Fraud Friday — Texas Man Gets PPP Loan for Defunct Wedding Planning Business

June 26, 2020

By Caity Witucki
Contributing Editor, Fraud Friday

Fraud Friday — Texas Man Gets PPP Loan for Defunct Wedding Planning Business

The wedding planning business his wife owned went bust in 2018, but that did not stop Fahad H. Shah from allegedly using the company’s name to apply for a $3 million PPP loan. Shah was indicted last week in the Eastern District of Texas with three counts of wire fraud, one count of false statements to a bank, and four counts of money laundering.

According to the indictment, Shah allegedly submitted two different applications on behalf of his wife’s defunct wedding planning business, WBF Weddings by Farah Inc. On the PPP application, Shah allegedly claimed that between 2019 and 2020, WBF had between 92 and 126 employees that had been paid between $1.7 million and $2.4 million in wages, tips and other compensation. However, evidence presented in court shows that WBF did not have any employees at the time of the application and that the company had forfeited its corporate status in 2018 after failing to pay state franchise taxes.

Although Shah’s first application was denied, he was eventually approved for a $1.3 million PPP loan when he applied again at a different bank. Just days after the loan was wired into the Shah’s business account, Fahad and his wife allegedly used the funds to pay off their $335,260 mortgage, purchase a new Tesla, and boost their E-Trade investment account by $550,000.

On or about June 12, 2020, a federal agent contacted Shah. On the recorded call, Shah allegedly falsely stated that the PPP loan had allowed him to continue to pay 123 employees at their regular hours. He also allegedly stated that he expected to apply for another $1.5 million forgivable loan in the future. 

Shah was indicted last week and taken into custody on Tuesday. His case is being investigated by the SBA OIG, the Treasury Inspector General for the Tax Administration, the Federal Housing Finance Agency OIG, the IRS, and the FDIC OIG. His trial date has not yet been set. 

Sources:
Department of Justice
Complaint