June 19, 2022

PPP Loan Fraud: IT Service Provider Owner Convicted, Sentenced – ChannelE2E: Technology News for MSPs & Channel Partners

The owner and CEO of an IT services company has been convicted and sentenced in a $13 million fraud scheme involving PPP (Paycheck Protection Program) loans, according to the U.S. Department of Justice.

The PPP program, managed by the Small Business Administration (SBA), is part of the  CARES Act — which the U.S. government set up to help small businesses survive the coronavirus pandemic. The PPP program directed about $800 billion to small businesses. But roughly 10 percent of that — about $80 billion — involved fraud, NBC News reported in March 2022.

Among the example cases: Defendant Elijah Majak Buoi, owner of Sosuda Tech LLC, was convicted in federal government’s first-ever pandemic fraud trial in the District of Massachusetts. Buoi now faces 39 months in prison and three years of supervised release. The case involved four counts of wire fraud and one count of making a false statement to a financial institution, the DOJ said.

Sosuda Tech allegedly offers application development and maintenance, cloud and infrastructure services, IT consulting, data analytics and AI, business process management and cybersecurity services, according to the conpany’s website.

But Buoi in 2020 “devised a scheme to obtain PPP funds by repeatedly filing false and fraudulent loan applications in which he systematically used false tax documents and payroll processing records until he was ultimately awarded a loan,” the Department of Justice indicated.

Although Sosuda was a startup company with no U.S.-based payroll and no U.S.-based employees, Buoi obtained a $2 million PPP loan. The government recovered approximately $1.97 million of the loan funds, the DOJ said.

ChannelE2E could not reach Sosuda for comment about the case.

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