Apparently, some folks thought “PPP” stood for Professional Pandemic Profiteering. But the feds just reminded them: crime doesn’t pay—at least not forever.
In this publication, we’re diving into one of the largest COVID-era financial scams yet—one that stretched across years, borders, and bogus businesses. If you thought the pandemic ended the worst of the chaos, this $25 million case says otherwise.
A California-based criminal ring has been charged with defrauding the U.S. government out of more than $25 million through fake businesses and fraudulent COVID relief loan applications, in a scheme that began before the pandemic and spanned multiple years.
How It Works:
-
Build Fake Businesses:
Scammers set up sham companies with no intention of offering actual services. Think “Music E Solutions” suddenly rebranding to “Mobile Auto Repair, Inc.” overnight. -
Open Bank Accounts:
Fraudsters used stand-ins—often people they pressured—to open accounts in their names. -
Forge Documents & Apply for Loans:
They submitted fake documentation to get COVID-related loans: Paycheck Protection Program (PPP), Economic Injury Disaster Loans (EIDL), and more. -
Launder the Cash:
Once the funds hit, they were moved through multiple accounts to hide the trail and avoid detection. -
Spend It:
The money was used for personal gain—not business. Think lavish lifestyles, not lesson plans.
Who’s Targeted:
This scheme wasn’t about targeting victims to scam—it was about targeting the U.S. government and its relief programs meant to help real small businesses stay afloat during the pandemic.
The fallout, however, impacts:
- Legitimate small business owners, who faced more scrutiny and delays as a result of increased fraud.
- Taxpayers, who foot the bill for these fraudulent payouts.
Real-Life Example:
Authorities say Vahe Margaryan, 42, of Tujunga, was the ringleader. He allegedly manipulated others—like a man identified as F.N.—into opening business accounts and applying for loans under false pretenses.
F.N. grew concerned, calling Margaryan’s behavior “scary” and “unhinged.” He even questioned whether what they were doing was legal. Margaryan assured him it was—and pressured him to keep going.
By the time the feds swooped in, 14 people had been arrested. Authorities seized cash, loaded handguns, money-counting machines, and laptops. Four suspects remain at large, believed to be hiding in Armenia.
Why You Should Care:
This scam shows how opportunistic criminals used a crisis to line their pockets—and why we’re all affected. Fraud like this not only misuses taxpayer dollars, but it also clogs the system for those who actually needed help during one of the worst global economic downturns in history.
It also highlights a darker reality: many scams thrive under the radar for years, and some rely on manipulating people into compliance through fear, coercion, or promises of easy money.
How to Protect Yourself:
• Don’t “front” for someone else’s business. If someone asks you to open a bank account or apply for a loan “on their behalf,” it’s likely a scam.
• Question sudden changes in business names or models. A guitar school suddenly becoming an auto repair shop? Big red flag.
• Double-check loan documentation. If you’re involved in any loan process, read everything before signing. Fraudsters often hide behind complex forms.
• Report suspicious financial activity. Contact federal authorities or your local U.S. Attorney’s Office if you suspect fraud.
• Trust your gut. If someone’s behavior feels “scary” or coercive, it probably is. Step back and seek legal or professional help.
Quick Tips & Updates:
• Quick Tip #1: Did you know? Over $200 billion in COVID relief funds are suspected to have been stolen or improperly disbursed.
• Pro Tip: Scammers love crisis periods. When new programs or government relief efforts roll out, scam attempts spike. Always verify sources and avoid fast-money schemes.
• Update: Homeland Security Investigations is cracking down hard on pandemic-related fraud. Arrests are continuing nationwide, and international suspects are being pursued.
Stay safe, stay informed.
Keywords:
• COVID Loan Fraud – The use of false information to obtain pandemic-related government funds.
• PPP (Paycheck Protection Program) – A federal loan program intended to help businesses retain employees during COVID-19.
• Economic Injury Disaster Loan (EIDL) – A relief program offering loans to small businesses affected by disasters, including the pandemic.
• Money Laundering – The act of concealing the origins of illegally obtained money.
• Wire Fraud – Fraud involving electronic communications or transactions.
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