Tax Preparer And Client Charged With $13 Million Paycheck Protection Program Fraud Scheme

Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of a complaint charging SANDEEP GROVER and SHIKHA SEHGAL with major fraud against the U.S. and conspiracy to commit wire fraud and bank fraud for their participation in a scheme to submit more than 100 applications containing false representations to seven financial institutions and fraudulently obtain over $13 million in government-backed Paycheck Protection Program (“PPP”) loans designed to provide relief to small businesses during the COVID-19 pandemic.  GROVER is also charged with aggravated identity theft for using an employee’s personally identifiable information without authorization to submit a loan application.  GROVER and SEHGAL will be presented today before U.S. Magistrate Judge Gabriel W. Gorenstein.

U.S. Attorney Damian Williams said: “Sandeep Grover allegedly used his tax preparation business to steal millions of dollars from a program created by Congress to assist struggling small businesses during the pandemic.  To pull off his scheme, Grover allegedly recruited co-conspirators like Shikha Sehgal, who opened bank accounts for shell companies and lied to banks about those companies’ loan eligibility.  This Office will continue to prosecute those who used the pandemic as an opportunity to defraud American taxpayers.”

FBI Assistant Director-in-Charge Michael J. Driscoll said: “The defendants allegedly devised a scheme to exploit the Paycheck Protection Program for millions of dollars for personal use rather than qualifying expenses.  Fraudulent schemes like these defraud not only a program intended to help small businesses weather a global pandemic but also the United States' taxpayers. The FBI will continue to ensure that anyone taking advantage of government backed programs are held responsible in the criminal justice system.”

As alleged in the Complaint^[[1]]:

SANDEEP GROVER is the owner of Excellent Business Services Inc.  (“EBS”), a tax preparation business based in Seaford, New York.  From at least April 2020 through at least June 2021, GROVER submitted more than 100 PPP applications containing false representations to at least seven financial institutions, on behalf of dozens of his own companies as well as putative client companies on whose behalf GROVER created false IRS filings.  The applications certified to the United States Small Business Administration (“SBA”) that the companies each had multiple employees and spent tens of thousands of dollars in monthly payroll, but in fact the companies did not report wages to the Social Security Administration during the relevant time period.  Bank records also show that instead of using the PPP loan proceeds for allowable expenses, such as payroll costs, mortgage interest, rent, and utilities, GROVER moved millions of dollars in PPP loan proceeds between his many accounts and used those proceeds to purchase property, pay off personal loans, and pay expenses for other companies under his control.  GROVER used a variety of methods to increase the number of fraudulent loan applications he was able to submit.  Among other things, he recruited SHIKHA SEHGAL and others to open bank accounts for companies that did no business, create fake invoices and other supporting documentation, and submit fraudulent applications for numerous PPP loans.  GROVER also misused the personally identifiable information of one of his employees to obtain a loan.

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GROVER, 54, of Massapequa, New York, and SEHGAL, 43, of Deer Park, New York, were each charged with one count of major fraud against the United States, which carries a maximum sentence of ten years in prison, and one count of conspiracy to commit wire fraud and bank fraud, which carries a maximum sentence of 30 years in prison.  GROVER is also charged with one count of aggravated identity theft, which carries a mandatory sentence of two years in prison.

The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.        

Mr. Williams praised the investigative work of the FBI and thanked the U.S. Small Business Administration’s Office of Inspector General and the New York Field Office of the Internal Revenue Service, Criminal Investigation, for their assistance.

This case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorney Jane Yumi Chong is in charge of the prosecution.

The charges contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.