A Newton man admitted to illegally getting a $5.6 million COVID relief loan meant for businesses struggling during the pandemic.
Azhar Sarwar Rana, 30, pleaded guilty to bank fraud and money laundering in federal court on Thursday, said a release from the U.S. Attorney’s Office. He was arrested on Dec. 12, 2020, as he left his home and was going to board a same-day flight to Pakistan.
Rana received money from the federal Paycheck Protection Program after he falsified payroll and tax information for his alleged real estate development business, Azhar Sarwar Rana LLC.
In his loan application, Rana said he had 11 employees, not including family or himself. He initially said his monthly payroll was $722,352 but later amended it to say it was closer to $1.4 million, requesting a $10 million loan, according to the complaint.
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He used the millions he received to purchase stock market investments and a luxury car. He also sent hundreds of thousands of dollars to bank accounts in Pakistan.
Records from the New Jersey Department of Labor showed that Rana’s company paid no wages for 2019 and that the wages for 2020 were to people whose Social Security numbers did not match the submitted names, the release said.
Rana faces up to 40 years in federal prison and fines of $1.25 million.
The Coronavirus Aid, Relief and Economic Security (CARES) Act was passed in March 2020 as a way to provide emergency financial assistance to those facing economic hardship because of the pandemic. The CARES Act allowed up to $349 billion in forgivable loans for small businesses, and an additional $300 billion in PPP funding was authorized the next month.
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The qualifying businesses could receive loans with a two-year maturity and 1% interest rate, and the loans had to be used for payroll, interest on mortgages, rent and utilities. The loan was forgivable if the money was spent on these specific expenses within a set time, and a certain percentage had to be used for payroll.
Congressional investigators also found that thousands of ineligible companies received loans, despite many businesses’ crediting the program with keeping them alive after the shutdown, a September report said.
In November, a Hackettstown man was charged with fraudulently getting $1.8 million in PPP loans.
Kaitlyn Kanzler covers Essex County for NorthJersey.com. For access to the most important news from your local community, please subscribe or activate your digital account today.
Email: [email protected]
Twitter: @KaitlynKanzler8