Source: United States Department of Justice News
LOS ANGELES – An Orange County man has agreed to plead guilty to federal criminal charges that he fraudulently obtained more than $5 million in COVID-relief loans for three sham companies.
Raghavender Reddy Budamala, 35, of Irvine, agreed to plead guilty to one count of bank fraud and one count of money laundering in a plea agreement filed today in United States District Court. Budamala, who has agreed to forfeit his ill-gotten gains to the government, is scheduled to enter his guilty plea on June 21 before United States District Judge Otis D. Wright II.
According to his plea agreement, in 2019 Budamala formed or acquired three shell companies with no operations – Hayventure LLC, Pioneer LLC, and XC International LLC. Following the outbreak of the COVID-19 pandemic, and the enactment of federal programs designed to address the economic fallout from the pandemic, Budamala submitted to the Small Business Administration seven applications for pandemic-relief loans under the Paycheck Protection Program and Economic Injury Disaster Loan.
As part of the applications filed from April 2020 through March 2021, Budamala falsely represented to the banks administering the COVID-relief business loan programs that his companies employed dozens of individuals and earned millions of dollars in revenue, and that he needed the money for payroll and business expenses.
The listed addresses for the companies were bogus, nonexistent or residential. The states where Budamala’s companies purportedly operated have no records of those companies paying wages to any employees, and bank records for the companies reflect no significant business income or operating expenses.
The SBA and the banks funded six of the loans and disbursed $5,151,497. Budamala applied to have several of the loans forgiven and falsely represented that he had used the SBA money entirely for payroll.
Once the loans were funded, Budamala used the money to pay for personal expenses, including the purchase of a $1.2 million investment property in Eagle Rock, the purchase of a $597,585 property in Malibu, the purchase of a personal residence in Irvine, a $970,000 investment in an EB-5 Immigrant Investor Visa Program and a nearly $3 million deposit into Budamala’s personal TD Ameritrade account.
Upon entering his guilty plea, Budamala will face a statutory maximum sentence of 40 years in federal prison.
Budamala has been in federal custody since his arrest on February 23, when he attempted to abscond from the United States to Mexico via the San Ysidro border crossing. A criminal complaint was filed against him on February 24.
IRS Criminal Investigation, the FBI, and the Small Business Administration’s Office of Inspector General investigated this matter.
Assistant United States Attorney Gregory D. Bernstein of the Major Frauds Section is prosecuting this case.
In May 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at (866) 720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.