Luquay Zahir — Criminal Complaint, Case No. 24-mj-7043 (EAP)
Summary
A criminal complaint (AO 91) in United States v. Luquay Zahir, Case No. 24-mj-7043 (EAP), in the U.S. District Court for the District of New Jersey, signed by complainant Sarah Gordon-Howell. It charges false statements to influence the Small Business Administration under 15 U.S.C. 645(a) and, in Count 2, wire fraud under 18 U.S.C. 1343 from about March 2021 through about August 2021, in Atlantic County. The affidavit describes Zahir as a Ross Family Service Coordinator serving Atlantic City's public housing residents. It alleges that on or about July 9, 2020 he submitted an EIDL application for a business described only as "Advertising Sales", and that on or about July 14, 2020 the SBA disbursed approximately $10,000, the full advance requested, to his bank account.
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Full text
AO 91 (Rev. 11/11) Criminal Comp!<1int
UNITED STATES DISTRICT COURT
for the
District of New Jersey
United States of America )
v. )
) Case No.
Luquay Zahir ) 24-mj-7043 (EAP)
)
)
)
Defendanl(s)
CRIMINAL COMPLAINT
I, the complainant in this case, state that the following is true to the best ofmy knowledge and belief.
On or about the date(s) of - - - - - - - - - - - - - ~ in the county of Atlantic in the
District of --~N~e~wc___cJ-=e-"rs'-'e'-'y___ , the defendant(s) violated:
Code Section Description of Offenses
15 U.S.C. 645(a); False Statements to Influence the Small Business Administration;
18 U.S.C. 1343 Wire Fraud.
See Attachment A
This criminal complaint is based on these facts:
See Attachment B
&If" Continued on the attached sheet.
s/ Sarah Gordon-Howell
Complainant's signature
Sarah Gordon-Howell, FBI Special Agent
Printed name and title
Attested to by the applicant in accordance with the requirements of Fed. R. Crim. P. 4.1 by
telephone
Date: HjJJI /J.O.l.'j
City and state: District of New Jersey Hon. Elizabeth A. Pascal, U.S. Magistrate Judge
Printed name and title
ATTACHMENT A
Count 1
(False Statements to Influence the Small Business Administration)
On or about July 9, 2020, in the District of New Jersey and elsewhere,
defendant
LUQUAY ZAHIR
did knowingly make false statements for the purpose of obtaining for himself a
loan and for the purpose of influencing in any way the action of the U.S. Small
Business Administration.
In violation of Title 15, United States Code, Section 645(a).
2
Count 2
(Wire Fraud)
From in or about March 2021 through in or about August 2021, in the
District of New Jersey and elsewhere, defendant
LUQUAY ZAHIR
did knowingly and intentionally devise and intend 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, and, for the
purpose of executing and attempting to execute such scheme and artifice to
defraud, did knowingly and intentionally transmit and cause to be transmitted
by means of wire communication in interstate and foreign commerce certain
writings, signs, signals, pictures and sounds.
In violation of Title 18, United States Code, Section 1343.
3
ATTACHMENT B
I, Sarah Gordon-Howell, am a Special Agent of the Federal Bureau of
Investigation. The information contained in the complaint is based upon my
personal knowledge, as well as information obtained from other sources,
including: (a) statements made or reported by various witnesses with
knowledge of relevant facts; (b) my review of publicly available information; and
(c) my review of evidence, including surveillance reports, business records,
bank records, and other documents. Because this complaint is being
submitted for a limited purpose, I have not set forth each and every fact that I
know concerning this investigation. Where the contents of documents and the
actions and statements of others are reported herein, they are reported in
substance and in part, except where otherwise indicated. Where I assert that
an event took place on a particular date, I am asserting that it took place on or
about the date alleged.
1. At all times relevant to this Complaint:
The Paycheck Protection Program and Economic In/uro Disaster Loans
a. The Coronavirus Aid, Relief, and Economic Security
("CARES") Act was a federal law enacted in or about March 2020 and 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 about April 2020, Congress authorized over $300 billion
in additional PPP funding. The PPP ended on or about May 31, 2021.
b. To obtain a PPP loan, a qualifying business was required to
submit a PPP loan application, 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
loan application, the small business 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 was
eligible to receive under the PPP. In addition, businesses applying for a PPP
loan had to provide documentation showing their payroll expenses.
c. A PPP loan application had to be processed by a participating
lender. If the PPP loan application was approved, the participating lender
funded the PPP loan using its own money, which was 100% guaranteed by the
U.S. Small Business Administration ("SBA"). Data from the application,
including information about the borrower, the total amount of the loan, and
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the listed number of employees, was transmitted by the lender to the SBA while
processing the loan.
