Long Island man pleads guilty to massive COVID-19 loan fraud


Date: July 14, 2023

Contact: newsroom@ci.irs.gov

Rami Saab of Glen Cove, New York, pleaded guilty at the federal courthouse in Central Islip to conspiracy to commit wire fraud in connection with his participation in a scheme to defraud banks and the Small Business Association (SBA) of millions of dollars' worth of small business loans under the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan Program (EIDLP). Today's proceeding was held before United States District Judge Gary R. Brown. When sentenced, Saab faces up to 20 years in prison, as well as restitution of $9,668,508 and a fine of up to $250,000.

Breon Peace, United States Attorney for the Eastern District of New York, Thomas M. Fattorusso, Special Agent-in-Charge, Internal Revenue Service Criminal Investigation, New York (CI), Ivan J. Arvelo, Special Agent-in-Charge, Homeland Security Investigations, New York (HSI), and J. Russell George, Treasury Inspector General for Tax Administration (TIGTA) announced the guilty plea.

"Using fraud and deceit, the defendant callously stole millions of dollars during an unprecedented public health crisis at the expense of American small business owners," stated United States Attorney Peace. "Those who engaged in blatant theft of taxpayer dollars intended to assist legitimate businesses and their employees during the COVID-19 pandemic should know they will be aggressively prosecuted by our Office."

Mr. Peace thanked the Nassau County Police Department for their assistance on this case.

"As alleged, Rami SAAB stole nearly $10 million dollars in relief money intended for small businesses impacted by the COVID-19 global pandemic, for his own enrichment," stated HSI Special Agent-in-Charge Arvelo. "This is an egregious case of fraud perpetrated by an individual who pilfered a program intended for those who truly needed emergency financial assistance. HSI and our law enforcement partners remain steadfastly committed to rooting out such thievery and ensuring violators are prosecuted to the fullest extent of the law."

"Saab pocketed nearly $10 million in ill-gotten gains by exploiting benefits meant to help those truly in need. Criminals like Saab continue to seek the quickest way to make a buck, regardless of the rule of law or those who may be victimized in the process. But as a result of strong law enforcement partnerships, today's guilty plea means Saab now faces a large prison sentence for his criminal acts," stated CI Special Agent-in-Charge Fattorusso.

"As alleged, the defendant and his co-conspirators fraudulently obtained more than $9.5 million in Federal funds from the Payroll Protection Program and Emergency Injury Disaster Loans through applications containing fraudulent documents. Fraud schemes like these defraud not only a program intended to help small businesses weather a global pandemic but also the United States' taxpayers. The Treasury Inspector General for Tax Administration is committed to working with our law enforcement partners and the United States Attorney's Office to prevent these types of fraud and to bring those responsible to justice."

As set forth in court filings, between May 2020 and May 2021, amid the height of the COVID-19 pandemic, Saab, working with others, fraudulently applied for, and received, at least 20 PPP and EIDLP loans totaling in excess of $9,500,000, on behalf of numerous corporate entities under his control. Saab submitted applications on behalf of these entities even though these were not, in fact, real businesses. Instead, these entities were "shell companies" that claimed false numbers of employees, payroll costs, and intended use of the loan proceeds – all of which was specifically designed to mislead the SBA and numerous banks administering the PPP and EIDLP loan programs. Shortly after the loans were funded, Saab engaged in numerous financial transactions designed to conceal the true nature and source of the funds, including electronically transferring portions of the loan proceeds between various bank accounts which Saab controlled. Saab, after transferring the loan proceeds though multiple accounts, utilized the laundered loan proceeds to enrich himself and others, including by personally making cash withdrawals and transferring funds to associates overseas.

Congress created the PPP and EIDLP as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Enacted on March 29, 2020, the CARES Act provided emergency financial assistance in connection with economic effects of the COVID-19 pandemic. One source of relief provided by the CARES Act was the allocation of funds for the issuance of forgivable loans to small businesses for job retention and certain other expenses through the PPP. The PPP allowed qualifying small businesses to receive unsecured loans on favorable terms, which they were required to use for specified expenses, including payroll costs, interest on mortgages, rent and utilities. The PPP provided for forgiveness of the loan if recipient businesses spent the proceeds on these specified expenses within a limited time period and used a certain percentage for payroll costs.

Another source of relief provided by the CARES Act was the EIDLP, which provided low-interest financing to small businesses, renters, and homeowners in regions affected by declared disasters. Under the program, EIDLP recipients were eligible to receive advances of up to $10,000 for small businesses within three days of applying for an EIDL. The amount of an EIDL advance –which did not need to be repaid – was determined based on the number of employees working for the applicant.

The government's case is being handled by the Office's Long Island Criminal Division. Assistant United States Attorneys Anthony Bagnuola and Michael Maffei are in charge of the prosecution.