Chinese Man Found Guilty Of $20 Million Dollar PPP Fraud Scheme

Written by Brian P. Hamachek on 6/16/2021

The United States Attorney for the Southern District of New York, Audrey Strauss, announced today that MUGE MA, a Chinese national residing in New York, New York, pled guilty in connection with a fraudulent scheme to obtain over $20 million in Government-guaranteed loans designed to help small businesses during the novel coronavirus/COVID-19 pandemic. MA falsely represented to the U.S. Small Business Administration (“SBA”) and at least five financial institutions that his companies, New York International Capital LLC (“NYIC”) and Hurley Human Resources LLC (“Hurley”), had hundreds of employees in connection with loan applications for relief available from the Paycheck Protection Program (“PPP”) and the Economic Injury Disaster Loan (“EIDL”) Program. MA was arrested on May 21, 2020, and has been jailed since that time. He plead guilty today in front of U.S. District Judge Richard M. Berman and will be sentenced on September 22, 2021, at 11:00 a.m.

According to claims included in public documents in federal court in Manhattan: The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act is a federal law passed on March 29, 2020, that is intended to give emergency financial help to millions of Americans who are experiencing economic hardship as a result of the COVID-19 epidemic. The provision of hundreds of billions of dollars in forgiving loans to small companies for job retention and certain other costs under the SBA's PPP was one source of assistance given by the CARES Act. The amount of PPP funding a firm is eligible to receive is determined by the number of people employed by the firm and their average payroll expenses, according to the CARES Act. Businesses who seek for a PPP loan must show evidence proving that they have previously paid employees the salary listed on the loan application. The CARES Act also extended the independent EIDL Program, which offered low-interest loans of up to $2 million to small enterprises in order to help them overcome the temporary loss of revenue caused by COVID-19.

MA applied to the SBA and at least five banks for a total of more than $20 million in Government-guaranteed loans for his firms NYIC and Hurley (collectively, the “Ma Companies”) via the SBA's PPP and EIDL Program from at least March 2020 through at least May 15, 2020. In connection with these loan applications, MA represented, among other things, that he was the sole owner and executive director of the Ma Companies, that the Ma Companies were located on the sixth floor of his luxury condominium building in New York, New York, and that NYIC and Hurley collectively employed hundreds of people and paid millions of dollars in monthly wages to those employees. In fact, MA appears to have been NYIC's sole employee since at least early 2019, while Hurley does not appear to have any workers. MA submitted fraudulent and doctored bank records, tax records, insurance records, payroll records, and/or audited financial statements to five different banks to support the false representations made by MA in the loan applications about the number of employees at, and wages paid by, the Ma Companies, and also provided links to the Ma Companies' websites, which describe them as purp MA also misrepresented himself as a US citizen throughout these loan applications, when in fact he is a Chinese national with lawful permanent resident status in the US. MA additionally utilized another person's name and identity while submitting a false loan application and supporting paperwork to at least one financial institution.

The SBA authorized a $500,000 EIDL Program loan for NYIC and a $150,000 EIDL Program loan for Hurley prior to the discovery of MA's fraudulent activity, and at least a $10,000 loan advance was granted to NYIC. Furthermore, a bank accepted and disbursed about $800,000 in PPP loan money for Hurley, which had been blocked as part of this inquiry. As a result, MA attempted to cancel his loan applications with the banks and refund the cash.

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