Sussex County man admits to obtaining $5.6 Million Loan fraudulently

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A Pakistani-origin man from Sussex County, New Jersey, admitted to fraudulently obtaining a federal Paycheck Protection Program (PPP) loan of more than $5 million, July 1, 2021.

Azhar Sarwar Rana, 30, of Newton, New Jersey, pleaded guilty before U.S. District Judge Esther Salas to an information charging him with one count of bank fraud and one count of money laundering according to a press release from the Acting U.S. Attorney for the District of New Jersey Rachael A. Honig.

Rana was previously arrested on Dec. 12, 2020, after he booked a same-day flight to Pakistan; he was charged by complaint and made his initial appearance on Dec. 14, 2020.

According to documents filed in this case and statements made in court:

Rana submitted a fraudulent PPP loan application to a lender on behalf of a corporate entity, Azhar Sarwar Rana LLC, that purportedly invested in real estate development.

Investigators found the application falsified payroll and tax information and included internally inconsistent listings of the number of company employees.

The New Jersey Department of Labor records showed that Azhar Sarwar Rana LLC paid no wages in 2019, and the minimal wages it purportedly paid in 2020 were mostly to individuals whose submitted Social Security numbers did not correspond to their submitted names.

Based on Rana’s alleged misrepresentations, the lender approved Rana’s PPP loan application and provided Azhar Sarwar Rana LLC with approximately $5.6 million in federal COVID-19 emergency relief funds meant for distressed small businesses.

Rana used the fraudulently obtained PPP loan proceeds to pay for numerous personal expenses, including to invest millions in the stock market, make a payment to a luxury car dealership, and send hundreds of thousands of dollars to accounts in Pakistan.

The count of bank fraud carries a maximum potential penalty of 30 years in prison and a $1 million fine; the count of money laundering carries a maximum potential penalty of 10 years in prison and a $250,000 fine, or twice the gross gain to the defendant or gross loss to the victim, whichever is greater. Sentencing is scheduled for Nov. 3, 2021.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a federal law enacted on March 29, 2020. It is 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 2020, Congress authorized over $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. The loan must be used 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.

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