Long Island Doctor sentenced to 51 months in prison for Covid-19 loan fraud | USAO-EDNY
Long Island Doctor sentenced to 51 months in prison for Covid-19 loan fraud |  USAO-EDNY

Long Island Doctor sentenced to 51 months in prison for Covid-19 loan fraud | USAO-EDNY

Earlier today, in a federal court in Central Islip, Konstantinos Zarkadas, a Glen Cove-based physician, was sentenced by U.S. District Judge Gary R. Brown to 51 months in prison for fraudulently providing millions of dollars in COVID-19 aids. The court also ordered Dr. Zarkadas to pay approximately $ 3.5 million in damages. Dr. Zarkadas pleaded guilty in November 2021 to disaster relief and transfer fraud in connection with his receipt of loans to small businesses under the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan Program (EIDLP). As part of the agreement, Dr. Zarkadas lost $ 200,000 and four luxury wristwatches.

Breon Peace, United States Attorney for the Eastern District of New York, Michael J. Driscoll, Assistant Director, Federal Bureau of Investigation, New York Field Office (FBI), and Thomas Fattorusso, Jr., Special Agent-in – Indictment, Internal Revenue Service Criminal Investigation, New York (IRS-CI), announced the verdict.

“Today’s judgment shows that there are consequences for those who treat vital government programs as cash give-a-ways and shamefully seek to take advantage of an unprecedented public health crisis,” the United States Attorney Peace said. “This office will vigorously prosecute and prosecute medical professionals such as the defendant and other fraudsters who are driven by greed to maintain a lavish lifestyle at the expense of small businesses with legitimate need for COVID-19 relief.”

“It’s a shame to see violent abuse of programs designed to help ordinary people struggling through the pandemic. Dr. Zarkadas chose greed over honesty by funding a luxury lifestyle on the backs of America’s taxpayers,” the IRS-CI said. Special Agent-in-Charge Fattorusso. “Thanks to the IRS-CI’s and FBI investigative work, he will sail directly to federal prison instead of aboard his $ 1.7 million yacht purchased illegally with CARES Act funds.”

Between March 2020 and July 2020, in the midst of the COVID-19 pandemic, Dr. Zarkadas fraudulently withheld and received, based on the false information he provided, at least 11 PPP and EIDLP loans totaling approximately $ 3,700,000 on behalf of corporate entities he controlled. Dr. Zarkadas laundered the loan proceeds through various bank accounts and eventually used the money for extravagant personal purchases and other illicit purposes. For example, Dr. Zarkadas in July 2020 approximately $ 194,915.42 in PPP funds to fund the payout on a yacht of $ 1.75 million. To hide the fraudulent nature of the purchase, Dr. Zarkada’s check to a family member who was not the ultimate recipient of the funds, and in the check’s note line, he erroneously stated that the money was “repayment to salary.” Dr. Zarkadas also raised tens of thousands of dollars in loan proceeds in cash and used some of the profits to meet more than $ 1 million in judgments against him, to lease luxury cars and to make personal purchases, including several Rolex and Cartier wristwatches, which he lost as part of his admission of guilt in this case.

Congress established the PPP and EIDLP as part of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. Adopted on 29 March 2020, the CARES law provided emergency financial assistance in connection with the economic effects of the COVID-19 pandemic. One source of relief from the CARES Act was the allocation of funds for the issuance of forgivable loans to small businesses for job retention and certain other expenses through PPPs. PPPs allowed qualified small businesses to receive unsecured loans on favorable terms that they would need for specified expenses, including labor costs, mortgage interest rates, rent, and utilities. OPP provided for the remission of the loan if the recipient companies used the proceeds of these specified expenses within a limited period of time and used a certain percentage for labor costs.

Another source of relief provided by the CARES Act was the EIDLP, which provided low-interest financing to small businesses, tenants and homeowners in regions affected by declared disasters. Under the program, EIDLP beneficiaries were eligible to receive up to $ 10,000 advances for small businesses within three days of applying for an EIDL (EIDL Advance). The size of an EIDL advance was determined on the basis of the number of staff working for the applicant. EIDL Advance was not to be repaid.

The government’s case is being processed by the office’s Long Island Criminal Division. Assistant U.S. Attorney Anthony Bagnuola is in charge of the prosecution.

The accused:

KONSTANTINOS ZARKADAS
Age: 48
Glen Cove, New York

EDNY Document No. 21-CR-363 (GRB)

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