I-Team: Millions In PPP Money Went To Bogus Texas Companies With Little Vetting
UPDATE: North Texan Dinesh Sah Pleads Guilty To $24M COVID-Relief Fraud Scheme
COPPELL, Texas (CBSDFW.COM) - The federal government's $500 billion Payment Protection Program was a lifeline during the pandemic for millions of small businesses.
But in the rush to help, growing evidence shows the pandemic relief program was also ripe for fraud.
The government designed the PPP to give small businesses money fast through mainly forgivable loans.
However, the CBS 11 I-Team found in many cases there was little vetting upfront to determine if applicants were telling the truth.
A single internet search or phone call to verify an applicant's information would have likely kept millions of dollars out of the hands of suspected fraudsters.
According to court records, Dinesh Sah of Coppell was approved for PPP funding for 11 different companies for a total of $17.7 million.
Federal investigators said Sah used the money to pay off his home in Coppell and two in California owned by his wife.
Sah also bought five additional houses in Coppell with PPP funds, according to investigators.
Shortly after receiving the federal funds, court records show Sah bought a Bentley, a Porsche, a Corvette, and two Cadillacs.
Sah was arrested last month and charged with filing fraudulent loan applications.
He is currently in federal custody awaiting his December trail date. Sah's federal attorney declined to comment on the case.
An I-Team investigation found multiple red flags on Sah's PPP loan applications were missed.
Any one of them would have likely prevented Sah from receiving millions in taxpayer dollars.
For starters, a search on the Texas Secretary of State website shows Sah started most of his companies just days before applying for federal aid.
The business address for most of his companies is also the same as his home address in Coppell.
Also, according to court documents, the bank statement and tax documents Sah used when submitting his PPP loan applications were "false and fraudulent."
This could have been discovered with a call to the IRS or bank to verify the documents.
But even if those were missed, there was still another red flag.
The PPP application states loans will not be approved for those with a pending felony charge.
In June, Sah was arrested by Coppell police and charged with felony assault family violence.
Five weeks later, Sah applied for two more PPP loans and was approved.
Sah's trial date for his assault charge is scheduled for December - one day after his federal fraud trail.
The I-Team examined the court records of other alleged PPP loan fraud cases and found many of these same red flags were missed in these cases, too.
But in some ways the government predicted this.
On the same day the Small Business Administration launched the program back in April, its own inspector general released a report warning of potential fraud.
"This should come as no surprise," said Jay Dewald, a white collar criminal defense attorney for Jackson Walker and former federal prosecutor.
Dewald said the government wanted to get the money in the hands of struggling businesses fast, so to speed up the approval process the program was essentially based on the honor system.
"The government basically said we are going to take you at your word and we are going to send you that money," Dewald said. "Now if you get that money and you lied about those things, then (the government) is coming after you."
Dewald said it's known as "pay and chase."
The former federal prosecutor said federal agents will be aggressive in tracking down fraud but the government won't be able to get all the money back.
"The fraudsters always get away with something. You can seize a person's watch, their Bentleys, and their real estate but there's a significant amount of money especially if it's sent overseas that sometimes you never see again," Dewald said.
So far the government has confiscated more than $6 million worth of homes, cars and cash from Sah, according to court records.
That's less than half of the more than $17 million he received in federal funds.
Federal investigators say they believe Sah has sent some of the money overseas to India.
According to a recent Senate report, red flags have now been raised on more than 11,000 PPP loans totaling nearly $3 billion.
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