IssuesStatewide NewsEast Texas Man Indicted for $5 Million Coronavirus Small Business Loan Fraud, Fabricating Employee Names

Samuel Yates allegedly used an online generator to fabricate the names of 400 fake employees in an attempt to obtain $5 million in coronavirus small business aid.
May 21, 2020
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Federal prosecutors announced on Tuesday that an East Texas man has been indicted for using fictional employees in an attempt to obtain $5 million in aid designated for small businesses via the Paycheck Protection Program. 

The Department of Justice announced in a press release that Samuel Yates, a 32-year-old man from Bowie County, was confronted with charges of multiple felonies in the U.S. District Court for the Eastern District of Texas in Texarkana.

Yates allegedly made two different sham applications to separate lenders. In the first application, the government says Yates claimed to have more than 400 employees with over $2 million in monthly payroll expenses. In a second bogus application, Yates was able to get his hands on $500,000 in aid, according to the press release.

The U.S. Attorney is claiming that Yates’ actions constitute wire fraud, bank fraud, and falsifying information to both the Small Business Administration and financial institutions. 

The fictitious employee names Yates provided to the lenders were created using an online name generator, the government alleges.

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Yates would not be the first person in Texas charged with abusing federal programs created to provide relief from coronavirus-related economic hardships. 

A Beaumont engineer, Shashank Rai, was accused of similar offenses last week, per a Justice Department press release. 

The government says investigators found handwritten materials in the trash at Rai’s home with notes about investing $3 million he intended to swindle from the Paycheck Protection Program. 

Prosecutors accuse Rai of making two applications to separate lenders that each claimed Rai had 250 employees. The first application allegedly purported that Rai needed $10 million to cover $4 million in monthly payroll expenses, and the second application allegedly purported that Rai needed $3 million to cover $1.2 million in monthly payroll expenses.

The press releases emphasize that Yates and Rai are entitled to a trial by jury and to be considered innocent unless the U.S. Attorney proves otherwise.

The Justice Department encourages persons who suspect abuse of the Paycheck Protection Program or other coronavirus-related criminal activity to call the National Center for Disaster Fraud Hotline at 866-720-5721. Submissions may also be made online.

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Hayden Sparks

Hayden Sparks

Hayden Sparks is a reporter for The Texan in Dallas. During the academic year, he coaches high school competitive speech and debate and has also been involved in community theater and politics. A native Texan, Hayden served as a delegate at the Republican Party of Texas Convention in 2016. He is on track to receive a bachelor’s degree in psychology from Liberty University. In his free time, Hayden is known to take walks around the neighborhood while listening to random music on Spotify.