An Illinois tax preparer will be spending a substantial amount of time behind bars after being sentenced for orchestrating a multi-million dollar fraud scheme exploiting COVID-19 relief funds. Farooq Khan, 31, of Chicago, was handed a 42-month prison sentence yesterday for using his business, Hannan Tax Services, to file at least 30 bogus loan applications, which netted over $3.6 million from programs intended to help small businesses weather the pandemic.
Delving into the specifics of Khan’s wrongdoing, court documents revealed the tax preparer manipulated applications to the SBA's Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program, despite knowing the firms he represented were non-operational and therefore ineligible for such relief. His actions not only misrepresented employee numbers and tax records but also attempted to secure an additional $588,900 for other non-existent companies—a ploy that, fortunately, did not materialize.
In a guilty plea entered on February 19, Khan admitted to one count of wire fraud and was consequently ordered to pay back $3,645,104 in restitution, according to a Justice Department release. Throughout the proceedings, it was established that Khan personally pocketed roughly $1.2 million of the dishonestly acquired funds.
Special agents from the FBI Chicago Field Office and ICE-HSI are credited with the investigation that brought Khan’s scheme to light, an effort underscored by Acting Assistant Attorney General Matthew R. Galeotti. Trial Attorney Claire Sobczak Pacelli of the Criminal Division's Fraud Section led the prosecution, with the case being publicly announced by Galeotti alongside FBI's Special Agent in Charge Douglas S. DePodesta and ICE-HSI's Special Agent-in-Charge Matthew J. Scarpino. The agencies encourage anyone with knowledge of similar COVID-19-related fraud to report it to the National Center for Disaster Fraud.
