Illinois Tax Preparer Sentenced for Role in $3.6M Covid-19 Fraud Scheme

Summary

A press release published 2025-07-22 by the Justice Department announcing that Farooq Khan, 31, of Chicago, was sentenced to 42 months in prison for a scheme to fraudulently obtain over $3.6 million in PPP and EIDL loans. According to the release, Khan owned Hannan Tax Services and, from approximately May 2020 through October 2021, prepared at least 30 fraudulent applications for companies that he knew were non-operational and did not qualify. It states that he caused approximately $3.6 million to be distributed, attempted to obtain at least $588,900 more, and personally obtained approximately $1.2 million. The release adds that he pleaded guilty to one count of wire fraud on Feb. 19 and was ordered to pay $3,645,104 in restitution.

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An Illinois man was sentenced yesterday to 42 months in prison for his role in a scheme to fraudulently obtain over $3.6 million in small business loans under the Coronavirus Aid, Relief, and Economic Security Act Paycheck Protection Program (PPP) and COVID19 Economic Injury Disaster Loan (EIDL) program implemented by the Small Business Administration (SBA).
According to court documents, Farooq Khan, 31, of Chicago, owned and operated Hannan Tax Services (Hannan Tax), a tax preparation company located in Chicago. From approximately May 2020 through October 2021, through Hannan Tax, Khan prepared and facilitated the submission of at least 30 fraudulent applications for loans through the PPP and EIDL program. At the time Kahn prepared and submitted the applications, he knew that the companies for which he sought the loans were non-operational and did not qualify. He also knowingly falsified the information contained in the applications, including the number of employees and tax records attributed to the defunct companies. Khan caused approximately $3.6 million to be fraudulently distributed by the SBA and PPP lenders. He also attempted to obtain at least an additional $588,900 in loans through other EIDL applications that were never funded for nonexistent companies. He personally obtained approximately $1.2 million of the fraudulent loan proceeds.
Khan pleaded guilty to one count of wire fraud on Feb. 19. At sentencing, he was also ordered to pay $3,645,104 in restitution.
Acting Assistant Attorney General Matthew R. Galeotti of the Justice Department’s Criminal Division, Special Agent in Charge Douglas S. DePodesta of the FBI Chicago Field Office, and Special Agent-in-Charge Matthew J. Scarpino of Immigration and Customs Enforcement Homeland Security Investigations (ICE-HSI) Chicago made the announcement.
The FBI Chicago Field Office and ICE-HSI are investigating the case.
Trial Attorney Claire Sobczak Pacelli of the Criminal Division’s Fraud Section is prosecuting the case.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Justice Department’s National Center for Disaster Fraud (NCDF) Hotline at 8667205721 or via the NCDF Web Complaint Form at
www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form
.

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