On Friday, November 6, a Los Angeles man was sentenced to two years in prison for defrauding over $3.8 million in COVID-19 relief loans by exploiting shell companies.
The individual, 50-year-old Gevork George Dagliyan, pleaded guilty to a federal wire fraud charge earlier this year in February. Additionally, he has been ordered to pay more than $3.26 million in restitution and fines, according to the office of the U.S. Attorney.
Court documents reveal that between May 2020 and September 2021, Dagliyan submitted fraudulent applications to Chase Bank and the Small Business Administration (SBA) to obtain loans from the federal government’s Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program, which were designed to assist businesses struggling due to the pandemic.
In his plea agreement, Dagliyan acknowledged that he submitted a total of 17 loan applications under the names of 17 different shell companies, including Ultimate Software Solutions, Dagliyan Co., and Ramzes Enterprises Inc. Records filed in the U.S. District Court in Los Angeles indicate that Dagliyan falsely claimed in his loan applications that each of these companies had a specific number of employees, revenue, and operating expenses.
However, according to the plea agreement, Dagliyan was fully aware that the actual employee counts, income, and expenses of these companies did not match the information he provided in his PPP and EIDL applications.
Federal prosecutors have indicated that Dagliyan continued to deceive even when he later submitted a request for PPP loan forgiveness, falsely asserting that the loan funds had been utilized for qualifying expenses, when in reality, he used the money for personal expenses.
The U.S. Attorney’s Office pointed out that Dagliyan, in conjunction with an individual referred to in court documents as “Person 1,” managed to secure a total of $3.33 million in PPP loans, along with nearly $539,200 in EIDL loans.
This case highlights the ongoing issues of fraud and abuse related to government aid programs aimed at supporting businesses during the pandemic. Authorities have ramped up investigations into fraudulent activities as they work to preserve the integrity of these essential relief efforts. The judgment against Dagliyan serves as a stern reminder of the legal consequences of exploiting emergency relief funds for personal gain.