A man from Sugar Land, Texas, who stole $1 million from a COVID-19 pandemic program meant to help small businesses and then promptly lost the money trading stocks will now spend four years in prison, the U.S. Department of Justice said in a news release.
Zain Khan, 43, pleaded guilty April 10 and was sentenced for submitting fake and fraudulent Small Business Administration Paycheck Protection Program loan application documents and collecting the money for personal use, U.S. Attorney for the Southern District of Texas Alamdar S. Hamdani said in the news release Wednesday.
In addition to the federal prison sentence, U.S. District Judge Lee H. Rosenthal also ordered Khan to serve three years of supervised release once he is released. Khan also was ordered to pay $1 million in restitution to the SBA.
At the hearing, the court heard testimony that said Khan almost immediately lost the money he stole in stock trading maneuvers.
In handing down the sentence, the judge noted Khan’s criminal activity took place while the country was suffering from the effects of the COVID-19 pandemic.
Authorities said that in or around April 2021, Khan created a fictitious temporary workforce business and payroll documents to qualify for the program’s funds, then converted the funds for personal use, using the money to invest and trade in stocks.
The federal government created the PPP under the CARES Act to protect jobs during the 2020 pandemic, the news release said. The program offered low-interest private loans to pay for payroll and certain other related costs.
The scheme caused a loss to the government of more than $1 million, the news release said.
Khan was allowed to stay out on bond until he has to voluntarily surrender to a U.S. Bureau of Prisons facility, which will be determined later.
Homeland Security Investigations investigated the case, which Assistant U.S. Attorneys Craig M. Feazel and Thomas Carter prosecuted.
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