Rahul Shah became the first person in the Chicago area with the dubious distinction of defrauding the federal government for coronavirus relief funds. Shah applied for a $441,000 federal loan earmarked for small business relief during the coronavirus pandemic.
When confronted concerning the suspicious forms used to apply for the loan, Shah said he had workers in India file the forms for him. Later, however, he reversed course and admitted that the loan was keeping his business afloat. Shah is charged with bank fraud and making false statements to a financial institution.
The Paycheck Protection Program
Shah is accused of applying for a loan on behalf of his Evanston business, N2N holdings. The loan was part of the government program offering relief to businesses that were shut down due to the quarantine. The loan was supposed to guarantee the paychecks of workers who were otherwise out of work.
According to federal authorities, Shah listed names of two people who were once employees of his companies, but no longer. The feds reached out to these individuals and determined that they were not employed by N2N nor any of Shah’s subsidiary companies.
Furthermore, on the application, Shah appears to have vastly inflated the size of his payroll. The feds were able to glean this information from past year’s tax filings. Worse still for Shah, he could not even get the loan approved by the bank. This means that Shah will face felony charges not for the theft of actual funds but for the attempted theft of actual funds.
Indeed, Shah’s fraud was so inept and the numbers were so obviously forged that the bank would not approve the loan.
Federal Bank Fraud Charges
The federal government takes any theft or attempted theft from a financial institution seriously. It takes this fraud more seriously when the funds were earmarked for struggling businesses during one of the most cataclysmic economic disasters of the past 100 years.
18 U.S. Code § 1344 makes it unlawful to pass knowingly false information to a financial institution for the purpose of securing a loan. The penalties for such a crime are brutal. Shah is facing up to 30 years behind bars and a fine of up to $1 million.
Shah began to set up his defense by saying that workers in India were responsible for filling out the forms and sending them to the government to apply for the loan. To be convicted of fraud, the state must prove that the false statements made to secure the loan were not made in error, but made intentionally for the purpose of illegally getting money. This is where defense attorneys have some wiggle room. However, when asked to provide the email where he spoke to Indian workers concerning the loan, Shah was unable to produce. While the burden of proof still lies with the prosecution, Shah’s alibi is not panning out.
Similarly, because the financial institution recognized the problems with the application, no financial loss occurred to the institution and this may be reason to reduce the charges.
Talk to a Chicago Criminal Defense Attorney
If you have been charged with a federal crime, then you need an attorney who understands federal rules of procedure and federal law and can negotiate a successful outcome to the charges. Call Chicago defense attorney David Freidberg at (312) 560-7100 to learn more about how we can help.