Indictment — Fahad H. Shah (Eastern District of Texas, Sherman Division)

Summary

Indictment stamped JUN 18 2020, in the United States District Court for the Eastern District of Texas, Sherman Division, against Fahad H. Shah, a resident of Murphy, Texas. It states that WBF Weddings by Farah, Inc. was a Texas corporation that operated as a wedding planning company and forfeited its existence in 2018, and that Shah was its registered agent and purported to be the 100% owner. It alleges that beginning in or around April 2020 and continuing until at least in or around May 2020, in Collin County, Texas, Shah devised a scheme to defraud Bank 1, Bank 2, Company 1, and the SBA by filing false and fraudulent applications for PPP funds. A notice of penalty for Counts One through Three lists imprisonment of not more than 30 years and a fine not to exceed $1,000,000.

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“Indictment — Fahad H. Shah (Eastern District of Texas, Sherman Division).” Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/crim-txed-4-20-cr-00156-u-s-v-fahad-h-shah-docx-indictment-190059e9e3/, SHA-256 cb25163634b1f9fff41ff5c3475dbc41ce3c6358cc7aa2a3809ec2979e5a1884.

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IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS JUN 18 2020
SHERMAN DIVISION
Clerk, U.S. District Court
Texas Eastern
UNITED STATES OF AMERICA SEALED
§ SEALED

V. § No. 4:20-CR-
§ Judge
FAHAD H. SHAH §
INDICTMENT

THE UNITED STATES GRAND JURY CHARGES:

General Allegations

At all times relevant to this Indictment:

The Defendant and Related Entities

1. Defendant Fahad H. Shah was a resident of Murphy, Texas, in the Eastern District

of Texas.

2. WBF Weddings by Farah, Inc. ( WBF ) was a Texas corporation formed in or

around March 2011. WBF operated as a wedding planning company. In 2018, WBF forfeited

its existence due to a failure to file a state franchise tax return and/or to pay state franchise taxes.

Defendant Fahad H. Shah was WBF s registered agent and purported to be the 100% owner of

WBF.

The Small Business Administration

3. The United States Small Business Administration ( SBA ) was an executive-

branch agency of the United States government that provided support to entrepreneurs and small

businesses. The mission of the SB A was to maintain and strengthen the nation s economy by

enabling the establishment and viability of small businesses and by assisting in the economic

recovery of communities after disasters.

Indictment Page 1
4. As part of this effort, the SBA enabled and provided for loans through banks, credit

unions, and other lenders. These loans have government-backed guarantees.

The Paycheck Protection Program

5. The Coronavirus Aid, Relief, and Economic Security ( CARES ) Act was a federal

law enacted in March 2020 and designed to provide emergency financial assistance to the

millions of Americans who are suffering the economic effects caused by the COVID-19

pandemic. One source of relief provided by the CARES Act was the authorization of forgivable

loans to small businesses for job retention and certain other expenses, through a program referred

to as the Paycheck Protection Program ( PPP ).

6. To obtain a PPP loan, a qualifying business was required to submit a PPP loan

application, which was signed by an authorized representative of the business. The PPP loan

application required the business (through its authorized representative) to acknowledge the

program rules and make certain affirmative certifications in order to be eligible to obtain the PPP

loan. In the PPP loan application (SBA Form 2483), the small business (through its authorized

representative) was required to state, among other things, its: (a) average monthly payroll

expenses; and (b) number of employees. These figures were used to calculate the amount of

money the small business is eligible to receive under the PPP. In addition, businesses applying

for a PPP loan were required to provide documentation showing their payroll expenses.

7. A PPP loan application was processed by a participating lender. If a PPP loan

application was approved, the participating lender funded the PPP loan using its own monies,

which were guaranteed by the SBA. Data from the application, including information about the

borrower, the total amount of the loan, and the listed number of employees, was transmitted by

the lender to the SBA in the course of processing the loan.

Indictment - Page 2
8. PPP loan proceeds were required to be used on certain permissible expenses,

including payroll costs, mortgage interest, rent, and utilities. Under the applicable PPP rules and

guidance, the interest and principal on the PPP loan is eligible for forgiveness if the business

spent the loan proceeds on these expense items within a designated period of time and used a

certain portion of the loan towards payroll expenses.

