Orange County man to plead guilty to $5 million COVID-19 relief loan scam
An Orange County man has agreed to plead guilty to a $5 million COVID-19 relief loan scam, the U.S. Attorney’s Office said in a statement.
Raghavender Reddy Budamala, 35, of Irvine reportedly used relief loans to buy a $1.2 million “investment property” in Eagle Rock, a nearly $600,000 property in Malibu and a “residence personal” in Irvine. Budamala deposited nearly $3 million in a personal account, the US attorney said.
Under the plea deal, Budamala will admit one count of bank fraud and one count of money laundering and forfeit all the money he earned during the scheme.
Before the COVID-19 outbreak in early 2020, Budamala had three shell companies: Hayventure LLC, Pioneer LLC and XC International LLC, authorities said.
Between April 2020 and March 2021, Budamala applied for seven paycheck protection programs and economic disaster loans for businesses.
The Paycheck Protection Program and COVID-19 Economic Disaster Loans were introduced in the months after the pandemic began to help businesses and employees survive shutdowns and quarantines. The loans were virtually interest-free and repayable.
In its applications, Budamala said the companies employed dozens of people and had millions of dollars in revenue. The banks funded six loans for a total of $5,151,497.
Budamala then called for the cancellation of several loans, saying he had used the money for payroll.
However, the addresses listed for the businesses “were false, nonexistent, or residential,” prosecutors said in the statement.
“The states where the Budamala businesses are believed to have operated have no record of these businesses paying salaries to employees, and the businesses’ bank records do not reflect any significant business income or operating expenses,” the statement said. .
Budamala was arrested in February while allegedly trying to flee to Mexico, prosecutors said.
Upon sentencing, Budamala could face up to 40 years in federal prison.