A Santa Clarita Valley man pleaded guilty Monday to perpetrating a scheme to fraudulently obtain approximately $1.8 million in COVID-19 relief after he transferred the money to a bank account in Uganda.
The money was obtained through the Small Business Administration (SBA), the Economic Injury Disaster Loan (EIDL) program and the Paycheck Protection Program (PPP).
Hassan Kanyike, 29, of Santa Clarita, admitted that he submitted six fraudulent PPP loan applications and two fraudulent EIDL applications, according to court documents.
“The applications sought funds to purportedly pay the salaries of employees whom he claimed worked for two of his businesses,” the court document read.
Kanyike successfully obtained around $1 million through four PPP loans, and another $300,000 through two EIDL loans, according to officials.
In support of the fraudulent PPP loan applications, Kanyike submitted fake federal tax filings and payroll reports.
“For example, in one loan application, Kanyike falsely claimed the business had 26 employees and an average monthly payroll of $168,000, and he submitted a fabricated IRS tax form claiming Falcon Motors had paid $2,022,300 in payroll in 2019,” court officials said.
However, Kanyike admitted during his plea that the company had substantially fewer employees and substantially lower payroll, according to officials.
Kanyike further admitted that he obtained additional Employer Identification Numbers from the IRS in April and May 2020, so that he could apply for multiple loans for the same used-car business.
Kanyike then used a “substantial” portion of the PPP loan proceeds for his own personal benefit.
Kanyike was arrested in December 2020 at Los Angeles International Airport just before he was about to board a flight to Dubai.
At the time of his arrest, Kanyike had transferred approximately $762,000 to Uganda, his country of citizenship, from one of the business accounts that had received the loan proceeds, in violation of the terms of the PPP and EIDL program.
Kanyike pleaded guilty to one count of wire fraud before United States District Judge Virginia A. Phillips.
He is scheduled to be sentenced on Aug. 23 and faces a maximum penalty of 20 years in prison.
As part of his guilty plea, Kanyike is required to pay approximately $1.3 million in restitution.
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