LOS ANGELES (CNS) - An Orange County man accused of fraudulently obtaining more than $5 million in COVID-19 relief loans for three sham companies but who used the money to purchase a home in Malibu among other personal expenses pleaded guilty Tuesday to federal criminal charges.
Reddy Budamala, 35, of Irvine, entered his plea in downtown Los Angeles to one count each of bank fraud and money laundering, which carry a total sentence of up to 40 years behind bars, according to the U.S. Attorney's Office.
Sentencing was scheduled for Sept. 26.
Budamala has been in federal custody since his arrest on Feb. 23, when he attempted to abscond from the United States to Mexico via the San Ysidro border crossing, prosecutors said.
In 2019, he formed or acquired three shell companies with no operations -- Hayventure LLC, Pioneer LLC and XC International LLC, according to court papers.
Following the outbreak of the COVID-19 pandemic, and the enactment of federal programs designed to address the subsequent economic fallout, Budamala submitted to the Small Business Administration seven applications for pandemic- relief loans under the Paycheck Protection Program and Economic Injury Disaster Loan.
In the applications, Budamala falsely represented to the banks administering the loan programs that his companies employed dozens of individuals and earned millions of dollars in revenue, and that he needed the money for payroll and business expenses.
The listed addresses for the companies were bogus, nonexistent or residential.
The SBA and the banks funded six of the loans and disbursed more than $5.15 million. Budamala applied to have several of the loans forgiven and falsely represented that he had used the SBA money entirely for payroll.
Once the loans were funded, Budamala used the money to pay for personal expenses, including the purchase of a $1.2 million investment property in Los Angeles, the purchase of a $597,585 property in Malibu, a $970,000 investment in an EB-5 Immigrant Investor Visa Program and a nearly $3 million deposit into Budamala's personal TD Ameritrade account, according to federal prosecutors.