Relevant Financial Institutions and Related Entities

9. Bank 1 was a federally insured financial institution and a member of the Federal

Home Loan system based in Sioux Falls, South Dakota with branches throughout the United

States. Bank 1 participated in the SBA s PPP as a lender and, as such, was authorized to lend

funds to eligible borrowers under the terms of the PPP.

10. WBF maintained an account at Bank 1. Defendant Fahad H. Shah was a signatory

on that account.

11. Bank 2 was a federally insured financial institution and a member of the Federal

Home Loan system based in Salt Lake City, Utah. Bank 2 participated in the SBA s PPP as a

lender, and, as such, was authorized to lend funds to eligible borrowers under the terms of the

PPP.

12. Company 1 was a publicly traded company that specialized in processing credit

card payments and small-business lending. Company 1 was based in Redwood City, California.

Company 1 participated in the SBA’s PPP by, among other things, acting as a service provider

between small businesses and certain banks, including Bank 2. Small businesses seeking PPP

loans could apply through Company 1 for PPP loans. Company 1 would review the loan

applications. If a loan application received by Company 1 was approved for funding, a partner

bank, such as Bank 2, disbursed the loan funds to the applicant.

Indictment - Page 3
The Scheme to Defraud

13. Beginning in or around April 2020, and continuing until at least in or around May

2020, in Collin County, Texas, within the Eastern District of Texas, and elsewhere, defendant

Fahad H. Shah, devised a scheme to defraud Bank 1, Bank 2, Company 1, and the SBA by

filing false and fraudulent applications for PPP funds.

Purpose of the Scheme to Defraud

14. The purpose of the scheme was for defendant Fahad H. Shah to unjustly enrich

himself by obtaining PPP loan proceeds under false and misleading pretenses, including by

making false statements about the number of WBF employees, and the intended use of the loan

proceeds.

Manner and Means

15. In furtherance of the scheme, on or about April 25, 2020, defendant Fahad H.

Shah submitted a false and misleading PPP application to Bank 1 in the name of WBF seeking

approximately $1,753,875 in PPP funds (the Bank 1 PPP Application ). The Bank 1 PPP

Application was signed by Shah. Shah also certified that the application and the information

provided in all supporting documents and forms was true and accurate.

16. The Bank 1 PPP Application falsely stated that WBF s average monthly payroll

was $701,550 and that the company had 126 employees. In addition, defendant Fahad H. Shah

submitted with the Bank 1 PPP Application what purported to be Employer s Quarterly Federal

Tax Returns ( IRS Form 941 ) for WBF for each quarter in 2019 and the first quarter of 2020.

On the purported IRS Form 941s, Shah falsely claimed that between 2019 and 2020, WBF had

between 92 and 126 employees and had paid between $1,707,250 and $2,481,100 in wages, tips,

and other compensation.

Indictment - Page 4
17. On or about June 1, 2020, Bank 1 notified defendant Fahad H. Shah that it did not

approve the Bank 1 PPP Application.

18. In furtherance of the scheme, on or about May 1, 2020, defendant Fahad H. Shah,

submitted a false and misleading PPP application to Company 1 in the name of WBF seeking

approximately $1,592,657 in PPP funds (the Bank 2 PPP Application ). The Bank 2 PPP

Application was signed by Shah. Shah also certified that the application and the information

provided in all supporting documents and forms was true and accurate.

19. The Bank 2 PPP Application falsely stated that WBF s average monthly payroll

was $637,063 and that the company had 126 employees. In addition, defendant Fahad H. Shah

submitted with the Bank 2 PPP Application what purported to be IRS Form 941s for WBF for

each quarter in 2019. On the purported IRS Form 941s, Shah falsely claimed that in 2019, WBF

had between 92 and 114 employees and had paid between $1,707,250 and $2,217,000 in wages,

tips, and other compensation.

20. Ultimately, the Bank 2 PPP Application was approved. On or about May 4, 2020,

Bank 2 distributed approximately $1,592,657 to defendant Fahad H. Shah through a wire

transfer sent to the WBF account at Bank 1.

