Two brothers from San Diego County are facing a civil complaint from the U.S. government for allegedly defrauding the Paycheck Protection Program (PPP) out of more than $8 million, as reported by the U.S. Attorney's Office for the Southern District of California. Duraid A. Zaia and Kusay Karana purportedly collected these funds by submitting false information regarding business operations and employee counts for three businesses that, as per the government's claims, do not exist.
The PPP loans, part of the CARES Act, were intended to assist small businesses with employee payroll and other essential expenses during the COVID-19 pandemic. The complaint, filed on May 9th, accuses Zaia and Karana of fraudulently securing four loans by certifying nonexistent or exaggerated business details. Applying between March 25 and April 28 of 2021, they reported inflated staff numbers and operational statuses that later proved inaccurate.
One of the dubious claims involves "Ramona Egg Ranch," a business Zaia claimed to have 75 employees and over $9.5 million in annual payroll. In stark contrast, his tax returns showed annual payroll costs of only $62,848. "The Duriad A. Zaia Sole Proprietorship" is another example cited. Zaia asserted a workforce of 137 and a 2016 establishment date, despite the business not having acquired an Employer Identification Number (EIN) necessary for proper operation until 2021.
Further, the brothers allegedly padded their loan applications with fabricated lists of employees. A striking inconsistency was uncovered when 41 supposedly working full-time individuals appeared on employment lists for Zaia's and Karana's separate businesses. Even after being denied loan forgiveness and defaulting, their actions resulted in lenders being reimbursed by the Small Business Administration (SBA), causing an excess of $8.6 million in losses to the United States.
As the case seeks justice for misuse of federal funds, U.S. Attorney Adam Gordon emphasized the importance of accountability for those exploiting the PPP. "COVID-relief programs were designed to help people and businesses under extreme financial stress during the pandemic," Gordon stated, asserting the determination of his office "to pursue those who knowingly cheat taxpayers" by such abuses. The SBA's OIG's Western Region Assistant Special Agent in Charge Jonathan Huang echoed this sentiment, reaffirming their commitment to pursuing and prosecuting wrongdoers, as per the U.S. Attorney's Office.
