A Texas woman will serve over five years behind bars for her role in defrauding the Paycheck Protection Program (PPP) under the CARES Act.

Court documents and evidence brought forward during trial detail that 24-year-old Lola Shalewa Barbara Kasali of Houston, Texas, defrauded the PPP out of $1.9 million. Following her trial, she was found guilty of two counts of bank fraud and two counts of making false statements to a financial institute.

Prosecutors detail that Kasali submitted two fraudulent loan applications on behalf of her companies, Lola’s Level and Charm Hair Extensions. Officials detail that the loans were submitted to two different lenders in conjunction with fraudulent documents to support her claims. With her fraudulent applications, Kasali was seeking over $3.8 million in relief from the Small Business Administration.

To support her applications, prosecutors detail that Kasali offered up fraudulent tax records in order to secure the funds. In total, she was paid out a little over $1.9 million in PPP loan funding. After her scheme was uncovered, local law enforcement supported by the Justice Department was able to seize most of the funding that Kasali received.

Task Force Continues Crack Down on Pandemic Fraud

The Paycheck Protection Program which was established to help business owners during the pandemic offers loans guaranteed by the Small Business Administration under the Coronavirus Aid, Relief, and Economic Security Act, (the CARES Act). Following massive nationwide fraud related to the PPP, the Attorney General put into place the COVID-19 Fraud Enforcement Task Force in an effort to crack down on those who submitted and/or received money from the PPP.

The COVID-19 fraud task force was established to help bolster the efforts in cracking down on the estimated $80 billion stolen by applicants who fraudulently sought out the loans. Some analysts estimate that at least half of the loans stolen were perpetrated by international fraudsters.

But what exactly stipulates a CARES Act fraud case, and why is it that so many people have been able to swindle the government out of billions of dollars?

Elements of CARES Act Fraud Case

Like most cases of fraud against the PPP and other government programs, applicants will typically engage in several deceptive behaviors. Many of the fraud cases include individuals filing loan applications for non-existent businesses and submitting multiple loan applications to different lenders in order to avoid suspicion.

Because the PPP was established to help business owners through payroll and service funding, applicants must show that a percentage of the loan will go toward payroll and other expenses. For many of these fraudulent claims, it’s common for fraudsters to report that they have employees on their roster and other expenses when in fact they don't.

Another way applicants have been able to obtain funding is by providing fraudulent financial statements. This can include doctored bank statements, tax records, and other financial documents that support their position of being eligible for the loans.

And while many of these fraudsters feel emboldened because their actions feel like a “victimless” crime, the consequences can be severe. Charges including wire fraud, bank fraud, and lying to a financial institution can carry with them severe fines and jail time, especially for those who file multiple fraudulent claims throughout their criminal activity.

Hunt for Fraudsters Continues

As part of the crackdown by the task force, investigators have been successful as they have ramped up their efforts to hunt down perpetrators of the criminal activity. The Justice Department has boasted of success as their COVID-19 task force continues to seek out fraudulent financial documents and nonexistent businesses to which thousands and in some cases millions of dollars have been provided.