Information — No. 2:21-cr-00363 (Dkt. 4, E.D.N.Y.)
Summary
An information filed November 12, 2021 as Document 4 in United States v. Konstantino Zarkadas, Case 2:21-cr-00363-GRB, in the U.S. District Court for the Eastern District of New York. Its introduction describes the COVID-19 pandemic, the Paycheck Protection Program and the Economic Injury Disaster Loan program. It alleges that between March 30, 2020 and September 1, 2020 the defendant submitted or caused to be submitted at least 11 online loan applications for entities associated with him. Count One is captioned Disaster Relief Fraud and Count Two Wire Fraud, followed by a criminal forfeiture allegation.
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“Information — No. 2:21-cr-00363 (Dkt. 4, E.D.N.Y.).”
Original at archive.org. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/information-no-2-21-cr-00363-dkt-4-e-d-n-y-37758dff84/
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Case 2:21-cr-00363-GRB Document 4 Filed 11/12/21 Page 1 of 8 PageID #: 6
CMM:AXB
F. #2020R01096
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
---------------------------X
UNITED STATES OF AMERICA INFORMATION
- against - Cr. No.
(T. 18, U.S.C., §§ 1040(a)(2),
KONSTANTINO ZARKADAS, 1040(b)(1), 1343, 981(a)(1)(C) and
3551 et seq.; T. 21, U.S.C., § 853(p);
Defendant. and T. 28, U.S.C., § 2461(c))
---------------------------X
THE UNITED STATES ATTORNEY CHARGES:
INTRODUCTION
At all times relevant to this Information, unless otherwise indicated:
The COVID-19 Pandemic in the United States
1. In or about December 2019, a novel coronavirus, SARS-CoV-2 (the
“coronavirus”), was first detected in Wuhan, Hubei Province of the People’s Republic of
China, causing outbreaks of the coronavirus disease COVID-19 that have since spread
globally. On or about January 31, 2020, the Secretary of Health and Human Services
declared a national public health emergency under 42 U.S.C. § 247d as a result of the spread
of COVID-19 to and within the United States. On or about March 11, 2020, the Director-
General of the World Health Organization characterized COVID-19 as a pandemic. On or
about March 13, 2020, the President of the United States issued Proclamation 9994 declaring
a national emergency beginning on March 1, 2020, as a result of the rapid spread of COVID-
19 within the United States.
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The Paycheck Protection Program
2. On or about March 27, 2020, the President signed into law the
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. The CARES Act was a
federal law designed to provide emergency financial assistance to the millions of Americans
who were suffering the economic effects caused by the COVID-19 pandemic. One source
of relief provided by the CARES Act was the authorization of up to $349 billion in
forgivable loans to small businesses for job retention and certain other expenses, through a
program referred to as the Paycheck Protection Program (“PPP”). In or around April 2020,
Congress authorized over $300 billion in additional PPP funding.
3. To obtain a PPP loan, qualifying businesses were required to submit a
PPP loan application, which was signed by an authorized representative of the business.
The PPP loan application required recipient businesses, through an authorized representative,
to acknowledge the program rules and make certain affirmative certifications to establish
eligibility for the PPP loan. For example, in the PPP loan application, recipient businesses,
through an authorized representative, were required to state, among other things, their
average monthly payroll expenses and number of employees. These figures were used to
calculate the amount of money the businesses were eligible to receive under the PPP. The
recipient businesses were also required to provide documentation supporting the information
contained in the PPP loan application.
4. PPP loan proceeds were required to be used by the recipient businesses
on certain permissible expenses, to wit: payroll costs, interest on mortgages, rent and
utilities. The PPP allowed the interest and principal on a PPP loan to be entirely forgiven if
Case 2:21-cr-00363-GRB Document 4 Filed 11/12/21 Page 3 of 8 PageID #: 8
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the recipient businesses spent the loan proceeds on these expense items within a designated
period of time after receiving the proceeds and used a certain percentage for payroll costs.
