As the coronavirus pandemic continues and the government approves several rounds of the Paycheck Protection Program for small businesses, many are starting to see the risks of falsely claiming for the funds. Fahad Shah, the owner of Texas-based wedding planning company WDF Weddings by Farrah Inc., pleaded guilty last month to applying for $3 million in PPP loans using fraudulent federal tax returns for the business and lying about the company’s size.
According to a press release by the Department of Justice, Shah applied for two loans by “fraudulently claiming that his company, WBF Weddings by Farah Inc. (WBF), employed 126 individuals with an average monthly payroll of over $700,000” though was found during the trial to only have two employees at the time he applied for the loans. After obtaining $1.5 million in government assistance, he used the majority of these funds to pay off personal debts and luxury purchases including his home mortgage, investment securities, two Teslas, two Freightliner trucks, and a Mercedes Benz van.
While the Freightliner trucks and the Mercedes Benz van may have had a legitimate use for the wedding planning business, the way in which Shah applied for the loans was fraudulent, leading to an investigation and his eventual guilty plea to one count of wire fraud. He now faces up to 20 years in federal prison.
In recent months the Fraud Section of the Small Business Administration has clamped down on misuse and abuse of the PPP loans; having seized over $60 million in cash and prosecuting over 100 individuals as of May 2021. We anticipate that this trend will continue. If you applied for a PPP loan and want to ensure your business proceeds are protected, set up a consultation with the team at Padula Law by calling 305 455 5206.
