CALIFORNIA – An Orange County man was arrested today on federal charges alleging he fraudulently obtained approximately $5 million in Payment Protection Program (PPP) loans for his sham businesses, then used the money on himself, including purchasing Ferrari, Bentley and Lamborghini sports cars.
Mustafa Qadiri, 38, of Irvine, was named in a federal grand jury indictment returned Wednesday charging him with four counts of bank fraud, four counts of wire fraud, one count of aggravated identity theft, and six counts of money laundering.
Qadiri surrendered to special agents with Homeland Security Investigations (HSI) Los Angeles this morning and is expected to make his initial appearance this afternoon in U.S. District Court. The case is the result of an investigation by HSI’s El Camino Real Financial Crimes Task Force – including the Federal Bureau of Investigation and the Internal Revenue Service Criminal Division – and the Small Business Administration Office of Inspector General.
According to the indictment, Qadiri claimed to have operated four Newport Beach-based companies, none of which are currently in operation: All American Lending, Inc., All American Capital Holdings, Inc., RadMediaLab, Inc., and Ad Blot, Inc.
In May and June of 2020, Qadiri allegedly submitted false and fraudulent PPP loan applications to three banks on behalf of those companies. The false information allegedly included the number of employees to whom the companies paid wages, altered bank account records with inflated balances, and fictitious quarterly federal tax return forms. Qadiri allegedly also used someone else’s name, Social Security number and signature to fraudulently apply for one of the loans.
Relying on this false information, the banks funded the PPP loan applications and transferred approximately $5 million to accounts Qadiri controlled, according to the indictment. Qadiri allegedly used the fraudulently obtained PPP loan proceeds for his own personal benefit, including for expenses prohibited under the requirements of the PPP program, such as the purchase of luxury vehicles, lavish vacations, and the payment of his personal expenses.
HSI special agents have seized the Ferrari, Bentley and Lamborghini cars that Qadiri allegedly purchased with the fraudulently obtained PPP loans, along with $2 million in alleged ill-gotten gains from his bank account.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act was designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic. One source of relief provided by the CARES Act is the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses through the PPP. In April, Congress authorized more than $300 billion in additional PPP funding.
The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1 percent. Businesses must use PPP loan proceeds for payroll costs, interest on mortgages, rent, and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.
The El Camino Real Financial Crimes Task Force is a multi-agency task force comprised of federal and state investigators focused on the investigation of financial crimes in the Southern California area.
This case is being prosecuted by the U.S. Attorney for the Central District of California’s Santa Ana office.
HSI is a directorate of U.S. Immigration and Customs Enforcement (ICE) and the principal investigative arm of the U.S. Department of Homeland Security (DHS), responsible for investigating transnational crime and threats, specifically those criminal organizations that exploit the global infrastructure through which international trade, travel and finance move. HSI’s workforce of over 10,400 employees consists of more than 7,100 Special Agents assigned to 220 cities throughout the United States, and 80 overseas locations in 53 countries. HSI’s international presence represents DHS’s largest investigative law enforcement presence abroad and one of the largest international footprints in U.S. law enforcement.