A Chicago tax preparer was sentenced to 42 months in federal prison for orchestrating a $3.6 million COVID-19 relief fraud scheme.
Farooq Khan, 31, submitted dozens of bogus loan applications for defunct businesses through his tax preparation company.
Khan owned Hannan Tax Services in Chicago. From May 2020 through October 2021, he prepared and submitted at least 30 fraudulent applications for Paycheck Protection Program and Economic Injury Disaster Loans.
Court documents reveal Khan knew the companies were non-operational and ineligible. He falsified employee numbers and tax records for the defunct businesses.
The scheme netted approximately $3.6 million in fraudulent distributions. Khan personally pocketed about $1.2 million of the stolen funds.
He also attempted to secure an additional $588,900 through other loan applications. These applications for nonexistent companies were never funded.
Khan pleaded guilty to wire fraud on February 19. The court ordered him to pay $3,645,104 in restitution, in addition to his prison sentence.
The FBI Chicago Field Office and Immigration and Customs Enforcement investigated the case. Trial Attorney Claire Sobczak Pacelli of the Justice Department’s Fraud Section handled the prosecution.
Federal authorities encourage reporting suspected COVID-19 fraud through the National Center for Disaster Fraud hotline at 866-720-5721. Tips can also be submitted online at www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.