D.C. Man Pleads Guilty to Attempting to Steal More than $31 Million in COVID-19 Funds

Summary

Elias Eldabbagh, 30, of Washington, D.C., pleaded guilty to wire fraud and laundering the proceeds of a scheme to steal more than $31 million under the CARES Act, the U.S. Attorney's Office for the District of Columbia announced on April 8, 2022. The release says that from July 2020 through May 2021 Eldabbagh used his company, Alias Systems, LLC, and a stolen identity to apply for at least 25 PPP loans totaling more than $30 million, and submitted at least four false EIDL applications totaling $950,000. According to the release, Eldabbagh stole $2,385,000, bought a Tesla Model 3 and conducted over 2,000 transactions involving at least 43 different cryptocurrencies. Eldabbagh agreed to forfeit the Tesla and the contents of 21 bank accounts. Sentencing was set for Aug. 25, 2022; the likely recommended sentence is between 11 and 14 years in prison.

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Press Release

D.C. Man Pleads Guilty to Attempting to Steal More than $31 Million in COVID-19 Funds

Friday, April 8, 2022

For Immediate Release

U.S. Attorney's Office, District of Columbia

Defendant Successfully Stole $2,385,000

WASHINGTON – Elias Eldabbagh, 30, of Washington, D.C., pleaded guilty in federal court today to carrying out a scheme to steal more than $31 million under the CARES Act and laundering the proceeds of his scheme. Eldabbagh succeeded in stealing $2,385,000 under the Paycheck Protection Program (PPP) loans and Economic Injury Disaster Loans (EIDL).

The announcement was made by U.S. Attorney Matthew M. Graves, Special Agent in Charge Darrell J. Waldon of the Internal Revenue Service-Criminal Investigation, Washington, D.C. Field Office, and Special Agent in Charge Amaleka McCall-Brathwaite of the U.S. Small Business Administration, Office of the Inspector General.

“While many Americans were struggling with the economic impacts of the COVID-19 pandemic, this defendant brazenly attempted to steal more than $31 million in emergency funds intended to help small businesses and employees survive COVID-19,” said U.S. Attorney Graves. “The United States Department of Justice will prosecute, to the fullest extent of the law, those individuals who scheme to rob vital government programs.”

“Elias Eldabbagh stole funds that were meant to help businesses and their employees during a crisis to spend on a luxury car and enriching himself,” said IRS-CI Special Agent in Charge Waldon. “During the two years since the CARES Act was passed, IRS-CI special agents have rooted out and continue to pursue these selfish criminals who thought they could get away with stealing from those who truly needed help.”

“OIG will continue to safeguard SBA programs from fraudsters determined to steal funds meant to support the nation’s small businesses,” said SBA OIG’s Special Agent in Charge McCall-Brathwaite. “OIG remains committed to rooting out bad actors and protecting the integrity of SBA programs. I want to thank the Department of Justice and our law enforcement partners for their dedication and pursuit of justice.”

Eldabbagh pleaded guilty in the U.S. District Court for the District of Columbia to wire fraud and laundering the proceeds of the wire fraud scheme. Wire fraud carries a statutory penalty of 20 years and financial penalties. Engaging in monetary transactions in criminally derived funds carries a statutory penalty of 10 years and financial penalties. Eldabbagh faces a likely recommended sentence of between 11 and 14 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The Honorable Trevor N. McFadden took the plea and scheduled sentencing for Aug. 25, 2022.

From July 2020 through May 2021, Eldabbagh used his company, Alias Systems, LLC, to fraudulently apply for at least 25 PPP loans totaling more than $30 million. He also submitted at least four false EIDL applications totaling $950,000. During the course of his scheme, Eldabbagh used a stolen identity to disguise the ownership of Alias Systems, LLC, and used the same stolen identity to submit the vast majority of the applications. In support of his fraudulent applications, Eldabbagh also used stolen identities, stolen tax returns and stolen financial records from a Washington, D.C. consulting company. Eldabbagh fraudulently doctored the stolen documents to be appear to be tax returns and payroll records of his company, Alias Systems, LLC. Eldabbagh successfully stole $2,385,000 from the PPP and EIDL programs.

Eldabbagh wired the proceeds of his scheme to at least 13 separate bank and brokerage accounts and to purchase a Tesla Model 3. Eldabbagh then converted at least $288,000 of proceeds from fiat currency into multiple cryptocurrencies. Using fraud proceeds, Eldabbagh conducted over 2,000 transactions involving at least 43 different cryptocurrencies.

Eldabbagh also used the money he stole to pay for rent, hotels, dog boarding, attorney fees, ride shares, electronics, and various personal expenses.

In May 2021, IRS-CI executed seizure warrants on Eldabbagh’s bank accounts and investment accounts. Eldabbagh proceeded to make multiple attempts to transfer seized funds prior to being thwarted by federal agents. As part of his plea agreement, Eldabbagh has agreed to forfeit the Tesla Model 3, the contents of 21 bank accounts, and he has agreed to liquidate his interest in the cryptocurrency obtained with proceeds and to remit the funds to the United States government.

The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act is a federal law enacted in or around 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 billions in forgivable loans to small businesses for job retention and certain other expenses, through a program referred to as the Paycheck Protection Program (PPP).

An Economic Injury Disaster Loan (“EIDL”) is a Small Business Administration administered loan designed to provide assistance to small businesses that suffer substantial economic injury as a result of a declared disaster. An EIDL helps businesses meet necessary financial obligations that could have been met had the disaster not occurred. It provided relief from economic injury that the disaster caused and permitted businesses to maintain a reasonable working capital position during the period that the disaster affected.

In announcing the plea, U.S. Attorney Graves, Special Agent in Charge Waldon, and Special Agent in Charge McCall-Brathwaite commended the work of those who investigated the case from IRS-CI and the SBA Office of the Inspector General. This case is being prosecuted by Assistant U.S. Attorney Leslie A. Goemaat of the Fraud, Public Corruption, and Civil Rights Section, supported by Paralegal Specialist Mariela Andrade.

# #

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

Anyone with information about allegations of fraud related to COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

Updated April 8, 2022

Topics

COVID-Related Fraud

Financial Fraud

Component

USAO - District of Columbia

Press Release Number: 22-102

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