Three Arrested As Government Cracks Down On PPP Loan Fraud

Audrey Strauss, the Acting United States Attorney for the Southern District of New York, Amaleka McCall-Brathwaite, Eastern Region Special Agent-in-Charge of the Office of the Inspector General of the U.S. Small Business Administration (“SBA-OIG”), William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Jonathan D. Larsen, Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced today the arrests of NGOC MANH NGUYEN, a/k/a “Peter Nguyen,” VICTORIA DIEUY HO, a/k/a “Vicky Ho,” and DAT TAT HO for a fraudulent scheme to obtain over $13 million in Government-guaranteed loans designed to provide relief to small businesses during the novel coronavirus/COVID-19 pandemic. In connection with loan applications for COVID-19 relief available from the Paycheck Protection Program (“PPP”) of the SBA, the defendants falsely and grossly overstated the number of employees and payroll at their nail salons and other businesses through fraudulent and doctored payroll and tax records in order to obtain larger loans. The defendants were arrested this morning. VICTORIA HO will be presented tomorrow in Manhattan federal court before U.S. Magistrate Judge Sarah Netburn. NGUYEN and DAT HO will be presented in United States District Court for the Eastern District of New York in connection with these and other unrelated charges.

According to the allegations contained in the Complaint[1] unsealed today in Manhattan federal court:

The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of hundreds of billions of dollars in forgivable loans to small businesses for job retention and certain other expenses through the SBA’s PPP. Pursuant to the CARES Act, the amount of PPP funds a business is eligible to receive is determined by the number of employees employed by the business and their average payroll costs. Businesses applying for a PPP loan must provide documentation to confirm that they have previously paid employees the compensation represented in the loan application.

NGUYEN, VICTORIA HO, and DAT HO are members of a family that owns a chain of over 15 nail salons called “Victoria Nails & Spa” and other companies (the “Victoria Companies”) in or around the New York metropolitan area, including the Bronx, Brooklyn, and Long Island. From at least in or about April 2020 through at least in or about June 2020, NGUYEN, VICTORIA HO, and DAT HO engaged in a scheme to submit online applications to at least two financial institutions for a total of over $13 million in government-guaranteed loans for the Victoria Companies through the SBA’s PPP. In connection with these loan applications, the defendants falsely and grossly overstated the number of employees at the Victoria Companies and wages paid to those employees in order to obtain larger loans. In order to support the false representations in the loan applications about the number of employees at, and the wages paid by, the Victoria Companies, the defendants submitted fraudulent and doctored payroll and tax records. In addition, the defendants falsely listed the same employees in applications for different nail salons to support the loan amounts applied for, and some purported employees were listed as employees of as many as seven different nail salons during the same time period.

Based on the fraudulent PPP loan applications submitted by NGUYEN, VICTORIA HO, and DAT HO, a total of more than $13 million in PPP loans were approved for the Victoria Companies and approximately $7.8 million in loan proceeds were disbursed into bank accounts controlled by NGUYEN, DAT HO, and other family members. After the defendants learned that a hold was placed on bank accounts of the Victoria Companies that received PPP loans issued by one financial institution due to suspicion of fraudulent activity, one of the defendants conducted Internet searches for “PPP Fraud,” “PPP Loan Fraud Arrests,” and “How to get rid of a PPP Loan.” The defendants thereafter withdrew the applications for and/or repaid the PPP loans for the Victoria Companies issued by that financial institution.

NGUYEN, 44, and VICTORIA HO, 31, both of Hicksville, New York, and DAT HO, 33, of the Bronx, New York, are each charged with one count of conspiracy to commit bank and wire fraud, which carries a maximum sentence of 30 years in prison; one count of major fraud against the United States, which carries a maximum sentence of 10 years in prison; and one count of conspiracy to make false statements, which carries a maximum sentence of five years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Ms. Strauss praised the investigative work of the SBA-OIG, FBI, and IRS-CI, and noted that the investigation remains ongoing. Ms. Strauss also thanked Homeland Security Investigations and the U.S. Attorney’s Office for the Eastern District of New York for their assistance with the investigation.

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorneys Michael C. McGinnis and Sagar K. Ravi are in charge of the prosecution.

The charges contained in the complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.