22nd April, 2022
A jailed Liberian, Steven Jalloul, has pulled off another scam while locked up in U.S. prison for tax fraud.
The Ligerian from Dallas, Texas, managed to orchestrate a fraudulent scheme to secure more than $23 million in forgivable Paycheck Protection Program (PPP) loans.
While he was locked-up in the Seagoville federal prison, Jalloul submitted falsified PPP forms for his clients, inflating the number of workers they had so they could get more money.
The clients then paid Jalloul nearly $1 million in ‘commissions.’
The 43 year-old scammer was eventually caught.
On Thursday, Jalloul was sentenced to 10 years in federal prison, according to an announcement by U.S. Attorney for the Northern District of Texas, Chad E. Meacham.
In addition to the extra sentence, a judge has ordered all of the money be returned to the federal government.
Steven Jalloul, a 43-year-old tax consultant from the Dallas area, was first charged via criminal complaint in September 2020; he pleaded guilty in October 2021 to a superseding information charging him with one count of engaging in monetary transactions using property derived from unlawful activity.
He was sentenced by U.S. District Judge Jane J. Boyle.
“Mr. Jalloul callously exploited the Paycheck Protection Program, which was designed to keep struggling businesses afloat during the pandemic. He took money out of the hands of businesspeople who truly needed it,” said U.S. Attorney Chad E. Meacham. “The Justice Department will not stand for PPP fraud.”
According to plea papers, Mr. Jalloul admitted he defrauded lenders participating in the Paycheck Protection Program — a measure authorized by Congress in the early days of the pandemic to award forgivable loans to small business impacted by COVID-19 — while awaiting sentencing in a separate tax fraud case.
In court documents, he admitted that he submitted roughly 170 falsified PPP loan applications to lenders (including through a fintech company) seeking more than $23 million on behalf of over 160 clients of his tax preparation business, Royalty Tax & Financial Services LLC.
Mr. Jalloul admitted he inflated clients’ employee rosters and monthly payroll expenses in order to increase the amount of PPP funds for which their businesses would be eligible. He generally charged clients a 2 to 20 percent commission on the PPP loans they received and even listed his ex-wife as Royalty Tax’s authorized representative, without her consent, when seeking an inflated PPP loan for his own business.
In total, 97 false PPP loan applications were ultimately approved, and Mr. Jalloul’s clients were awarded more than $12 million in PPP money.
Those clients paid him at least $972,114 in fees. Mr. Jalloul also admitted to submitting a fraudulent PPP loan application on behalf of his tax preparer company and received $163,500 in PPP funds.
Mr. Jalloul was already behind bars at FCI-Seagoville, having pleaded guilty to tax fraud in the separate case in January 2020; in that case, he was sentenced to six years in federal prison.
Judge Boyle ruled that he will serve his sentence in the PPP case consecutive to his sentence in the tax fraud case.
The Dallas Field Offices of the Federal Deposit Insurance Corporation’s Office of Inspector General and IRS – Criminal Investigation conducted the investigation. Assistant U.S. Attorneys Fabio Leonardi and Marty Basu are prosecuting the case.
Assistant U.S. Attorney Dimitri Rocha is handling the asset-forfeiture component of the case.
The Paycheck Protection Program was authorized under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a federal law enacted on March 29, 2020, to provide emergency financial assistance to Americans suffering economic hardship due to the COVID-19 pandemic.
The PPP initially provided for up to $349 billion in forgivable loans to small businesses for payroll costs and certain other expenses, including rent; in April 2020, Congress authorized more than $300 billion in additional PPP funding.
The PPP allows qualifying small businesses to receive loans with a maturity of two years and an interest rate of 1 percent.
In addition, the PPP allows both the interest and principal on the loans to be forgiven if the business spends the money on qualifying expenses within a designated period of time