21. Between on or about May 4, 2020 and May 19, 2020, defendant Fahad H. Shah

transferred PPP loan funds from the WBF account at Bank 1 and used them for personal

expenses, including the purchase of a luxury automobile, home mortgage payments, and other

items.

22. On or about June 12, 2020, defendant Fahad H. Shah spoke on a recorded call

with an agent of the government, who posed as a representative of Company 1. On the call,

Shah falsely stated that the PPP loan from Bank 2 allowed him to continue to pay 123

Indictment - Page 5
employees at their regular hours. A ong other statements, Shah stated that he had used all the

loan funds and would be interested in obtaining another $1.5 million in forgivable loans.

23. Defendant Fahad H. Shah s scheme caused intended losses of at least $3.3

million, based on the two PPP loan applications submitted to lenders.

Counts One through Three
Violation: 18U.S.C. § 1343
(Wire Fraud)

24. Paragraphs 1 through 23 of this Indictment are realleged and incorporated by

reference as though fully set forth herein.

25. Beginning in or around April 2020, and continuing until in or around May 2020, in

Collin County, Texas, within the Eastern District of Texas, and elsewhere, defendant Fahad H.

Shah, on or about the dates specified below, did knowingly, willfully, and with the intent to

defraud, having devised and intending to devise a scheme and artifice to defraud, and to obtain

money and property by means of materially false and fraudulent pretenses, representations, and

promises, knowing such pretenses, representations, and promises were false and fraudulent when

made, transmit and cause to be transmitted, by means of wire communications in interstate

commerce, writings, signals, pictures, and sounds, for the purpose of executing such scheme and

artifice.

Execution of the Scheme and Artifice to Defraud

26. On or about the dates specified as to each count below, defendant Fahad H. Shah,

in the Eastern District of Texas and elsewhere, for the purpose of executing the aforesaid scheme

and artifice to defraud, and attempting to do so, did knowingly transmit and cause to be

transmitted, by means of wire, radio, and television communication, writings, signals, pictures,

Indictment - Page 6
and sounds in interstate and foreign commerce for the purposes of executing such scheme and

artifice, as set forth below:

Count Approximate Date Description of Interstate Wire

Bank 1 PPP application electronically submitted by
1 April 25, 2020 Fahad H. Shah, in Texas, and routed interstate
through Bank Us servers outside of Texas.
Bank 2 PPP application electronically submitted by
2 May 1,2020 Fahad H. Shah, in Texas, and routed interstate
through Company Us servers in Virginia.

Wire transfer of $1,592,657 from Bank 2, in Utah,
3 May 4, 2020
routed interstate to WBF s account at Bank 1.

All in violation of 18 U.S.C. § 1343.

Count Four
Violation: 18 U.S.C. § 1014
(False Statement to Bank)

27. Paragraphs 1 to 23 of this Indictment are realleged and incorporated by reference

as though fully set forth herein.

28. On or about April 25, 2020, in Collin County, Texas, in the Eastern District of

Texas, and elsewhere, defendant Fahad H. Shah, knowingly made a false statement with the

intent to influence the actions of financial institutions, the accounts of which are insured by the

Federal Deposit Insurance Corporation ( FDIC ), to wit, in the Bank 1 PPP Application, the

Shah falsely represented that WBF had 126 employees and an average monthly payroll of

$701,550.

All in violation of 18 U.S.C. § 1014.

Indictment - Page 7
Counts Five through Eight
Violation: 18 U.S.C. § 1957
(Engaging in a Monetary Transaction
with Criminally Derived Property)

29. Paragraphs 1 through 23 of this Indictment are realleged and incorporated by

reference as though fully set forth herein.

30. On or about the dates set forth below, in Collin County, Texas, in the Eastern

District of Texas, and elsewhere, defendant Fahad H. Shah, did knowingly engage and attempt

to engage in a monetary transaction by, through, or to a financial institution affecting interstate

commerce, in criminally derived property of a value greater than $10,000, that is a transfer of

funds, such property having been derived from a specified unlawful activity, that is, wire fraud in

violation of 18 U.S.C. § 1343.

