CFO, Controller, Corporate Officers Charged in $53 Million Fraud Scheme Involving Pandemic Relief

Fourteen people who allegedly bilked the Paycheck Protection Program, a COVID-era financial program, and numerous financial institutions out of more than $53 million in loan proceeds have been federally charged, announced U.S. Attorney for the Northern District of Texas Leigha Simonton. This case is the largest investigated by the Pandemic Response Accountability Committee (PRAC) Fraud Task Force to date. 

The defendants were arrested Tuesday and Wednesday in Texas, California, and Oklahoma by special agents of the Federal Bureau of Investigation (FBI), the Treasury Department’s Special Inspector General for Pandemic Recovery (SIGPR), and the Federal Deposit Insurance Corporation, Office of Inspector General (FDIC-OIG). 

“Defrauding the government is an affront to American taxpayers. Defrauding the government during a pandemic – at a time when millions of hardworking entrepreneurs struggled to make payroll and rent – is pouring salt in a wound,” said U.S. Attorney Leigha Simonton. “These defendants allegedly conspired to steal tens of millions of dollars from the Paycheck Protection Program – funds which could have helped legitimate businesses pay their bills and keep their employees afloat. We are thankful to the officers and agents who meticulously investigated this case, especially the data scientists at the Pandemic Analytics Center of Excellence, whose sophisticated analysis ensures that those who abused the PPP will be brought to justice.”  

“These indictments charge another group of individuals with defrauding the taxpayers of millions of dollars as the group abused a federal program critical for struggling small businesses that were hit hard by the pandemic,” said Brian Miller, the Special Inspector General for Pandemic Recovery. “SIGPR is glad to have played a significant role teaming with other law enforcement agencies and the United States Attorney’s Office to hold these individuals accountable.”

“These individuals allegedly conspired to orchestrate multiple fraud schemes which exploited financial institutions and government programs, solely to enrich themselves,” said FBI Dallas Special Agent in Charge Chad Yarbrough. “We will continue to work with our partners to ensure that the American people do not fund the lifestyle of criminals with taxpayer dollars that were intended to protect the most susceptible from financial ruin and promote economic stabilization in a critical time of need.”

According to a series of indictments unsealed Wednesday, several of the charged defendants purportedly operated a group of affiliated recycling companies, including Mammoth Metal Recycling, Elephant Recycling, Gulf Coast Scrap, 4G Metals, 4G Plastics, 5G Metals, Level Eight, Sunshine Recycling, L.K. Industries, , NTC Industries, West Texas Equipment, and West Texas Scrap.

They allegedly submitted at least 29 Paycheck Protection Program (PPP) loan applications that fraudulently inflated payroll expenses, doctoring bank statements and Internal Revenue Service tax forms to falsely reflect business income. They then routed PPP loan funds through a series of bank accounts to create a false paper trail of payroll expenses.

At least two of the defendants also allegedly submitted false applications to financial institutions on behalf of their purported recycling companies to fraudulently obtain, in the aggregate, millions of dollars in business loan proceeds.

And one defendant allegedly lied to the Federal Deposit Insurance Commission (FDIC) by stating that he did not know several of his other alleged coconspirators.

Those charged in the sixteen count-indictment filed last week include:

• Mihir Patel, Chief Financial Officer of Sunshine Recycling, and owner of Mammoth Group, R.A. Industries, and L.K. Industries: conspiracy to commit bank fraud, bank fraud and aiding and abetting, and conspiracy to commit money laundering
• Kinjal Patel, Controller at Sunshine Recycling:  conspiracy to commit bank fraud, bank fraud and aiding and abetting, and conspiracy to commit money laundering
• Prateek Desai, owner of West Texas Scrap:  conspiracy to commit bank fraud and bank fraud and aiding and abetting
• Wajahat Khan, aka Ray Khan, President and owner of Gulf Coast Scrap:  conspiracy to commit bank fraud, bank fraud and aiding and abetting, and conspiracy to commit money laundering
• Imran Khan, aka Ron Khan, Operations Director and owner of 4G Metals and West Texas Equipment: conspiracy to commit bank fraud and bank fraud and aiding and abetting
• Chirag Gandhi, aka Chris Gandhi, Controller of NTC Industries, and President and owner of 5G Metals and Sunshine Recycling:  conspiracy to commit bank fraud and bank fraud and aiding and abetting
• Bhavesh Patel, aka Bobby Patel, Chief Business Development Officer for Sunshine Recycling and owner of Level Eight and: conspiracy to commit bank fraud, bank fraud and aiding and abetting, and making a false statement to the FDIC
• Dharmesh Patel, aka Danny Patel, Co-President and co-owner of Elephant Recycling:  conspiracy to commit bank fraud and bank fraud and aiding and abetting
• Mitra Bhattarai, Co-President and co-owner of Elephant Recycling: conspiracy to commit bank fraud and bank fraud and aiding and abetting
• Bhargav Bhatt, aka Brad Bhatt, NTC Industries employee: conspiracy to commit bank fraud, conspiracy to commit money laundering

Those charged in separate indictments include:

• Mrunal Desai: bank fraud and aiding and abetting
• Chintak Desai, President of Nanosoft Technologies: bank fraud and aiding and abetting
• Ambreen Khan: wire fraud
• Usha Chapain, aka Usha Sharma: bank fraud

An indictment is merely an allegation of criminal conduct, not evidence. All defendants are presumed innocent until proven guilty in a court of law.

If convicted, the defendants face up to 30 years in federal prison for each count of conspiracy to commit bank fraud, bank fraud and aiding and abetting, bank fraud, and making a false statement to the FDIC, 20 years for wire fraud, and 10 years for conspiracy to commit money laundering.

This case was investigated by a SIGPR special agent assigned to the Pandemic Response Accountability Committee (PRAC) Fraud Task Force, and special agents from the Dallas field offices of the FDIC OIG and FBI.  Assistant United States Attorney Fabio Leonardi is prosecuting the case. 

The PRAC was established to promote transparency and facilitate coordinated oversight of the federal government’s COVID-19 pandemic response. The PRAC’s 21 member Inspectors General identify major risks that cross program and agency boundaries to detect fraud, waste, abuse, and mismanagement in the more than $5 trillion in COVID-19 spending, including spending via the Paycheck Protection Program. This case was also supported by the PRAC’s Pandemic Analytics Center of Excellence, which applies the latest advances in analytic and forensic technologies to help OIGs and law enforcement pursue data-driven pandemic relief fraud investigations.

The Paycheck Protection Program was authorized under the Coronavirus Aid, Relief, and Economic Security Act, a federal law enacted on March 29, 2020, to provide emergency financial assistance to Americans suffering economic hardship due to the COVID-19 pandemic. The PPP provided forgivable loans to small businesses to cover payroll, rent, and other certain business expenses; the program ended in May 2021.