California Man Arrested for Obtaining COVID-relief Loans for Sham Companies
- Reddy Raghav Budamala allegedly pocketed more than $5 million under the Paycheck Protection Program and Economic Injury Disaster Loan.
A California man who fled after authorities searched his residence last week was arrested at the U.S.-Mexico border and charged with fraudulently obtaining more than $5 million in COVID-relief loans for three sham companies. Reddy Raghav Budamala, 35, of Irvine, was arrested on Feb. 25, according to a Department of Justice press release.
Later that afternoon, Budamala made his initial court appearance in the United States District Court in Los Angeles. At that hearing, a United States Magistrate Judge ordered Budamala held without bond because he posed a flight risk. He is charged with one count of wire fraud.
The DOJ press release, citing an affidavit filed with the complaint, said that in 2019, Budamala formed or acquired three shell companies with no operations – Hayventure LLC, Pioneer LLC, and XC International LLC. He then allegedly submitted seven applications to the Small Business Administration for pandemic-relief loans under the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL).
Those applications were filed from April 2020 through March 2021, the DoJ said, adding that Budamala “falsely represented to the banks administering the COVID-relief business 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.
During a February 2021 interview with a State Department official in an unsuccessful attempt to obtain a United States passport, Budamala said he wanted the passport so he could get a job, according to the affidavit.
The SBA and the banks funded six of the loans and disbursed $5,151,497, the affidavit states. Budamala allegedly 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, he used the money to pay for personal expenses, including the purchase of a $1.2 million investment property in Los Angeles, 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 his personal TD Ameritrade account.