Chinese National Admits To Trying To Scam $20 Million In Federal Covid Relief Funds

A Chinese national who goes by the name “Hummer Mars” faces up to 30 years in prison after admitting he planned to take $20 million in federal Covid relief funding, mainly by defrauding the Paycheck Protection Program (PPP), in what appears to be one of the biggest known attempts to scam the loan program.

A Chinese national pleaded guilty on Tuesday to a $20 million scheme to defraud federal Covid relief … [+] funds.

Key Facts

The man, whose actual name is Muge Ma, pled guilty to one count of bank fraud in Manhattan federal court on Tuesday.

Prosecutors said Ma claimed two companies he owned employed hundreds of workers and paid millions in wages, when, in fact, Ma was the only person working for the companies.

Ma submitted fraudulent payroll records, bank records and tax records between March and mid-May of 2020, according to the Justice Department.

Ma’s main target was the PPP loan program, but he also sought federal funding from the Economic Injury Disaster Loan Program (EDIL), which provides up to $2 million for small businesses impacted by the Covid-19 pandemic.

Ma, 37, also claimed to be a U.S. citizen when he’s actually a Chinese national with legal residence in New York City.

The DOJ said Ma had been given around $800,000 in PPP loan funding, which was frozen after his arrest on May 21, 2020, and had also been approved for $650,000 in EDIL loans.

What To Watch For

Sept. 22 has been set as Ma’s sentencing date.

Crucial Quote

“Small businesses are facing uncertainty and unprecedented challenges, the least of which should be opportunists attempting to loot the federal funds meant to assist them,” U.S. Attorney Audrey Strauss said in a statement.

Key Background

Congress set aside $953 billion in PPP funding designated for small business owners, but the program has been plagued by claims of those funds being misused. Publicly traded companies like Shake Shack and Ruth’s Chris Steak House were identified as early loan recipients, but the dining giants decided to give the money back after public outrage. Many issues have been much more malicious than just a bad PR look, though. In March of this year, the Justice Department announced 474 people had been charged in Covid relief fraud schemes, totaling $569 million in attempted fraud. A common issue was employers lying about wages in order to qualify for bigger loans.

The biggest single fraud attempt appears to have taken place in Texas. In March, a man pleaded guilty to trying to obtain $24.8 million in PPP funding. He received $17 million, which he used to buy houses and luxury cars.