Sussex County Man Sentenced to 64 Months in Prison for Fraudulently Obtaining $5.6 Million Loan Meant to Help Small Businesses During COVID-19 Pandemic
From the U.S. Attorney’s Office, District of New Jersey:
NEWARK, N.J. – A Sussex County, New Jersey, man was sentenced today to 64 months in prison for fraudulently obtaining a federal Paycheck Protection Program (PPP) loan of over $5 million, Acting U.S. Attorney Rachael A. Honig announced.
Azhar Sarwar Rana, 31, of Newton, New Jersey, previously pleaded guilty before U.S. District Judge Esther Salas to an information charging him with one count of bank fraud and one count of money laundering. Judge Salas imposed the sentence today in Newark federal court.
According to documents filed in this case and statements made in court:
Rana submitted a fraudulent PPP loan application to a lender on behalf of a corporate entity, Azhar Sarwar Rana LLC, that purportedly invested in real estate development. The application falsified payroll and tax information and included internally inconsistent listings of the number of company employees. New Jersey Department of Labor records showed that Azhar Sarwar Rana LLC paid no wages in 2019, and the minimal wages it purportedly paid in 2020 were mostly to individuals whose submitted Social Security numbers did not correspond to their submitted names.
Based on Rana’s misrepresentations, the lender approved Rana’s PPP loan application and provided Azhar Sarwar Rana LLC with approximately $5.6 million in federal COVID-19 emergency relief funds meant for distressed small businesses. Rana used the fraudulently obtained PPP loan proceeds to pay for numerous personal expenses, including to invest millions in the stock market, make a payment to a luxury car dealership, and send hundreds of thousands of dollars to accounts in Pakistan. Rana was arrested on Dec. 12, 2020, after he booked a same-day flight to Pakistan.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a federal law enacted on March 29, 2020. It is 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 2020, Congress authorized over $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.
In addition to the prison term, Judge Salas sentenced Rana to five years of supervised release, ordered restitution of $5.58 million. A forfeiture order of $5.68 million was entered in September 2021.
Acting U.S. Attorney Honig credited special agents of the FBI, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark; special agents of IRS – Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez; special agents of the Social Security Administration Office of the Inspector General, New York Field Division, under the direction of Inspector General Gail S. Ennis; and special agents of the U.S. Department of Homeland Security, Homeland Security Investigations, under the direction of Acting Special Agent in Charge Ricky J. Patel in New York, with the investigation leading to today’s sentencing.
The government is represented by Assistant U.S. Attorneys Jennifer S. Kozar and Carolyn Silane of the U.S. Attorney’s Office Economic Crimes Unit in Newark.