Security & Fraud

WA Man Charged With Seeking $1.5M In PPP Loans For Fake Companies

WA Man Charged With Seeking Fraudulent PPP Loans

A 35-year-old Washington State resident is charged with allegedly attempting to defraud the Paycheck Protection Program (PPP) by requesting loans for companies and employees that didn’t exist.

Baoke Zhang, a software engineer, reportedly attempted this crime multiple times, according to a press release from the Department of Justice (DOJ).

In those instances, he asked for a sum of $1,525,000 from the PPP, claiming that fictitious information technology companies and employees merited loans from the Small Business Administration (SBA).

Zhang reportedly provided documents with that false information to the authorities charged with distributing loans, including an IRS-provided Employer Identification Number (EIN) for his business, which the IRS had awarded him only a week prior, allegedly based on fake information he had invented for over 20 employees.

Several federal officials are quoted in the press release with words of outrage. Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division calls Zhang’s alleged activities a “brazen scheme” to acquire money meant for legitimate businesses during the coronavirus pandemic.

J. Russell George, treasury inspector general for tax administration, said the allegations have extra seriousness and weight due to their occurrence in the middle of the pandemic, and promised to aggressively pursue those committing such crimes.

And Raymond Duda, special agent in charge of the FBI’s Seattle field office, said the allegations were “an example of someone who was attempting to take advantage of a program to help Americans during one the most difficult times in recent memory.”

Fraud during the coronavirus pandemic has taken on many forms, including impersonating banks or official entities and asking for money or private information. And, in a similar case to Zhang's, a Texas man was also accused of inventing employees to scam PPP funds.

The PPP, which was intended to boost small businesses that have no funds in place to survive the shutdowns, has seen numerous errors in which publicly traded and large companies successfully requested to glean millions from the SBA. Though several of those companies returned the funds, many kept them even amid rising public pressure.

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