Earlier today, Konstantino Zarkadas, a Glen Cove physician, pleaded guilty to disaster relief and wire transfer fraud at the federal courthouse in Central Islip in connection with his receipt of millions of dollars in loans for small businesses under the Paycheck Protection Program (PPP) and the Loans Program. against economic injury (EIDLP). Today’s proceedings were held before U.S. District Judge Gary R. Brown. If convicted, Zarkadas faces up to 30 years in prison, as well as $3,796,849.50 forfeiture and a fine of up to $250,000.
Breon Peace, United States Attorney for the Eastern District of New York, Michael J. Driscoll, deputy director-in-charge, Federal Bureau of Investigation, New York Field Office (FBI), and Thomas Fattorusso, special commander, Internal Revenue Service-Criminal Investigation, New York (IRS-CI), announced the guilty plea.
“The defendant, a medical professional, admits to diverting millions of dollars in COVID-19 emergency funds to fund an extravagant lifestyle, including the purchase of luxury watches and vehicles, and the down payment on a yacht,” the U.S. said. lawyer Peace. “This agency will vigorously prosecute those who steal from government programs designed to help struggling small businesses and families survive the pandemic.”
“It’s always sad to see the rampant abuse of programs designed to help ordinary people struggling through the pandemic. dr. Zarkadas chose greed over honesty by financing a luxurious lifestyle on the backs of American taxpayers. This case, along with many others, shows that IRS-CI is constantly working to eradicate financial fraud wherever it is found. IRS-CI would like to thank the FBI and the US Attorney’s Office for the Eastern District of New York for their cooperation and investigative efforts in this matter,” said IRS-CI Special Agent-in-Charge Fattorusso.
As set forth in court records, Dr. Between March 2020 and July 2020, amid the COVID-19 pandemic, Zarkadas fraudulently applied for and received at least 11 PPP and EIDLP loans totaling approximately $3.7 million, on behalf of corporate entities he controlled. Zarkadas laundered the proceeds of the loan through various bank accounts he managed, eventually using the money for extravagant personal purchases and other illicit purposes. For example, in July 2020, Zarkadas used approximately $194,915.42 in PPP funds for ailing small businesses affected by the pandemic to fund the down payment on a $1.75 million yacht. To hide the fraudulent nature of the purchase, Zarkadas made the check payable to a family member who was not the beneficial owner of the money, and in the check’s memo line, incorrectly stated that the money was “payback for payroll.” . Zarkadas also withdrew tens of thousands of dollars in cash loan proceeds and used a portion of the proceeds to pay more than $1 million in judgments against him, to lease luxury vehicles, and to make personal purchases, including several Rolex and Cartier wristwatches. which he has agreed to forfeiture in today’s proceedings.
Congress created the PPP and EIDLP as part of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. The CARES Act, which came into effect on March 29, 2020, provided emergency financial assistance related to the economic impact of the COVID-19 pandemic. One source of relief provided by the CARES Act has been the allocation of funds for the issuance of forgivable loans to small businesses for job retention and certain other expenses through the PPP. The PPP allowed eligible small businesses to receive unsecured loans on favorable terms, which they had to use for certain expenses, including payroll, mortgage interest, rent and utilities. The PPP provided for loan waiver if the recipient companies spent the proceeds on these specified expenses within a limited time and used a certain percentage for payroll costs.
Another source of help provided by the CARES Act was the EIDLP, which provided low-interest financing to small businesses, renters and homeowners in regions hit by declared disasters. Under the program, EIDLP recipients were eligible for small business advances of up to $10,000 within three days of applying for an EIDL (EIDL Advance). The amount of an EIDL advance was determined based on the number of employees working for the applicant. The EIDL Advance did not have to be repaid.
The government’s case is being handled by the agency’s Long Island Criminal Division. The United States’ Assistant Attorney General, Anthony Bagnuola, is leading the prosecution.
Glen Cove, New York
EDNY Dock Number 21-CR-363 (GRB)