5. The PPP was overseen by the Small Business Administration (“SBA”),
which had authority over all PPP loans. Individual PPP loans, however, were issued and
approved by private lenders, who received and processed PPP loan applications and
supporting documentation and, following SBA approval, made loans using the lenders’ own
funds.
The Economic Injury Disaster Loan Program
6. The Economic Injury Disaster Loan (“EIDL”) program was also
overseen by the SBA and was designed to provide long-term, low-interest loans for small
businesses affected by various natural and economic disasters. The CARES Act provided
funding for EIDL loans for businesses affected by the COVID-19 pandemic. In contrast to
the PPP, EIDL loan amounts were determined based on the recipient businesses’ historical
revenue and disbursed directly by the SBA.
The Defendant and His Fraud Scheme
7. The defendant KONSTANTINO ZARKADAS was a resident of Glen
Cove, New York. ZARKADAS was associated with numerous corporate entities (the
“Subject Entities”), through which he committed the fraud described herein.
8. Between March 30, 2020 and September 1, 2020, both dates being
approximate and inclusive, the defendant KONSTANTINO ZARKADAS engaged in a
scheme to defraud the SBA and several financial institutions administering the PPP and
EIDL programs of federal COVID-19 emergency-relief funds meant for distressed small
businesses. It was a part of the scheme to defraud that ZARKADAS submitted, or caused to
Case 2:21-cr-00363-GRB Document 4 Filed 11/12/21 Page 4 of 8 PageID #: 9
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be submitted, at least 11 online loan applications to obtain funds through the PPP and EIDL
programs for the Subject Entities. It was further a part of the scheme to defraud that these
loan applications and certain supporting documentation contained materially false and
fraudulent information, including, but not limited to, the Subject Entities’ number of
employees, payroll costs and intended use of the loan proceeds, all of which was specifically
designed to mislead the SBA and financial institutions administering the PPP and EIDL
programs into disbursing various loans, which they did.
9. In total, between March 30, 2020 and September 1, 2020, both dates
being approximate and inclusive, as a result of this fraudulent scheme, the SBA and financial
institutions administering the PPP and EIDL programs wire-transferred sums totaling
approximately $3.7 million in PPP and EIDL loans for the Subject Entities to bank accounts
that the defendant KONSTANTINO ZARKADAS established at bank branches in the
Eastern District of New York and elsewhere.
10. Shortly after receiving these loan proceeds, the defendant
KONSTANTINO ZARKADAS engaged in numerous financial transactions designed to
conceal the true nature and source of the funds, including electronically transferring certain
of the loan proceeds between various bank accounts that ZARKADAS owned and controlled.
ZARKADAS then utilized the laundered loan proceeds to enrich himself, including by
discharging personal debts and making extravagant purchases. For example, on or about
June 29, 2020, ZARKADAS used approximately $24,500 in EIDL loan proceeds to purchase
a Rolex wristwatch. Thereafter, on or about July 16, 2020, ZARKADAS used
approximately $194,915.42 in PPP funds to partially finance a yacht, which sum he paid by
personal check. To conceal the true nature and source of these funds, ZARKADAS made
Case 2:21-cr-00363-GRB Document 4 Filed 11/12/21 Page 5 of 8 PageID #: 10
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the check payable to his sister, who was not the ultimate intended recipient of the funds, and,
in the check’s memo line, wrote “repayment for payroll,” when, as ZARKADAS then and
there well knew and believed, the check would not be used for payroll or any other
permissible purpose under the PPP program.
COUNT ONE
(Disaster Relief Fraud)
11. The allegations contained in paragraphs one through ten are realleged
and incorporated as if fully set forth in this paragraph.
