A Chinese national residing in New York has been arrested for allegedly trying to cheat the federal government and several banks in millions of dollars in loans intended to provide relief to small businesses during the CCP virus pandemic, the Justice Department said.
Muge Ma, 36, who is also known as Hummer Mars, has been accused of attempting to claim over $20 million in government-back loans for two of his companies—New York International Capital LLC (NYIC) and Hurley Human Resources LLC (Hurley)—by falsely representing that the companies had hundreds of employees and paid millions of dollars in wages to those employees when Ma appears to be the only employee in his companies.
Ma made false representations to the Small Business Administration and five banks in loan applications for relief under the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) Program, prosecutors alleged (pdf). He applied between March and May 15.
In order to support his loan applications, Ma submitted a range of falsified bank records, tax records, insurance records, payroll records, and audited financial statements, prosecutors said.
He also allegedly described one of his companies as a “patriotic American” firm and the other as a company that would “help the country reduce the high unemployment rate caused by the pandemic by helping unemployed American workers and unemployed American fresh graduates find jobs as quickly as possible.”
“In truth, Ma appears to be the only employee of either company and had no legitimate claim to the funds for which he applied,” Manhattan U.S. Attorney Geoffrey Berman said in a statement. “Ma’s alleged attempts to secure funds earmarked for legitimate small businesses in dire financial straits are as audacious as they are callous, and now he now faces federal prosecution.”
Prosecutors also said Ma allegedly misrepresented his citizenship in the applications, saying that he is an American citizen when he is in fact a Chinese national with lawful permanent resident status in the United States.
He also contacted a Canadian company that manufacturers COVID-19 test kits to procure testing kits in bulk by misrepresenting that his company NYIC was representing New York State in buying the kits to respond to the pandemic, prosecutors alleged.
Prosecutors said that before the discovery of the alleged fraudulent scheme, the SBA approved a $500,000 EIDL Program loan for NYIC and a $150,000 EIDL Program loan for Hurley, and at least a $10,000 loan advance was provided to NYIC. Meanwhile, one bank granted $800,000 in PPP loan funds for Hurley, which has since been frozen after the alleged scheme was exposed.
“Small businesses are facing uncertainty and unprecedented challenges, the least of which should be opportunists attempting to loot the federal funds meant to assist them,” Berman said.
Ma was arrested on Thursday and has been charged with one count of bank fraud, one count of wire fraud, and one count of making false statements to a bank—each with a maximum sentence of 30 years in prison. He has also been charged with one count of major fraud against the United States (a maximum sentence of 10 years in prison), one count of making false statements (a maximum sentence of five years in prison), and one count of making false statements to the SBA (a maximum sentence of two years in prison).
Congress passed the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, in March in order to assist Americans who are suffering the economic effects caused by the COVID-19 pandemic. The law created the PPP loans which aim to assist small businesses and non-profits for job retention and certain other expenses. Meanwhile, the act also expanded the EIDL Program, which provides small businesses with low-interest loans of up to $2 million to help business owners to overcome the temporary loss of revenue caused by the pandemic.