Count Approximate Date Financial Transaction

Wire transfer of approximately $326,799.62 from
5 May 7, 2020 WBF s bank account at Bank 1 to an account at
AmeriHome Mortgage Company, EEC.
Wire transfer of approximately $500,000 from
6 May 7, 2020 WBF s bank account at Bank 1 to Fahad H. Shah s
personal investment account at E*Trade Financial
Corporation.
Wire transfer of approximately $59,277.25 from
7 May 12, 2020 WBF’s bank account at Bank 1 to purchase a vehicle
from Tesla, Inc.
Wire transfer of approximately $50,000 from
8 May 19, 2020 WBF’s bank account at Bank 1 to Fahad H. Shah s
personal investment account at E* Trade Financial
Corporation.

All in violation of 18 U.S.C. § 1957.

Indictment - Pa e 8
NOTICE OF INTENT TO SEEK CRIMINAL FORFEITURE
18 U.S.C. §§ 982(a)(1), 982(a)(2), and 28 U.S.C. § 2461

As a result of committing the offenses as alleged in this Indictment, defendant shall forfeit

to the United States pursuant to 18 U.S.C. §§ 982(a)(1) and 982(a)(2) and 28 U.S.C. § 2461 any

and all property, real or personal, involved in or traceable to property involved in the offense,

including proceeds obtained directly or indirectly from the offense, and the following:

Cash Proceeds

A sum of money equal to $1,592,657.00 in United States currency, and all interest and
proceeds traceable thereto, representing the amount of proceeds obtained by defendant as
a result of the offenses alleged in this Indictment, for which the defendant is personally
liable.

Substitute Assets

If any property subject to forfeiture, as a result of any act or omission by defendant:

(a) cannot be located upon the exercise of due diligence;
(b) has been transferred or sold to, or deposited with a third party;
(c) has been placed beyond the jurisdiction of the court;
(d) has been substantially diminished in value; or
(e) has been commingled with other property which cannot .be subdivided without
difficulty,

it is the intent of the United States, pursuant to 21 U.S.C. § 853(p), to seek forfeiture of any other

property of defendant up to the value of the above forfeitable property, including but not limited

to all property, both real and personal, owned by defendant.

By virtue of the commission of the felony offenses charged in this Indictment, any and all

interest defendant has in the above-described property is vested in the United States and hereby

forfeited to the United States pursuant to 18 U.S.C. § 981(a)(1)(C) and 28 U.S.C. § 2461.

Indictment - Page 9
A TRUE BILL

GRAND JURY FOREPERSON

STEPHEN J. COX ROBERT A. ZINK
UNITED STATES ATTORNEY CHIEF, FRAUD SECTION
CRIMINAL DIVISION

Assistant United States Atto ey Trial Attorney
Bar No. 170966 (Georgia) Della Sentilles
110N. College, Suite 700 Trial Attorney
Tyler, Texas 75702 1400 New York Avenue, NW
(903) 590-1400 Washington, DC 20005
(903) 590-1439 Fax (202) 262-6570
(202)445-8793

Indictment - Page 10
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION

UNITED STATES OF AMERICA §
§
V. § No. 4:20-CR-J5'0
§ Judge l |
FAHAD H. SHAH §
NOTICE OF PENALTY

Counts One through Three

VIOLATION: 18U.S.C. § 1343

PENALTY: Imprisonment for not more than 30 years; a fine not to
exceed $1,000,000; a term of supervised release of not
more than 5 years.

SPECIAL ASSESSMENT: $100.00

Count Four

VIOLATION: 18U.S.C. § 1014

PENALTY: Imprisonment for not more than 30 years; a fine not to
exceed $1,000,000; a term of supervised release of not
more than 5 years.

SPECIAL ASSESSMENT: $100.00

Counts Five through Eight

VIOLATION: 18U.S.C. § 1957

PENALTY: Imprisonment of not more than 10 years; the
greater of a fine not to exceed $250,000 or not more
than twice the amount of the criminally-derived
property involved in the transaction; and a term of
supervised release of not more than 3 years.

SPECIAL ASSESSMENT: $100.00

Indictment - Page 11

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