United States v. Raghavender Reddy Budamala

Case summary

An Orange County man who fled after authorities searched his residence was taken into federal custody after being arrested at the U.S.-Mexico border and charged with fraudulently obtaining more than $5 million in COVID-relief loans for three sham companies. Reddy Raghav Budamala, 35, of Irvine, made his initial appearance in the U.S. District Court in Los Angeles, where he was ordered held without bond because he posed a flight risk.¹ Budamala, named in the sentencing announcement as Raghavender Reddy Budamala, 36, pleaded guilty to one count of bank fraud and one count of money laundering. U.S. District Judge Otis D. Wright II sentenced him to 48 months in federal prison and ordered him to pay $5,151,497 in restitution.²

According to an affidavit filed with the complaint, Budamala in 2019 formed or acquired three shell companies with no operations: Hayventure LLC, Pioneer LLC, and XC International LLC. Following the pandemic's onset, the affidavit says, he submitted seven applications to the SBA for Paycheck Protection Program and Economic Injury Disaster Loan funds between April 2020 and March 2021. He falsely represented that the companies employed dozens of people and earned millions of dollars in revenue, the affidavit alleges. The listed company addresses were bogus, nonexistent, or residential; the states where the companies purportedly operated had no record of them paying wages to any employee, and bank records showed no significant business income or expenses. During a February 2021 interview with a State Department official over an unsuccessful attempt to obtain a passport, Budamala said he wanted the passport so he could get a job. The SBA and lenders funded six of the loans, disbursing $5,151,497. Budamala then applied to have several forgiven, falsely representing that he had used the money entirely for payroll. According to the affidavit, he spent the proceeds on personal expenses, including a $1.2 million investment property in Los Angeles and a $597,585 property in Malibu. The expenses also included a $970,000 investment in the EB-5 Immigrant Investor Visa Program and a nearly $3 million deposit into his personal TD Ameritrade account.¹

He agreed to forfeit real estate in Orange County, Malibu, and Los Angeles, plus approximately $4,119,662 in bank, investment, and cryptocurrency assets. The sentencing announcement states that he formed or acquired the shell companies between January and August 2019, and that he also used loan proceeds to buy a personal residence in Irvine.²

The case was investigated by IRS Criminal Investigation, the FBI, and the SBA Office of Inspector General. Assistant U.S. Attorney Gregory D. Bernstein of the Major Frauds Section prosecuted it, with Assistant U.S. Attorney Maxwell K. Coll of the Asset Forfeiture and Recovery Section handling forfeiture.²

Notes

1. U.S. Attorney's Office for the Central District of California, "Irvine Man Arrested on Charge Alleging He Fraudulently Obtained More Than $5 Million in COVID-Relief Loans for Sham Companies" (original), February 25, 2022. ↩₁ ↩₂
2. U.S. Attorney's Office for the Central District of California, "Irvine Man Sentenced to 4 Years in Federal Prison for Obtaining More Than $5 Million in COVID-Relief Loans for Sham Businesses" (original), September 26, 2022. ↩₁ ↩₂ ↩₃

Summary written from the documents on this page; every sentence is sourced.