When federal agents confronted an Evanston businessman last month about suspicious forms used to apply for $441,000 in federal loan funds designed to respond to the coronavirus, he allegedly said workers in India had sent him the forms.
Then, the feds say he backpedaled. He admitted they didn’t come from India. And agents asked him if he filed the suspicious forms thinking, “it will keep our business alive.”
“I would say so, yes,” Rahul Shah allegedly replied.
Now Shah, 51, has become the first person to face fraud charges in Chicago’s federal court related to the coronavirus. A 10-page criminal complaint accusing Shah of bank fraud and making false statements to a financial institution became public Tuesday.
Shah could not immediately be reached for comment.
The charges revolve around an application by the Evanston-based business N2N Holdings to the Paycheck Protection Program, known as PPP, which was created to provide forgivable loans to small businesses for job retention and other expenses. The feds say Shah’s wife is listed as the manager of the company, which does business under the name Boardshare.
Shah is also listed as the president of another Evanston company, Katalyst Technologies Inc. The criminal complaint alleges that, in seeking a $441,138 PPP loan for N2N, the company submitted paperwork that claimed employees who once worked for Katalyst were current employees of N2N. Those individuals denied working for N2N to the feds.
The N2N application claimed the business had 10 employees and an average monthly payroll of $176,455. However, its previous tax filings suggested it had drastically inflated its payroll figures in the PPP application. Shah later adjusted its payroll figure down to $99,000, but IRS figures still showed the number was too high.
In the end, the bank considering the PPP loan for N2N did not approve it, according to the complaint.
Though Shah’s wife signed the application, Shah later told federal agents he is the president of N2N, while his wife owns the company and performs “back office” functions. He said that N2N is independent from their other companies. And while the others use a commercial payroll processor, he allegedly said N2N does its payroll “in house.”
Shah also allegedly acknowledged “errors” in the PPP loan documentation, telling agents the documents that accompanied the loan application were given to him via email by employees in India.
When agents asked if he could show them the email, he allegedly said, “I don’t have an email.”
“What I’m gathering is that this likely didn’t come from India . . . because the email account is not going to reflect that,” an agent said.
Shah allegedly replied, “right, right, right.”