NYC Man Hit With Fraud Charges Over $20M In Virus Loans

By Stewart Bishop
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Law360 (May 21, 2020, 4:33 PM EDT) -- Manhattan federal prosecutors brought fraud and false statements charges Thursday against a Chinese national over a purported scheme to get more than $20 million in government-backed loans earmarked for small businesses adversely affected by the coronavirus pandemic.

Prosecutors say Manhattan resident Muge Ma, also known as Hummer Mars, elicited loans via the Paycheck Protection Program and the Economic Injury Disaster Loan Program by falsely telling the U.S. Small Business Administration and lenders that his companies had hundreds of employees and a multimillion-dollar payroll.

In reality, Ma, 36, appears to have been the only employee of his companies — New York International Capital LLC and Hurley Human Resources LLC — and had no legitimate basis to apply for the loans, according to the government. Ma applied to the SBA and at least five banks for more than $20 million in state-backed loans through the SBA's Paycheck Protection Program and the EIDL Program.

Altogether, Ma managed to secure $650,000 in loans and a $10,000 loan advance. Additionally, a bank signed off on $800,000 in loan funds for the Hurley company, although prosecutors said that money was frozen in connection with the investigation into Ma.

Ma — a legal permanent resident who prosecutors said during the course of the scheme falsely represented that he was a U.S. citizen — made his initial appearance on Thursday before U.S. Magistrate Judge Judith C. McCarthy, and was ordered to be held without bail.

Manhattan U.S. Attorney Geoffrey S. Berman noted that Ma described one of his companies as a "patriotic American firm" and said the other would "help the country reduce the high unemployment rate caused by the pandemic by helping unemployed American workers and unemployed American fresh graduates find jobs as quickly as possible."

"Ma's alleged attempts to secure funds earmarked for legitimate small businesses in dire financial straits are as audacious as they are callous, and he now faces federal prosecution," Berman said. "Small businesses are facing uncertainty and unprecedented challenges, the least of which should be opportunists attempting to loot the federal funds meant to assist them."

An attorney for Ma could not immediately be reached for comment Thursday.

Prosecutors say that Ma submitted bogus bank, tax, insurance and payroll records as well as phony audited financial statements to at least five banks in support of his loan applications.

Ma and others also falsely claimed to a COVID-19 test kit manufacturer and a medical equipment supplier that one of his companies represented the state of New York in obtaining coronavirus test kits and personal protective equipment, according to the government.

He is charged with bank fraud, wire fraud, major fraud against the U.S. and multiple false statement counts.

The government is represented by Sagar K. Ravi of the U.S. Attorney's Office for the Southern District of New York.

Ma is represented by Tamara Giwa of the Federal Defenders of New York.

The case is U.S. v. Ma, case number 20-mag-5202, in the U.S. District Court for the Southern District of New York.

--Editing by Stephen Berg.

For a reprint of this article, please contact reprints@law360.com.

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