Santa Clarita Man Sentenced to Nearly 3½ Years in Federal Prison for Fraudulently Obtaining COVID-Relief Loans

Summary

A press release published 2022-04-18 by the U.S. Attorney's Office for the Central District of California announcing that Raymond Magana, 41, of Santa Clarita was sentenced by United States District Judge Stanley Blumenfeld Jr. to 41 months in federal prison and ordered to pay $360,415 in restitution. The office states that Magana pleaded guilty in January 2021 to fraud in connection with major disaster or emergency benefits after submitting PPP applications with fake tax documents and non-existent employees. According to the release, a $940,416 loan to The Building Circle LLC was funded on June 4, 2020 but frozen by the bank, and Forward Builders LLC received $360,415, the actual loss, which Magana deposited with the court before sentencing. It states that business partner Steven R. Goldstein is serving a one-year sentence.

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Full text

LOS ANGELES
– A Santa Clarita man was sentenced today to 41 months in federal prison for attempting to steal millions of dollars in Paycheck Protection Program (PPP) COVID-relief loans for his companies by submitting fraudulent applications that included fake tax documents and information for non-existent employees.
Raymond Magana, 41, was sentenced by United States District Judge Stanley Blumenfeld Jr., who ordered him to pay $360,415 in restitution. At today’s hearing, Judge Blumenfeld called Magana’s crime “a despicable offense” and noted that Magana exploited a “national emergency” in order to “line his own pockets.”
Magana pleaded guilty in January 2021 to one count of fraud in connection with major disaster or emergency benefits.
In May and June 2020, Magana submitted to banks PPP loan applications that contained false statements about the number of employees and the amount of payroll expenses. Specifically, on June 3, 2020, Magana submitted a PPP loan application to Customer’s Bank for $940,416 for The Building Circle LLC, a company registered in his name.
In that application, Magana falsely claimed the company’s average monthly payroll was $376,167 for 40 workers. Magana admitted to submitting fraudulent tax documents that reported $4,402,000 in annual wages paid to 40 employees in 2019 and $852,000 paid in employee wages during the first quarter of 2020.
IRS and California Employment Development Department records showed that the company never reported paying any employees, and the underwriting packet also did not include a list of employees or associates for the company, according to an affidavit filed with a criminal complaint in this case.
Investigators later determined that the Pico Rivera address given as The Building Circle’s headquarters was a 980-square-foot, single-family home that appeared to be a residence, not a business. Ultimately, the loan application was approved and $940,416 was funded to Magana’s company on June 4, 2020, the affidavit states.
Magana also applied for and received a PPP loan of $360,415 for Forward Builders LLC, another company, using fake tax documents and false employee information, and falsely claiming $1.73 million in employee wages.
When a bank manager contacted Magana after one of the business accounts receiving PPP funds had been frozen because of suspicious activity, he told the bank “We have all the documents, we got approved,” and he refused to agree to return the improperly obtained PPP funds, the affidavit states. The bank nonetheless kept the $940,416 in Magana's bank account frozen, and he could not access it.
The actual loss from the two loans that were approved and disbursed was $360,415. Prior to today’s sentencing hearing, Magana deposited with the court $360,415 as his restitution payment.
Magana’s business partner, Steven R. Goldstein, 37, of Northridge, is serving a one-year federal prison sentence for committing fraud in connection with major disaster or emergency benefits. Goldstein pleaded guilty in December 2020 to a federal fraud charge and admitted in his plea agreement that he fraudulently obtained $655,000 in PPP loans for his companies by submitting false tax documents and fake employee information.
IRS Criminal Investigation and the Small Business Administration’s Office of Inspector General investigated this case.
Assistant United States Attorney Charles E. Pell of the Santa Ana Branch Office prosecuted this case.

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