,000 certificate of deposit with PPP funds, and disbursed funds to various and individuals unrelated to his business entities."

Diakhate was arrested on a federal criminal complaint on May 7, 2021. Prosecutors said he is now released on a $450,000 bond, pending sentencing.

Prosecutors said residents 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.