Man Gets Over 4 Years in Prison for COVID-19 Funds Fraud

A file photo of a judge's gavel. (Joe Raedle/Getty Images)

LOS ANGELES—A Santa Clarita Valley man was sentenced on Nov. 15 to 51 months in federal prison for scheming to fraudulently obtain about $1.8 million in COVID-19 relief funds.

Hassan Kanyike, 30, was sentenced by U.S. District Judge Virginia A. Phillips, who also ordered him to pay a $20,000 fine and over $1.3 million in restitution to the Small Business Administration and four victim lenders, according to the U.S. Attorney’s Office.

Kanyike schemed to obtain eight loans totaling nearly $1.8 million, of which six loans worth a total of about $1.3 million were approved. Kanyike pleaded guilty on March 29 to one count of wire fraud.

From April to June 2020, Kanyike submitted eight fraudulent loan applications—six of which were for Paycheck Protection Program (PPP) and two for Economic Injury Disaster Loan (EIDL)—seeking funds to pay the salaries of employees whom he claimed worked for two of his businesses. He successfully obtained about $1 million through four PPP loans and another $300,000 through two EIDL loans.

In support of the PPP loan applications, Kanyike submitted fake federal tax filings and payroll reports for a used-car business, the Van Nuys-based Falcon Motors.

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 to employees in 2019.

In reality, Falcon Motors had no employees on its payroll. Kanyike further admitted that he obtained additional Employer Identification Numbers from the IRS in April and May 2020 so he could apply for multiple loans for the same used-car business.

Kanyike used a substantial portion of the PPP loan proceeds for his personal benefit, according to his plea agreement filed in the Los Angeles federal court.

When he was arrested in December, Kanyike had transferred about $762,000 to Uganda, his country of citizenship, from one of the business accounts that had received the loan proceeds, violating the PPP and EIDL program terms.