Issaquah software engineer faces federal charges for $1.5M coronavirus business loan fraud
Baoke Zhang, 35, was charged with wire fraud and bank fraud in a federal criminal complaint unsealed in the Western District of Washington on Friday.
He is accused of filing multiple fraudulent bank loan applications in pursuit of more than $1 million in forgivable loans guaranteed under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
The complaint states that Zhang sought $1,525,000 in Covid-19 relief loans provided by the U.S. Small Business Administration's Paycheck Protection Program, by falsifying payroll expenditures for nonexistent technology companies.
The federal CARES Act, which was enacted on March 29, authorized up to $349 billion in forgivable loans for small businesses struggling to compensate staff and handle certain other expenses. Zhang is accused of knowingly attempting to defraud lenders for those funds.
Zhang allegedly gave two financial institutions falsified IRS documentation claiming to show federal tax withholdings for 25 employees at a fake sole proprietorship, and 20 employees at a fictitious limited liability company.
Additionally, Zhang is alleged to have fabricated records to make it seem as though the businesses had operated for several quarters prior to April 2020, when he first started applying for the loans.
One of the lenders attempted to transmit $325,000 in approved funds to a bank account tied to Zhang, which was created in April 2020. But the money was returned before it could be deposited due to discrepancies related to the account name, according to court documents.
Zhang ultimately never received any money from either lender.
“This is an example of someone who was attempting to take advantage of a program to help Americans during one the most difficult times in recent memory,” said Raymond Duda, a special agent with the FBI’s Seattle Field Office.
The case is being prosecuted by trial attorney Amanda Vaughn of the Criminal Division’s Fraud Section and assistant U.S. attorney Brian Werner for the Western District of Washington.