CA man used over $5M in COVID aid to buy properties: feds

A California man has agreed to plead guilty after federal prosecutors said he received more than $5 million in COVID-19 relief loans for shell companies.

The Orange County resident, Raghavender Reddy Budamala, 35, used three sham companies to apply for seven Paycheck Protection Program and Economic Injury Disaster loans, according to the plea agreement. He agreed on June 3 to plead guilty to a count of money laundering and a count of bank fraud.

Budamala’s lawyer, Diane C. Bass, told McClatchy News she had no comment on the case.

The Paycheck Protection Program and COVID-19 Economic Injury Disaster loans were offered through the Small Business Administration in the months after the pandemic began to help businesses navigate mandated shutdowns and quarantines. The loans had minimal interest and were forgivable, so long as the funds were used on specific expenses, like rent or payroll.

Budamala ultimately received six loans, totaling $5,151,497, according to the plea agreement He is accused of using the funds to purchase a $1.2 million “investment property” in Eagle Rock, a nearly $600,000 property in Malibu and a “personal residence” in Irvine.

Additionally, Budamala deposited nearly $3 million into a personal account, according to a news release from the U.S. Attorney’s Office for the Central District of California.

The Orange County resident also applied for loan forgiveness on several of the loans, claiming to have used the money from the SBA entirely on payroll, the release said.

Budamala is in federal custody after being arrested on Feb. 23, when he tried to flee the country to Mexico, the release said. He faces a maximum 40-year prison sentence.

Budamala is among a rising number of individuals being charged with receiving COVID-19 relief loans under fraudulent circumstances, according to a release from the Department of Justice. The attorney general created the COVID-19 Fraud Enforcement Task Force a little over a year ago.

“Across the department, including the Criminal Division’s Fraud Section and U.S. Attorneys’ Offices, approximately 500 defendants have been charged in over 340 cases with alleged intended losses of over $700 million,” the release said.