A California man is accused by federal prosecutors of fraudulently getting $5 million in COVID-19 relief Payment Protection Program (PPP) loans and spending the money on himself, including buying a Ferrari, Bentley and Lamborghini.
Mustafa Qadiri, 38, of Irvine, was arrested Friday, the Department of Justice said. The federal grand jury indictment charges him with four counts of bank fraud, four counts of wire fraud, one count of aggravated identity theft, and six counts of money laundering.
NBC News reports Qadiri pleaded not guilty, according to the U.S. Attorney's Office.
DOJ says Qadiri claimed to have operated four companies that are not operating. Prosecutors allege Qadiri submitted false 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," a DOJ statement said.
The banks funded the loans and transferred $5 million to Qadiri's accounts, which the DOJ alleges he used to buy luxury vehicles, expensive vacations and for personal expenses.
Federal agents seized a Ferrari, Bentley and Lamborghini that Qadiri allegedly bought with the PPP money, plus another $2 million in his bank account.
In a similar case out of Connecticut, a man was arrested Friday on bank and wire fraud charges, accused of fraudulently obtaining nearly $2.9 million in federal COVID-19 relief funds and using some of the money to buy expensive cars.
Federal authorities allege Moustapha Diakhate, 45, of Stamford, provided Citibank with false and fraudulent information when applying for PPP loans last year for his five businesses. Some of the money was allegedly used to pay off a loan on a 2010 Porsche SUV and purchase a Mercedes and BMW.
The U.S. Attorney's Office also alleges Diakhate used some of the money to buy a certificate of deposit worth thousands and disburse some to individuals unrelated to his businesses. Prosecutors also say a substantial amount of the money is unaccounted for.
The PPP program was part of the CARES Act, authorized by Congress in March 2020 during the height of the COVID-19 pandemic to provide forgivable loans to small businesses to retain workers and cover other expenses.