March 6, 2020
By Caity Witucki
Contributing Editor, Fraud Friday
Fraud Friday – Houston Man Admits to SBA Disaster Assistance Fraud
Hurricane Harvey reportedly caused an influx of identity theft and bank fraud which resulted in over 1,800 complaints to the Department of Justice. As a result of a thorough investigation, five Houston-area residents were charged in separate indictments in 2018 for various offenses related to SBA disaster assistance and FEMA fraud. It is estimated that the combined fraud schemes resulted in the improper distribution and use of over $273,527 intended for victims of Hurricane Harvey. Last month, one of the five men indicted for fraud, Robert Kaitho, plead guilty to $53,000 in SBA loan fraud.
“These types of cases are no different than looting during and after a storm,” says U.S. Attorney Ryan K. Patrick. “Some people try to exploit natural disasters by taking things that aren’t theirs. It is white collar storm looting, and fewer people who actually need assistance get it.”
According to court documents, Kaitho applied for a $53,000 disaster loan from the SBA, claiming that his personal residence had sustained significant damage from Hurricane Harvey. In that application, he falsely represented to the SBA that he would use the disbursed funds to rehabilitate or replace the affected property. In reality, Kaitho’s home was not damaged in the storm and he planned to use the disbursed funds to pay his mortgage and other personal expenses. As a result of his misrepresentations, the SBA disbursed the funds directly into Kaitho’s personal bank account.
At a hearing on February 3, 2020, Kaitho admitted that he used the SBA funds to make unauthorized wire transfer payments, in the amounts of $10,000 and $15,000, to his mortgage company. Additionally, Kaitho transferred approximately $30,633 of the SBA loan from into his personal account to an unidentified individual located in Kenya.
Judge Hanen in the Southern District of Texas accepted Kaitho’s guilty plea and set his final sentencing for June 1, 2020 after the SBA OIG and DHS OIG have had significant time to complete their investigation. At that time, Kaitho faces a maximum of 10 years in federal prison and a $250,000 fine.