d. PPP loan proceeds could only be used by the business on
certain permissible expenses-payroll costs, interest on mortgages, rent, and
utilities. The PPP allowed the interest and principal on the PPP loan to be
forgiven if the business spent the loan proceeds on these eligible expense items
within a designated period of time after receiving the proceeds and used a
certain amount of the PPP loan proceeds on payroll expenses.
e. The CARES Act also authorized the SBA to provide Economic
Injury Disaster Loans ("EIDL") in the form of low-interest financing to help
small businesses recover from the economic impacts of the COVID-19
pandemic. There were two types of COVID-19 EIDL funding: (i) COVID-19 EIDL
loans which could be used for working capital and other normal operating
expenses; and (ii) EIDL advance funds. The EIDL loans were not forgivable and
borrowers were required to repay the principal and interest on the loans. The
EIDL advances, on the other hand, were for a fixed amount and were not
required to be repaid. The EIDL program ended on or about December 31,
2021.
f. In order to obtain an EIDL loan or advance, a qualifying
business was required to submit an application to the SBA and provide
information about its operations, such as the number of employees, gross
revenues, and cost of goods sold in the 12-month period preceding the disaster.
In addition, the business entity must have been in operation on February 1,
2020. The amount of the EIDL awarded to a small business was determined, in
part, on the information provided by the applicant about employment, revenue,
and cost of goods of the company. The SBA directly issued any funds disbursed
under an EIDL to the applicant company. A company could use EIDL funds for
payroll expenses, sick leave, production costs, and business obligations, such
as debts, rent, and mortgage payments. If an applicant also obtained a loan
under the PPP, the applicant company was prohibited from using EIDL funds
for the same purpose as the PPP funds.
Luquay Zahir's EIDL Application
2. Luquay Zahir ("ZAHIR") was a Ross Family Service Coordinator for
the Atlantic City Housing Authority and Urban Redevelopment Agency. In that
capacity, ZAHIR was required to coordinate available resources to meet the
needs of Atlantic City's public housing residents.
3. On or about July 9, 2020, ZAHIR submitted an EIDL application to
the SBA on behalf of a business he claimed to own, which he described in the
application only as "Advertising Sales." In the application, ZAHIR represented
that the business had ten employees and earned $100,000 in gross revenue
5
during the period from Febnmry 1, 2019 through January 31, 2020. ZAHIR
further represented that the business incurred $10,000 in costs of goods sold
over that same yearlong period. At the end of the application, ZAHIR certified
under penalty of perjury that the information he provided in the application was
"true and correct," even though he knew much of the material information he
provided was false.
4. In the application, ZAHIR sought an EIDL loan, and an additional
$10,000 EIDL advance.
5. In the application, ZAHIR provided the address of his residence in
Atlantic City (the "Atlantic City Residence") as the business address.
Surveillance conducted by law enforcement revealed that the Atlantic City
Residence was a single-family apartment that was not suitable for a ten-
employee business. Additionally, over two days of physical surveillance
conducted at the Atlantic City Residence after the period for which ZAHIR
sought EIDL funds, law enforcement did not observe any employees entering or
exiting the Atlantic City Residence.
6. Internal Revenue Service ("IRS") records confirmed that ZAHIR did
not file an IRS Form Schedule C 1 with the IRS in 2019. IRS records further
confirmed that neither ZAHIR nor a business at the Atlantic City Residence
reported income in the amount of $100,000 to the IRS in 2019.
7. Also, a search for business entity records filed with the New Jersey
Department of the Treasury, Division of Revenue and Enterprise Services
("Division of Revenue and Enterprise Services") showed that there were no
business registration filings related to ZAHIR's purported advertising sales
business.
8. In reliance on these material misrepresentations, on or about July
14, 2020, the SBA disbursed approximately $10,000-the full amount of the
advance requested by ZAHIR-to a bank account held by ZAHIR (the "bank
account"). Thereafter, ZAHIR caused multiple debits from the bank account,
including, among others, payments to a variety of commercial merchants for
what appear to be non-business related expenses and multiple ATM cash
withdrawals. The SBA denied ZAHIR's application for the EIDL loan on the
ground that ZAHIR had an unsatisfactory credit history.
1 A Schedule C is a form used to report income or loss from a business that is
attached to a tax filer's IRS Form 1040 annual income tax return.
