Orange County man to plead guilty to $5-million COVID-19 relief loan scam
An Orange County man has agreed to plead guilty to a $5-million COVID-19 relief loan scam, the U.S. attorney’s office said in a release.
Raghavender Reddy Budamala, 35, of Irvine allegedly used relief loans to purchase a $1.2-million “investment property” in Eagle Rock, a nearly $600,000 property in Malibu and a “personal residence” in Irvine. Budamala deposited nearly $3 million into a personal account, the U.S. attorney said.
Under the plea agreement, Budamala will admit to one count of bank fraud and one count of money laundering and will forfeit all of the money he gained during the scheme.
Before the COVID-19 outbreak in early 2020, Budamala owned three shell companies: Hayventure LLC, Pioneer LLC and XC International LLC, authorities said.
Between April 2020 and March 2021, Budamala applied for seven Paycheck Protection Program and Economic Injury Disaster loans for the businesses.
The Paycheck Protection Program and COVID-19 Economic Injury Disaster loans were introduced in the months after the start of the pandemic to help businesses and employees survive shutdowns and quarantines. The loans were virtually interest-free and forgivable.
In his applications, Budamala said the businesses employed dozens of people and had millions of dollars in revenue. Banks funded six loans for a total of $5,151,497.
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Budamala later applied to have several loans forgiven, stating that he had used the money on payroll.
However, the addresses listed for the companies “were bogus, nonexistent or residential,” prosecutors said in the release.
“The states where Budamala’s companies purportedly operated have no records of those companies paying wages to any employees, and bank records for the companies reflect no significant business income or operating expenses,” the release said.
Budamala was arrested in February while allegedly attempting to flee to Mexico, prosecutors said.
At sentencing, Budamala could face up to 40 years in federal prison.
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