Category: United States of America

Source: United States Attorneys General 1

A Nevada man was sentenced today to over 15 years in prison and five years of supervised release for fraudulently obtaining more than $11 million in Paycheck Protection Program (PPP) loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act and then laundering the funds through real estate transactions, gambling activity, and luxury purchases. The defendant was also ordered to pay restitution in the amount of $11,793,064.15, forfeiture in the amount of $11,231,186.52, and to forfeit two vehicles and five properties.

“This defendant stole more than $11 million in taxpayer funds that he used to finance luxury purchases and gambling,” said Acting Assistant Attorney General Matthew R. Galeotti of the Justice Department’s Criminal Division. “Prosecuting schemes like this is critical to protecting the contributions of hard-working Americans, preserving confidence in government relief programs, and ensuring that aid reaches those who truly need it. This sentence demonstrates the Criminal Division’s continuing commitment to protecting the public’s money from thieves and fraudsters.”

“The consequences of the defendant’s PPP loan fraud scheme have caught up with him and now he will be incarcerated for exploiting more than $11.2 million from a taxpayer-funded program,” said Acting U.S. Attorney Sigal Chattah for the District of Nevada. “Thanks to the diligent work of our law enforcement partners, the defendant is being held accountable for defrauding the government.”

“This lengthy sentence shows how seriously the American government takes PPP loan fraud,” said Special Agent in Charge Carissa Messick of IRS Criminal Investigation’s (IRS-CI) Phoenix Field Office. “This loan program was created to support small businesses and their employees during a once in a lifetime pandemic. When Mr. Dezfooli fraudulently obtained these loans, he not only stole from the Small Business Administration, but also from American taxpayers to the tune of $11.2 million. This sentencing is a testament to IRS-CI’s dedication to protecting American taxpayers and ensuring the integrity of our tax system.”

“Today’s sentencing holds accountable and brings to justice a fraudster who stole millions of taxpayer dollars intended to help small business owners,” said Special Agent in Charge Jon Ellwanger of the Office of Inspector General for the Board of Governors of the Federal Reserve System and Consumer Financial Protection Bureau Western Region. “We are proud to have worked with our federal law enforcement partners and the U.S. Attorney’s Office to achieve this result.”

“Mr. Dezfooli falsified loan applications to fraudulently obtain PPP loan proceeds that he used to enrich himself to the detriment of legitimate business struggling during the pandemic,” said Special Agent in Charge Ryan Korner of the Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG). “The defendant’s actions not only defrauded the PPP loan program but also disadvantaged business owners who were actually entitled to the benefits. FDIC OIG is committed to working alongside our law enforcement partners to protect the Nation’s Financial System and hold accountable those individuals, like Mr. Dezfooli, who steal benefits designated to help those in need.”

According to evidence presented at trial, Meelad Dezfooli, of Henderson, Nevada, submitted three fraudulent applications on behalf of entities he controlled, obtaining more than $11 million. Dezfooli supported these applications with false documents, including fabricated tax records and a utility bill, and grossly inflated the number of employees and payroll expenses of each entity.

After receiving the PPP funds, Dezfooli laundered the money by purchasing approximately 25 properties in Nevada, often using the alias “James Dez” or a fictitious entity called “Holdings Trust.” Even after he was indicted, Dezfooli continued laundering money, including selling property purchased with the illegally obtained PPP funds. He also used criminal proceeds to fund his personal investment account, buy luxury cars, and gamble extensively throughout Las Vegas. As part of this investigation, five homes were seized by law enforcement.

On Sept. 4, 2024, a jury found Dezfooli guilty of three counts of bank fraud, three counts of money laundering, and four counts of conducting transactions using criminally derived property. One of those violations related to a transaction that Dezfooli conducted after he had already been charged.

The IRS-CI, FRB-OIG, FDIC-OIG, and SBA-OIG investigated the case.

Trial Attorneys D. Zachary Adams and Taylor G. Stout of the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS) and Assistant U.S. Attorney Daniel R. Schiess for the District of Nevada prosecuted the case. Legal Assistant Alexa Stiles and Paralegal Holly Butler of MLARS provided substantial assistance throughout the investigation and trial.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Justice Department’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

Source: United States Attorneys General

A Chinese national was sentenced today to four years in prison and three years of supervised release for writing and deploying malicious code on his then-employer’s network. 

“The defendant breached his employer’s trust by using his access and technical knowledge to sabotage company networks, wreaking havoc and causing hundreds of thousands of dollars in losses for a U.S. company,” said Acting Assistant Attorney General Matthew R. Galeotti of the Justice Department’s Criminal Division. “However, the defendant’s technical savvy and subterfuge did not save him from the consequences of his actions. The Criminal Division is committed to identifying and prosecuting those who attack U.S. companies, whether from within or without, to hold them responsible for their actions.”  

“The FBI works relentlessly every day to ensure that cyber actors who deploy malicious code and harm American businesses face the consequences of their actions,” said Assistant Director Brett Leatherman of the FBI’s Cyber Division. “I am proud of the FBI cyber team’s work which led to today’s sentencing and hope it sends a strong message to others who may consider engaging in similar unlawful activities. This case also underscores the importance of identifying insider threats early and highlights the need for proactive engagement with your local FBI field office to mitigate risks and prevent further harm.”

In March, a jury convicted Davis Lu, 55, legally residing in Houston, of causing intentional damage to protected computers. According to court documents and evidence presented at trial, Lu was employed as a software developer for the victim company headquartered in Beachwood, Ohio, from November 2007 to October 2019. Following a 2018 corporate realignment that reduced his responsibilities and system access, Lu began sabotaging his employer’s systems. By Aug. 4, 2019, he introduced malicious code that caused system crashes and prevented user logins. Specifically, he created “infinite loops” (in this case, code designed to exhaust Java threads by repeatedly creating new threads without proper termination, resulting in server crashes or hangs), deleted coworker profile files, and implemented a “kill switch” that would lock out all users if his credentials in the company’s active directory were disabled. The “kill switch” code — which Lu named “IsDLEnabledinAD”, abbreviating “Is Davis Lu enabled in Active Directory” — was automatically activated when he was placed on leave and asked to surrender his laptop on Sept. 9, 2019, and impacted thousands of company users globally.

Additionally, on the day he was directed to turn in his company laptop, Lu deleted encrypted data. His internet search history revealed he had researched methods to escalate privileges, hide processes, and rapidly delete files, indicating an intent to obstruct the efforts of his co-workers to resolve the system disruptions. Lu’s employer suffered hundreds of thousands of dollars in losses as a result of his actions.

The FBI Cleveland Field Office investigated the case.

Senior Counsel Candina S. Heath of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) and Assistant U.S. Attorneys Daniel J. Riedl and Brian S. Deckert for the Northern District of Ohio prosecuted the case.

CCIPS investigates and prosecutes cybercrime in coordination with domestic and international law enforcement agencies, often with assistance from the private sector. Since 2020, CCIPS has secured the conviction of over 180 cybercriminals, and court orders for the return of over $350 million in victim funds.