12. In or about and between March 2020 and July 2020, both dates being
approximate and inclusive, within the Eastern District of New York and elsewhere, the
defendant KONSTANTINO ZARKADAS did knowingly and intentionally make one or
more materially false, fictitious, and fraudulent statements and representations, and make and
use one or more false writings and documents knowing the same to contain materially false,
fictitious, and fraudulent statements and representations, in connection with a procurement of
property and services related to an emergency declaration under Section 501 of the Stafford
Act, to wit: Proclamation 9994 of March 13, 2020 by the President of the United States of
America Declaring a National Emergency Concerning a Novel Coronavirus Disease
(COVID-19) Outbreak, which benefits were authorized, transported, transmitted, transferred,
disbursed and paid in and affecting interstate and foreign commerce.
(Title 18, United States Code, Sections 1040(a)(2), 1040(b)(1) and 3551 et
seq.)
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COUNT TWO
(Wire Fraud)
13. The allegations contained in paragraphs one through ten are realleged
and incorporated as if fully set forth in this paragraph.
14. In or about and between March 2020 and July 2020, both dates being
approximate and inclusive, within the Eastern District of New York and elsewhere, the
defendant KONSTANTINO ZARKADAS did knowingly and intentionally devise a scheme
and artifice to defraud the SBA and one or more financial institutions administering the PPP
and EIDL programs, and to obtain money and property from the SBA and said financial
institutions by means of materially false and fraudulent pretenses, representations and
promises, and for the purpose of executing such scheme and artifice did transmit and cause to
be transmitted, by means of wire communication in interstate and foreign commerce, one or
more writings, signs, signals, pictures and sounds, to wit: fraudulent online applications for
one or more PPP and EIDL loans for the Subject Entities.
(Title 18, United States Code, Sections 1343 and 3551 et seq.)
CRIMINAL FORFEITURE ALLEGATION
AS TO COUNT TWO
15. The United States hereby gives notice to the defendant that, upon his
conviction of the offense charged in Count Two, the government will seek forfeiture in
accordance with Title 18, United States Code, Section 981(a)(1)(C) and Title 28, United
States Code, Section 2461(c), which require any person convicted of such offense to forfeit
any property, real or personal, constituting, or derived from, proceeds obtained directly or
indirectly as a result of such offense, including but not limited to:
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(a) one (1) Rolex Sky-Dweller with a Blue dial;
(b) one (1) Rolex Yacht-Master II;
(c) one (1) Rolex Day-Date with gold and diamond; and
(d) one (1) Cartier Ladies Roadster.
If any of the above-described forfeitable property, as a result of any act or omission of the
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
divided without difficulty;
it is the intent of the United States, pursuant to Title 21, United States Code, Section 853(p),
to seek forfeiture of any other property of the defendant up to the value of the forfeitable
property described in this forfeiture allegation.
(Title 18, United States Code, Section 981(a)(1)(C); Title 21, United States
Code, Section 853(p); Title 28, United States Code, Section 2461(c))
JACQUELYN M. KASULIS
ACTING UNITED STATES ATTORNEY
EASTERN DISTRICT OF NEW YORK
Case 2:21-cr-00363-GRB Document 4 Filed 11/12/21 Page 8 of 8 PageID #: 13
F.#: 2020R01096
FORM DBD-34 No.
JUN. 85
UNITED STATES DISTRICT COURT
EASTERN District of NEW YORK
CRIMINAL DIVISION
THE UNITED STATES OF AMERICA
vs.
KONSTANTINO ZARKADAS,
Defendant.
INFORMATION
(T. 18, U.S.C., §§ 1040(a)(2), 1040(b)(1), 1343, 981(a)(1)(C) and 3551
et seq.; T. 21, U.S.C., § 853(p); and T. 28, U.S.C., § 2461(c))
A true bill.
________________________________________
Foreperson
Filed in open court this _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ day,
of _ _ _ _ _ _ _ _ _ _ _ _ A.D. 20 _ _ _ _ _
_______________________________________
Clerk
Bail, $ _ _ _ _ _ _ _ _ _ _ _
_________________________________
Anthony Bagnuola, Assistant U.S. Attorney (631) 715-7849
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