ALEXANDRIA, Va. – The U.S. District Court for the Eastern District of Virginia ordered IT Services Now LLC and O@sis Group LLC, located in McLean, and their CEO, Mustafa Khabir, 51, of Haymarket, to pay $1,052,227 for submitting fraudulent applications to obtain federally guaranteed loans through the Small Business Administration’s (SBA) Paycheck Protection Program (PPP).
The PPP offered loans to small businesses for economic relief during the COVID-19 pandemic. Each PPP loan was calculated based on the applicant’s payroll and number of employees. Applicants were required to submit supporting documents so PPP lenders and the SBA could verify the applicant’s payroll and employee count.
The government filed a complaint for violations of the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), alleging that the defendants fraudulently obtained $460,300 by submitting four PPP applications to SBA-approved lenders. In each of the applications, the companies and Khabir misrepresented their payroll and employee counts. They also submitted fabricated payroll and tax documents in support of each application. The lenders ultimately issued two PPP loans to IT Services Now and one PPP loan to O@sis Group.
After the loans were issued, Khabir used the PPP funds to invest in cryptocurrency and his companies defaulted on all three loans. The court entered judgment in favor of the United States on all counts.
The outcome in this case was the result of a coordinated effort between the U.S. Attorney’s Office for the Eastern District of Virginia; the U.S. Small Business Administration’s Office of General Counsel, Litigation Unit; and the U.S. Small Business Administration, Office of Inspector General.
The case was prosecuted by Assistant U.S. Attorney William Hochul III and assisted by Forensic Auditor Peter Melaragni. The scheme was uncovered by the U.S. Attorney’s Office using PPP data analytics.
The case caption is United States v. IT Services Now LLC et al., 1:23-cv-00738-LMB-WEF
(E.D. Va.). This case follows litigation to enforce a Civil Investigative Demand, which may be found at United Sates v. Khabir, No. 1:22-mc-00004-AJT-TCB (E.D. Va.).
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia.