San Jose resident Lebnitz Tran pleads guilty to $3.6M COVID funds fraud

SAN FRANCISCO -- A San Jose man accused of submitting multiple fake applications for small business COVID relief funds - obtaining more than $3.6 million in fraudulent payments that funded a luxury lifestyle - pleaded guilty to criminal charges, authorities said Friday.

A federal grand jury charged Lebnitz Tran last year with six counts of wire fraud and one count of bank fraud. Under a plea agreement Tran pleaded guilty to two of the wire fraud counts; if he complies with the plea agreement, the remaining counts will be dismissed, said a press statement from U.S. Attorney for the Northern District of California Stephanie Hinds.  

Citing court documents, Hinds said the 41-year-old Tran submitted at least 27 Paycheck Protection Program (PPP) loan applications and at least seven others for a Economic Injury Disaster Loan (EIDL). The loans are designed to help pandemic-affected small businesses stay afloat.

In one example, Tran registered four companies in May 2020 and a month later received large PPP loans for each one of them, totaling more than $1 million, even though loan guidelines state the business needed to have been registered by February 15.

Prosecutors said Tran submitted the fake applications using multiple persons and business entities, using fictitious information and documents. He sought a total of about $8.5 million in federal funds and obtained more than $3.6 million in illicit proceeds, ultimately netted approximately $1.7 million from the scheme.

Tran and others used the proceeds for purchases at restaurants and retail stores, to make investments, buy cryptocurrency, and even purchase a $100,000 Tesla vehicle.

U.S. District Judge William Orrick will sentence Tran on November 3; he faces a maximum 20 years in prison for each count, subject to sentencing guidelines and other statutory factors. Tran also faces additional supervised release along with restitution and fines.

People with information about COVID-19 fraud can report it to the U.S. Department of Justice's National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.