FBI: $7.6M COVID Relief Scam Rooted In The Hudson Valley

MOUNT VERNON, NY — Two Mount Vernon residents are accused of taking part in a scheme that saw more than 1,000 fraudulent U.S. Small Business Administration Economic Injury Disaster forgivable loan applications submitted.

Federal prosecutors said the operation netted more than $7.6 million in ill-gotten gains.

“Today’s defendants have become the latest in line to be charged for SBA loan fraud as a result of their alleged conduct during the COVID-19 pandemic," FBI Assistant Director-in-Charge Michael Driscoll said announcing charges in the case. "As this behavior continues to be uncovered, the FBI will continue to respond to illegal activity with appropriate legal action.”

A complaint charging 25-year-old Quadri Salahuddin, 35-year-old Anwar Salahuddin and two co-conspirators was unsealed on Thursday. The defendants are charged with conspiracy to commit wire fraud, wire fraud, false statements and aggravated identity theft in connection with a scheme to defraud the U.S. Small Business Administration (SBA), according to United States Attorney for the Southern District of New York Damian Williams. Both Salahuddins were present in White Plains federal court on Thursday.

"As alleged, the defendants schemed to steal taxpayer-funded resources intended for small businesses in need of assistance during the pandemic," Williams said. "My office will continue to investigate and prosecute those who would illegally seek to profit from a national emergency."

Prosecutors said the scam was especially distressing because the SBA was quick to advance as much as $10,000 in pandemic-related funds to businesses while applications were pending. Although the policy was a godsend to many struggling small businesses, it also made the program a much easier mark for would-be fraudsters.

The defendants in this case are accused of falsifying identities in order to fraudulently receive advances on coronavirus relief loans. By the time SBA officials took a closer look and eventually rejected the loans, the damage was, in many cases, already done.

From March through July 2020, the defendants are accused of using the identities of more than 1,000 other individuals to submit more than 1,000 online applications to the SBA, seeking over $10 million of funds from the SBA. Based on the fraudulent applications, investigators said, the SBA made advance payments of more than $7.6 million to those applicants, who often then kicked back a portion of the advance payments to the defendants.