Illinois Tech CEO Charged with #COVID-Relief Fraud

The founder and CEO of two Illinois software companies has been charged with fraudulently claiming over $400,000 from the Paycheck Protection Program (PPP).

Evanston resident Rahul Shah allegedly lied on an application for a forgivable bank loan guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The 51-year-old was charged in a federal criminal complaint filed in the Northern District of Illinois with bank fraud and making false statements to a financial institution.  

Shah is the founder and CEO of tech companies Boardshare LLC and Katalyst Technologies, Inc. Both companies are based on Davis Street in downtown Evanston. 

Katalyst, which was founded in 2000, also has offices in Atlanta, London, and in several cities in India. 

Shah applied for a PPP loan from the bank of Texas on April 15 for Katalyst. On April 30, he applied for a second loan on behalf of N2N Holdings LLC, which operates under the name Boardshare. 

According to the Department of Justice (DOJ), Shah “significantly overstated the payroll expenses of a company that he controlled” and submitted falsified IRS documents to the lender. 

On an IRS 1099-MISC form, Shah claimed that one of his companies had made payments to several individuals. These claims turned out to be false upon investigation.

In addition, Shah misrepresented his company’s payroll expenses for 2019 in documents that he signed and caused to be submitted to the lender.

“A comparison between the documents submitted to the lender and the company’s IRS filings revealed that Shah’s company reported significantly lower payroll expenses to the IRS,” said a spokesperson for the DOJ. 

An affidavit from James Sams, an agent with the Treasury Inspector General for Tax Administration, said Shah paid Boardshare’s employees less than $10k over a period in which he claimed to have spent $426k on payroll. 

In an interview with FBI and Treasury agents on May 29, Sams alleges that Shah acknowledged that there were “errors” in his application and blamed them on employees in India. 

If convicted of both counts, Shah could face a sentence ranging from probation to up to 60 years in federal prison.


Source: Infosecurity Magazine

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