Irvine Man Sentenced to 4 Years in Federal Prison for Obtaining Over $5 Million in COVID Relief Loans for Shell Companies | USAO-CDCA
LOS ANGELES – An Orange County man was sentenced today to 48 months in federal prison for fraudulently obtaining more than $5 million in COVID relief loans for three front companies.
Raghavender Reddy Budamala, 36, of Irvine, was sentenced by U.S. District Judge Otis D. Wright II, who also ordered Budamala to pay $5,151,497 in restitution.
Budamala pleaded guilty on June 21 to one count of bank fraud and one count of money laundering. As part of his plea deal, Budamala agreed to confiscate real estate in Orange County, Malibu, and Los Angeles, as well as approximately $4,119,662 in funds from bank and investment and crypto accounts. -change.
From January 2019 to August 2019, Budamala formed or acquired three shell companies without operations – Hayventure LLC, Pioneer LLC and XC International LLC. Following the outbreak of the COVID-19 pandemic and the enactment of federal programs designed to address the resulting economic fallout, Budamala submitted seven applications to the Small Business Administration for pandemic relief loans under the Paycheck Protection Program (PPP) and Economic Disaster Loan. (EIDL).
As part of applications filed from April 2020 to March 2021, Budamala falsely told banks administering COVID relief business loan programs that his businesses employed dozens of people and earned millions of dollars in revenue, and that he needed the payroll money. and business expenses.
Addresses listed for businesses were fake, non-existent, or residential. The states where the Budamala businesses are said to have operated have no record of these businesses paying salaries to employees, and the businesses’ bank records do not reflect any significant business income or operating expenses.
The SBA and the banks funded six of the loans and disbursed a total of $5,151,497. Budamala requested the cancellation of several of the loans and falsely stated that he had used all of the SBA money for payroll.
Once the loans were funded, Budamala used the money to pay for personal expenses, including buying a $1.2 million investment property in Eagle Rock, buying a property for $597,585 in Malibu, the purchase of a personal residence in Irvine, a $970,000 investment in an EB-5 immigrant investor visa program and a deposit of nearly $3 million in Budamala’s TD Ameritrade personal account .
Budamala has been in federal custody since his arrest on February 23, when he attempted to flee from the United States to Mexico through the San Ysidro border crossing. A criminal complaint was filed against him on February 24.
The IRS Criminal Investigation, the FBI, and the Office of the Inspector General of the Small Business Administration investigated this case.
Assistant United States Attorney Gregory D. Bernstein of the Major Fraud Section and Assistant United States Attorney Maxwell K. Coll of the Forfeiture and Asset Recovery Section prosecuted the case.
In May 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to mobilize Department of Justice resources in partnership with agencies across government to intensify enforcement efforts. and prevention of pandemic-related fraud. The task force strengthens efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies administering relief programs to prevent fraud, among other methods, by increasing and integrating coordination mechanisms existing ones, identifying resources and techniques to uncover fraudulent actors and their agendas, and sharing and leveraging information and knowledge gained from previous enforcement efforts. For more information about the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.
Anyone with information about alleged attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) hotline at (866) 720-5721 or via the NCDF online complaint form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.