California Man Pleads Guilty For $3.6 Million Paycheck Protection Program And Economic Injury Disaster Loan Fraud

SAN FRANCISO –Lebnitz Tran pleaded guilty to criminal charges related to a  scheme to submit fraudulent loan applications seeking millions of dollars in Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) COVID-19 relief funds. The  plea was accepted by the Hon. William H. Orrick, United States District Judge.

According to court documents, Lebnitz Tran, 41, of San Jose, submitted at least 27 PPP loan applications and at least seven EIDL loan applications on behalf of multiple persons and business entities, using false and fictitious information and documents, including falsified employee information, fictitious or grossly exaggerated payroll figures, and fake tax documents. Tran sought approximately $8.5 million in PPP and EIDL funds, obtained over $3.6 million in illicit loan proceeds, and ultimately netted approximately $1.7 million from the scheme. Tran and others used these illicit loan proceeds to make purchases at restaurants and retail stores, make deposits into personal investment accounts, buy cryptocurrency, and, in one instance, to purchase a $100,000 Tesla from a luxury car dealership.

On July 1, 2021, a federal grand jury indicted Tran, charging him with six counts of wire fraud, in violation of 18 U.S.C. § 1343, and one count of bank fraud, in violation of 18 U.S.C. § 1344(2). Pursuant to the plea, Tran pleaded guilty to two of the wire fraud counts. If Tran complies with the plea agreement, the remaining counts will be dismissed at sentencing.

Judge Orrick scheduled Tran’s sentencing for November 3, 2022; he faces a maximum penalty of 20 years in prison as to each count of wire fraud.  At sentencing, Tran also may be ordered to pay restitution and fines, as well as serve an additional term of supervised release.  However, any sentence will be imposed only after consideration of the U.S. Sentencing Guidelines and other statutory factors.

U.S. Attorney Stephanie M. Hinds of the Northern District of California and Federal Bureau of Investigation, Special Agent in Charge of the San Francisco Field Office Sean Ragan made the announcement.

The FBI and the Small Business Administration’s Office of Inspector General are investigating the case.

Assistant U.S. Attorney Sarah Griswold of the Northern District of California and Trial Attorney Christopher Jackson of the Criminal Division’s Fraud Section are prosecuting the case.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.