Santa Clarita Man Sentenced for PPP COVID-Relief Fraud

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LOS ANGELES (CNS) - A Los Angeles County man was sentenced today to 41 months in federal prison for attempting to steal millions of dollars in Paycheck Protection Program COVID-relief loans for his companies by submitting fraudulent applications that included fake tax documents and information for non-existent employees.

Raymond Magana, 41, was sentenced by U.S. District Judge Stanley Blumenfeld Jr., who ordered him to pay $360,415 in restitution, according to the U.S. Attorney's Office.

At sentencing, the judge called Magana's crime ``a despicable offense'' and noted that Magana exploited a ``national emergency'' in order to ``line his own pockets,'' federal prosecutors said.

The Santa Clarita man pleaded guilty in January 2021 to one count of fraud in connection with major disaster or emergency benefits.

In May and June 2020, Magana submitted to banks PPP loan applications that contained false statements about the number of employees and the amount of payroll expenses. Specifically, on June 3, 2020, Magana submitted a PPP loan application to Customer's Bank for $940,416 for The Building Circle LLC, a company registered in his name.

In the application, Magana falsely claimed the company's average monthly payroll was $376,167 for 40 workers. Magana admitted to submitting fraudulent tax documents that reported over $4.4 million in annual wages paid to 40 employees in 2019 and $852,000 paid in employee wages during the first quarter of 2020.

IRS and California Employment Development Department records showed that the company never reported paying any employees, and the underwriting packet also did not include a list of employees or associates for the company, according to an affidavit filed in Los Angeles federal court with a criminal complaint in this case.

Investigators later determined that the Pico Rivera address given as The Building Circle's headquarters was a 980-square-foot, single-family home that appeared to be a residence, not a business. Ultimately, the loan application was approved and $940,416 was funded to Magana's shell company on June 4, 2020, the affidavit states.

Magana's business partner, Steven R. Goldstein, 37, of Northridge, is serving a one-year federal prison sentence for committing fraud in connection with major disaster or emergency benefits.

Goldstein pleaded guilty in December 2020 to a federal fraud charge and admitted that he fraudulently obtained $655,000 in PPP loans for his companies by submitting false tax documents and fake employee information.

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