6
ZAHIR's PPP Loan Application
9. On or about March 20, 2021, ZAHIR submitted a PPP loan
application to a small business lender headquartered in New York, New York
that was enrolled in the PPP and approved by the SBA to loan funds to small
businesses through the PPP ("Lender-1"). In the application, ZAHIR, claimed he
was an independent contractor, and requested a $20,400 PPP loan on behalf of
business which ZAHIR identified in the application only as "Luquay Zahir."
ZAHIR further claimed in the application that he was the sole owner of the
business.
10. In the PPP loan application, Zahir provided the Atlantic City
Residence in the section titled: "Business Address." Additionally, a purported
Schedule C for 2019 was attached to the PPP loan application, that identified
the business as: "Barber," and provided the Atlantic City Residence on the
Schedule C in the section titled: "Business address." Further, the purported
Schedule C indicated that Zahir's barbershop business earned $97,919 in
profit in 2019.
11. The PPP loan application required ZAHIR to provide the "Total
Amount of Gross Income" earned by the applicant's business in either tax year
2019 or 2020. Further, the SBA required the gross income stated by the
applicant on the form to be reflected in a tax year 2019 or 2020 "IRS Form
1040, Schedule C." ZAHIR elected to provide purported gross income for tax
year 2019 and, as discussed above, included with the application a document
purporting to be a 2019 Schedule C.
12. Further as part of the PPP loan application, ZAHIR claimed that
during tax year 2019, the business earned $97,920 in gross income,
approximately the same amount claimed on the Schedule C as profit. ZAHIR
further represented in the PPP loan application that he would use any funds
disbursed by the SBA for payroll costs, and claimed that his business had one
employee, himself. At the end of the application, ZAHIR certified that "the
information in this application and the information provided in all supporting
documents and forms is true and accurate in all material respects. I
understand that knowingly making a false statement to obtain a guaranteed
loan from SBA is punishable under the law .... " Based on the reported gross
income of $97,920 from tax year 2019, ZAHIR qualified for a PPP loan in the
amount he had requested, that is $20,400.
13. In reliance on these material misrepresentations, on or about April
8, 2021, Lender-1 disbursed approximately $20,400-the full amount applied
for-to the bank account. Thereafter, ZAHIR caused multiple debits from the
bank account, including, among others, multiple hundred dollar or more ATM
cash withdrawals, a $2,000 online banking transfer, multiple thousand-dollar
or more transfers to cash applications, including Zelle and Cash App, and
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multiple payments to commercial merchants for what appear to be non-
business related expenses.
14. IRS records confirmed that in 2019 neither ZAHIR nor the
barbershop business reported income to the IRS in the amount reflected on the
2019 Schedule C attached to the PPP loan application.
15. Also, a search for business entity records filed with the Division of
Revenue and Enterprise Services showed that there were no business
registration filings related to ZAHIR's purported barbershop business or related
to his purported business as an "independent contractor".
16. On or about August 6, 2021, ZAHIR signed a PPP Loan
Forgiveness Application seeldng to have the entire $20,400 loan forgiven. In the
Loan Forgiveness Application, ZAHIR represented that he had spent $18,000 of
the loan on payroll costs. On or about August 12, 2021, the SBA sent ZAHIR a
letter authorizing complete loan forgiveness of his $20,400 PPP loan. Under
SBA rules, ZAHIR was not required to repay the $10,000 EIDL advance.
17. ZAHIR held no licenses in the field of cosmetology and hairstyling.
In order to become a cosmetologist-hairstylist in New Jersey, the New Jersey
Board of Cosmetology and Hairstyling (the "Board") required an applicant for
licensing to complete 1,200 hours of instruction in the field at an approved
school. Additionally, to become licensed in the field of cosmetology and
hairstyling, a prospective candidate in New Jersey was required to pass an
examination administered by the Board.
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18. On or about August 13, 2021, the SBA electronically transferred by
Automated Clearing House ("ACH") $20,471.40 to an account held by Lender-I,
thereby forgiving ZAHIR's PPP loan, as addressed in paragraph 16, above. That
ACH transaction was initiated by the SBA in Colorado and resulted in funds
being wired from Colorado and received in an account at a financial institution
in New York. Accordingly, that electronic transfer traveled in interstate
commerce.
s/Sarah Gordon-Howell
Sarah Gordon-Howell, Special Agent
Federal Bureau of Investigation
Special Agent Gordon-Howell attested to this Affidavit by telephone pursuant to
F.R.C.P. 4. l(b)(2)(A) on this 2.9#- day of April 2024.
tates Magistrate Judge
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