San Fernando Valley man admits to fraudulently obtaining $655,000 in COVID-19 relief PPP loans

 

Date: December 7, 2020

Contact: newsroom@ci.irs.gov

Los Angeles – A Northridge man pleaded guilty today to a federal criminal charge that he fraudulently obtained $655,000 in Payment Protection Program (PPP) loans for his companies by submitting fake tax documents and false employee information.

Steven R. Goldstein pleaded guilty to a single-count information charging him with fraud in connection with major disaster or emergency benefits.

According to his plea agreement, Goldstein knowingly submitted applications for PPP loans to banks that contained false statements about the number of employees and the amount of employee payroll expenses.

On May 2, Goldstein submitted a $355,000 PPP loan application to Bank of America for a company called Beagle Real Estate Investments. On the application, Goldstein listed false information that the company's average monthly payroll was $120,000 and it employed a total of 43 workers. Goldstein also submitted fabricated tax documents that falsely stated that Beagle Real Estate's payments to its employees in 2019 totaled $1,704,000, and that the company reported $308,000 in wages paid to 13 employees during the first quarter of 2020. The fraudulent loan application was approved and, on May 4, Bank of America disbursed $355,000 of PPP loan proceeds to a bank account that Goldstein provided in his application.

Goldstein further admitted to knowingly submitting at least one additional fraudulent PPP loan application, which resulted in Bank of America disbursing $300,000 to him. That loan application also contained similar false statements and fabricated tax documents. When law enforcement interviewed Goldstein in October, he admitted to submitting multiple PPP loan applications that contained false information about employees and payroll as well as fake tax documents.

The actual loss from the two approved loans was $655,000, according to the plea agreement.

United States District Judge Stanley Blumenfeld Jr. has scheduled a March 30, 2021 sentencing hearing, at which time Goldstein will face a statutory maximum sentence of 30 years in federal prison.

Goldstein's business partner, Raymond Magana of Santa Clarita, was charged in a criminal complaint in October with fraudulently obtaining PPP loans and is expected to surrender to federal authorities in the coming days.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic. One source of relief provided by the CARES Act is the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses through the PPP. In April, Congress authorized more than $300 billion in additional PPP funding.

The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1 percent. Businesses must use PPP loan proceeds for payroll costs, interest on mortgages, rent and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.

This matter was investigated by IRS Criminal Investigation and the Small Business Administration Office of Inspector General.

This case is being prosecuted by Assistant United States Attorney Charles E. Pell of the Santa Ana Branch Office.