Owner of San Diego based Shammas Funding Inc. Pleads Guilty to Fraudulently Obtaining $5 Million in Pandemic Related Loans

NEWS RELEASE SUMMARY - August 29, 2024

SAN DIEGO - Andre Shammas, owner of Shammas Funding Inc., pleaded guilty in federal court today to fraud charges, admitting that he submitted bogus applications for more than $5 million in pandemic-related loans intended to help struggling businesses during the pandemic.

Shammas admitted using his accounting and tax preparation business, Shammas Funding, to illegally apply for more than 40 loans from the Paycheck Protection Program known as PPP.

The Coronavirus Aid, Relief, and Economic Security ("CARES") Act was enacted to provide emergency financial assistance to Americans suffering economic harm as a result of the COVID-19 pandemic. The CARES Act established the PPP, under which banks would make forgivable loans to small businesses, so that those businesses could keep their doors open and employees on their payroll. If a business used the money for payroll and other eligible business expenses, the loans would be forgiven, and the federal government's Small Business Administration would pay back the bank.

According to court documents, Shammas solicited and recruited clients of Shammas's tax preparation business and people to apply for fraudulent PPP loans. Shammas then prepared fraudulent tax and other documentation to support fraudulent PPP loan applications. Co-conspirators then prepared and filed the PPP applications using the fraudulent documentation provided by Shammas.

Some examples include:

• One of the bogus applications submitted by Shammas and his co-conspirators was for a PPP loan on behalf of Nasser Salman and the entity LGDG (charged in federal Case No. 23-CR-0821-LL). This fraudulent PPP application generated $85,000 in PPP proceeds.

• An application for a PPP loan was submitted on behalf of Rafael Santiago and the entity Blacktie Co-Investors, Inc. (charged in federal Case No. 23-CR-01915-LAB). This fraudulent PPP application generated $117,233 in PPP proceeds.

• Another fraudulent application was submitted for a PPP loan on behalf of Wendell Pialet and the entity Hope Nuggets, LLC (charged in federal Case No. 23-CR-02156-LL). This fraudulent PPP application generated $100,000 in PPP proceeds.

To induce the Small Business Administration and banks to approve the fraudulent PPP loans, Shammas and his co-conspirators included false and fraudulent statements in the loan applications, including false representations regarding the number of employees, the average monthly payroll, and the gross receipts earned by these purported businesses.

"The Paycheck Protection Program served as a lifeline to many businesses desperately trying to stay afloat during the pandemic," said U.S. Attorney Tara McGrath. "These charges will hold Shammas accountable for abusing this critical program."

"As an accountant and tax preparer, Mr. Shammas is a gatekeeper who has a responsibility to do what is right for both his clients and the system. Mr. Shammas blatantly ignored that responsibility, and instead recruited clients to join his criminal conspiracy," said FDIC OIG Special Agent in Charge Ryan L. Korner. We are proud to work alongside our law enforcement partners to protect our nation's financial system and bring to justice individuals, like Mr. Shammas, who defraud our system to line their own pockets, while stealing benefits designated for those most in need during the pandemic."

"Conspiring to defraud programs aimed at assisting small businesses that struggled to survive the pandemic is both unacceptable and reprehensible," said SBA OIG's Western Region Special Agent in Charge Weston King. "Our office is committed to ensuring that SBA funds reach those who truly need them and are not diverted by fraudulent schemes. I want to thank the U.S. Attorney's Office and our law enforcement partners in bringing those who exploit these programs to justice."

Shammas is scheduled to be sentenced on November 18, 2024, at 9 a.m. before U.S. District Judge Thomas Whelan.

This case is being prosecuted by Assistant U.S. Attorney Mark Conover.

DEFENDANT Case Number -24-CR-1765-W

Andre Shammas Age: 43 San Diego, CA

SUMMARY OF CHARGES

Conspiracy to Commit Wire Fraud - Title 18, U.S.C., Section 1349

Maximum Penalty: Twenty years in prison

INVESTIGATING AGENCIES

Federal Deposit Insurance Corporation - Office of Inspector General

Homeland Security Investigations

Small Business Administration - Office of Inspector General

*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.