A federal jury in Charlotte convicted two men today for the submission of fraudulent loan applications seeking more than $1.7 million in forgivable Paycheck Protection Program (PPP) loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief and Economic Security (CARES) Act, announced Dena J. King, U.S. Attorney for the Western District of North Carolina.
U.S. Attorney King is joined in making today’s announcement by Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division; Inspector in Charge Tommy Coke of the U.S. Postal Inspection Service, Atlanta Division; Special Agent in Charge Donald “Trey” Eakins of IRS Criminal Investigation (IRS CI), Charlotte Field Office; and J. Russell George, Treasury Inspector General for Tax Administration (TIGTA).
According to evidence presented during a six-day trial, Izzat Freitekh, 55, of Waxhaw, North Carolina, and his son Tarik Freitekh, aka Tareq Freitekh, 33, whose last known residence was in Glendale, California, obtained $1.7 million in fraudulent proceeds obtained by submitting multiple fraudulent PPP loan applications for companies owned by Izzat Freitekh: La Shish Kabob, La Shish Kabob Catering, Green Apple Catering, and Aroma Packaging. The loan applications misrepresented the number of employees and payroll expenses. After obtaining the fraudulent loan proceeds, defendants engaged in unlawful monetary transactions with the proceeds of the scheme, including making $30,000 payments to family members.
“The wicked borrow and do not repay, but in the Freitekhs’ case they also lie to cover up the fraud,” said U.S. Attorney King. “This father and son duo exploited a national emergency for their own benefit, then tried to obstruct justice to avoid punishment. A federal jury saw through their criminal shenanigans and now the Freitekhs will be held accountable for their actions. Protecting important taxpayer-funded programs remains a priority for my office, and together with our law enforcement counterparts we will continue to identify and prosecute those who exploit these programs for their own profit.”
“The CARES Act was intended to help people and businesses harmed by the pandemic, not to line the pockets of greedy individuals. The U.S. Postal Inspection Service will continue to work with our partners to hold accountable those who lie and cheat the government out of money to enrich themselves,” said Inspector in Charge Coke.
“While businesses were suffering and doing their best to make it through the pandemic, others chose greed,” said Special Agent in Charge Eakins. “IRS CI will continue to utilize its financial expertise to follow the money and recommend the prosecution of criminals taking advantage of a crisis.”
“Today’s results demonstrate the commitment of the Treasury Inspector General for Tax Administration to investigate and bring to justice those who attempt to corruptly interfere with federal tax administration,” said Inspector General George. “We appreciate the work of the U.S. Attorney’s Office and our law enforcement partners to ensure this criminal activity is held to account.”
Izzat Freitekh was convicted of one count of conspiracy to commit money laundering, three counts of money laundering, and one count of making false statements. He faces up to 10 years in prison for conspiracy to commit money laundering, 10 years in prison for each of the money laundering counts, and five years in prison for the false statements count.
Tarik Freitekh was convicted of one count of conspiracy to commit wire fraud, one count of bank fraud, one count of conspiracy to commit money laundering, one count of money laundering, and one count of falsifying and concealing material facts. He faces up to 30 years in prison for the bank fraud count, 20 years in prison for the wire fraud and money laundering conspiracies, 10 years in prison for the money laundering count, and five years in prison for the falsifying material facts count.
A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. Law enforcement previously obtained and executed seizure warrants for over $1.3 million in proceeds of the fraud, held in various accounts. The seized money was administratively forfeited by the federal government prior to the trial.
The US Postal Inspection Service, IRS-CI, and TIGTA investigated the case.
Trial Attorneys Joshua N. DeBold and Matt Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Mark Odulio of the Western District of North Carolina prosecuted the case. Assistant U.S. Attorney Benjamin Bain-Creed of the U.S. Attorney’s Office Civil Division is in charge of the forfeiture proceedings.