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Law360 (May 19, 2020, 7:24 PM EDT) -- A Texas man fraudulently tried to score over $5 million in Paycheck Protection Program loans for small businesses affected by the COVID-19 pandemic by falsely claiming to employ hundreds of people whose identities he invented using an online name generator, prosecutors said Tuesday.
Samuel Yates, 32, was arrested Tuesday after he applied for two Small Business Administration-guaranteed loans under the PPP, the $649 billion federal relief measure intended to keep businesses afloat amid closures and disruptions caused by the spread of the novel coronavirus, according to the U.S. Department of Justice.
Yates faces charges of wire fraud, bank fraud, false statements to a financial institution and false statements to the SBA, prosecutors said.
"Today's arrest should serve as a strong deterrent to anyone considering exploiting the COVID-19 pandemic to enrich themselves through fraud," Special Agent in Charge Ryan L. Spradlin of U.S. Immigration and Customs' Homeland Security Investigations said Tuesday. "These individuals have no concern for legitimate businesses whose employees and their families are hurting financially during these unprecedented times."
HSI is one of several federal agencies that assisted in the investigation, according to the DOJ.
Although Yates does not actually employ anybody, according to prosecutors, he claimed in one of his PPP loan applications seeking $5 million in relief to have 400 employees and spend an average of $2 million per month on payroll expenses.
He was able to secure more than $500,000 with a second application that named 100 employees, according to the DOJ.
In addition to creating names using an online random name generator, Yates submitted fabricated tax documents with each of his loan applications, the government said.
Prosecutors did not specify Yates' line of work or any details about his "purported business." Although the DOJ described the criminal complaint as unsealed, it was not made publicly available as of Tuesday evening.
"Providing false statements to gain access to SBA's programs will be aggressively investigated by our office," Special Agent in Charge Donald Abram of SBA Office of Inspector General's Central Region said in the DOJ statement Tuesday.
Yates is not the first to be charged with pandemic-related loan fraud. Earlier this month, prosecutors charged two New England businessmen with lying on their bank applications for PPP loans.
David A. Staveley, 52, of Massachusetts, and David Butziger, 51, of Rhode Island, sought a total of more than $500,000 in relief to pay employees at businesses that were either fictitious, closed or owned by someone else. Staveley is charged with aggravated identity theft and Butziger is charged with bank fraud. Both men also face conspiracy charges, court records show.
Reality TV personality Maurice Fayne, aka Arkansas Mo, of "Love & Hip Hop: Atlanta" fame, was charged last week with fraudulently spending $1.5 million of a $2 million PPP loan on a Rolls-Royce, jewelry and child support.
The government is represented by Louis Manzo of the DOJ's Criminal Division and Frank Coan of the U.S. Attorney's Office for the Eastern District of Texas.
Counsel and contact information for Yates, and case information were not immediately available Tuesday.
--Additional reporting by Jody Godoy and Hannah Albarazi. Editing by Amy Rowe.
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