Florida man charged with $1.6 Million Cares Act loan fraud scheme

Mohamed A. Awad, 60, of Ocala, Florida, is charged by complaint with two counts of wire fraud. He was arrested July 21, 2022, in Virginia and made his initial appearance this afternoon before U.S. Magistrate Judge William E. Fitzpatrick in the Easter District of Virginia. He was detained pending transfer to the District of New Jersey.

According to documents filed in this case and statements made in court:

The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to millions of Americans suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses, through the PPP. The PPP allowed qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1 percent. PPP loan proceeds must be used by businesses on payroll costs, interest on mortgages, rent, and utilities.

The CARES Act also authorized the U.S. Small Business Association to provide EIDLs of up to $2 million, through the Economic Injury Disaster Loan Program, to eligible small businesses experiencing substantial financial disruption due to the COVID-19 pandemic.

Awad engaged in a scheme to illegally obtain over $1.6 million in PPP and EIDL loans through numerous misrepresentations to lenders. He submitted fraudulent loan applications that fabricated numbers of employees and misrepresented company information, to induce PPP and EIDL lenders to approve the loan applications that they otherwise would not have approved. Awad submitted falsified tax documents in support of PPP applications. According to IRS records, none of the purported tax documents that Awad submitted were ever in fact filed with the IRS. Awad transferred the loan proceeds among various bank accounts he controlled, withdrawing significant amounts in cash and transferring at least approximately $760,000 out of the country via wire transfers to banks based in Egypt.

The charges each carry a maximum penalty of 20 years in prison and a maximum fine of $250,000 or twice the gross gain to the defendant or gross loss to the victim, whichever is greatest.

U.S. Attorney Sellinger credited special agents of the IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Tammy Tomlins; postal inspectors of the U.S. Postal Inspection Service in Newark, under the direction of Inspector in Charge Damon Wood, Philadelphia Division; special agents of the FBI, under the direction of Special Agent in Charge James E. Dennehy in Newark; special agents of the Social Security Administration, Office of the Inspector General, under the direction of Special Agent in Charge Sharon MacDermott; special agents of the Office of Inspector General for the Board of Governors of the Federal Reserve System and the Bureau of Consumer Financial Protection, under the direction of Stephen Donnelly, Eastern Region; special agents of the Federal Deposit Insurance Corporation -- Office of Inspector General, under the direction of Special Agent in Charge Patricia Tarasca in New York; and special agents of the U.S. Attorney's Office for the District of New Jersey, under the direction of Special Agent in Charge Thomas Mahoney, with the investigation leading to the charges.

The government is represented by Assistant U.S. Attorney Katherine M. Romano of the U.S. Attorney's Office's Health Care Fraud Unit in Newark.

Anyone with information about allegations of attempted fraud involving COVID-19 can 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 at: http://www.doj.gov/disaster-fraud/ncdf-disaster-complaint-form.

The charges and allegations contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.