BOSTON — A Massachusetts business owner has been arrested in connection with an $18 million Paycheck Protection Program loan fraud scheme and is accused of using the money to buy a luxury condominium in New York City.
Durgaprasad Rao, 65, of Carlisle, who was arrested Wednesday, is accused of amassing millions of dollars in fraudulent PPP loans to multiple companies through a multi-state scheme. He is scheduled to appear before a federal judge in Boston on Thursday on two counts of wire fraud, Acting U.S. Attorney Joshua Levy said in a statement.
Mr. Rao remains in custody pending a detention hearing scheduled for May 17.
According to charging documents, Mr. Rao is the owner and operator of Accelerated Engineering, LLC, a product engineering services provider, and Upstream Global Services, Inc., a software company that provides software consulting services and staffing needs.
Levy said prosecutors believe that between April 2020 and May 2021, Rao made more than $18 million in payments to various companies in multiple states, including companies in Massachusetts, Wisconsin and Georgia. It alleges that it submitted numerous fraudulent applications seeking PPP funds.
Nine of the fraudulent PPP loan applications Rao allegedly submitted were for companies owned or controlled by Rao. For Mr. Rao's Massachusetts-based companies, Mr. Rao received his nearly $7 million in PPP loans, of which his $1.5 million was approved as forgiveness, Mr. Levy said. .
Levy said Rao is suspected of submitting PPP loan applications with fraudulent documentation about payroll and the number of employees working for his company, including fake tax returns and false payroll records.
Prosecutors allege that Mr. Rao then misused the funds, including by transferring them to foreign companies he owned and buying luxury apartments in New York City.
Each count of wire fraud carries a maximum penalty of 20 years in prison, three years of supervised release, and a fine of up to $250,000.
Mr. Rao's arrest comes just about three years after the Attorney General established the COVID-19 Enforcement Task Force on May 17, 2021 to combat and prevent pandemic-related fraud.
Anyone with information about attempted COVID-19 fraud can report it by calling the Department of Justice's National Disaster Fraud Center hotline at 866-720-5721 or via the NCDF web complaint form .
This is a developing story. Check back for updates as more information becomes available.
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