LI Man Pleads Guilty To 'Massive' COVID-19 Loan Fraud, Owes $9.6M In Restitution: Feds

GLEN COVE, NY — A Glen Cove man pleaded guilty on Friday to committing wire fraud and scheming to defraud banks and the Small Business Association (SBA) of millions of dollars’ worth of small business loans, the United States Department of Justice announced.

Rami Saab, 44, gamed the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan Program (EIDLP), authorities said. Saab faces up to 20 years in prison, as well as restitution of $9,668,508 and a fine of up to $250,000.

Federal officials called it a "massive" bust.

"Using fraud and deceit, the defendant callously stole millions of dollars during an unprecedented public health crisis at the expense of American small business owners," United States Attorney Breon Peace said in a news release. "Those who engaged in blatant theft of taxpayer dollars intended to assist legitimate businesses and their employees during the COVID-19 pandemic should know they will be aggressively prosecuted by our Office."

Amid the height of the coronavirus pandemic, Saab, working with others, fraudulently applied for and received at least 20 PPP and EIDLP loans worth more than $9.5 million on behalf of numerous corporate entities he controlled, between May 2020 and May 2021, court documents said.

Saab submitted applications for businesses that were not real, prosecutors said. The entities were actually shell companies that claimed false numbers of employees, payroll costs, and intended use of the loan proceeds – all of which was specifically designed to mislead the SBA and numerous banks administering the loans, investigators said.

Saab made financial transactions designed to hide the true nature and source of the funds, including electronically transferring portions of the loan proceeds between various bank accounts which Saab controlled, officials said. Saab, after transferring the loan proceeds though multiple accounts, used the laundered loan proceeds to enrich himself and others, prosecutors said. Saab personally made cash withdrawals and transferred funds to overseas associates, the DOJ said.

"As alleged, Rami Saab stole nearly $10 million dollars in relief money intended for small businesses impacted by the COVID-19 global pandemic, for his own enrichment," stated HSI Special Agent-in-Charge Ivan Arvelo. "This is an egregious case of fraud perpetrated by an individual who pilfered a program intended for those who truly needed emergency financial assistance. HSI and our law enforcement partners remain steadfastly committed to rooting out such thievery and ensuring violators are prosecuted to the fullest extent of the law."

Congress created the PPP and EIDLP as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act, enacted March 29, 2020, provided emergency financial assistance to those suffering the economic effects of the pandemic.

The act allowed for small businesses to file for forgivable PPP loans so merchants could avoid firing staff and pay other expenses. Businesses would use the loans for payroll costs, interest on mortgages, rent and utilities.

Another source of relief provided by the CARES Act was the EIDLP, which provided low-interest financing to small businesses, renters, and homeowners in regions affected by declared disasters. EIDLP recipients were eligible to receive advances of up to $10,000 for small businesses within three days of applying for an EIDL. The amount of an EIDL advance –which did not need to be repaid – was determined based on the number of employees working for the applicant.