A US-Uganda citizen, Hassan Kanyike, 29 years old, a resident of Santa Clarita, in the State of California has pleaded guilty to running a scheme to fraudulently obtain up to $1.8 million or Shs 6.6Billion in COVID-19 relief funds.
The funds are being provided in the US under the Small Business Administration (SBA) through the Economic Injury Disaster Loan (EIDL) program and the Paycheck Protection Program (PPP).
According to court documents, Kanyike admitted that he submitted six fraudulent PPP loan applications and two fraudulent EIDL applications.
The applications sought funds to purportedly pay the salaries of employees whom he claimed worked for two of his businesses. Kanyike successfully obtained approximately $1 million through four PPP loans, and another $300,000 through two EIDL loans.
The US Department of Justice in a statement, revealed that Kanyike submitted fake federal tax filings and payroll reports while applying for the funds.
“For example, in one loan application, Kanyike falsely claimed the business had 26 employees and an average monthly payroll of $168,000, and he submitted a fabricated IRS tax form claiming Falcon Motors had paid $2,022,300 in payroll in 2019,” the statement reads.
“But Kanyike admitted during his plea that the company had substantially fewer employees and substantially lower payroll. He further admitted that he obtained additional Employer Identification Numbers from the IRS in April and May 2020, so that he could apply for multiple loans for the same used-car business. Kanyike then used a substantial portion of the PPP loan proceeds for his own personal benefit.
Mr Kanyike was arrested in December 2020 at Los Angeles International Airport just before he was about to board a flight to Dubai.
At the time of his arrest, he is said to had transferred approximately $762,000 to Uganda, from one of the business accounts that had received the loan proceeds.
In court, Kanyike pleaded guilty to one count of wire fraud in the Central District of California.
He is scheduled to be sentenced on Aug. 23, and faces a maximum penalty of 20 years in prison. As part of his guilty plea, Kanyike is required to pay approximately $1.3 million in restitution.
A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.