BALTIMORE — A Baltimore man who prepared applications for nearly $18 million in fraudulent pandemic emergency loans in exchange for kickbacks received seven years in prison during his sentencing in federal court Tuesday.
The plan led by Ahmed Sari46 years old, is the largest pandemic fraud seen in the District of Maryland, a prosecutor said, involving 85 fraudulent Paycheck Protection Program loan applications and 57 fraudulent Economic Disaster Loan applications.
Both emergency programs were intended to ease economic damage and save jobs during the coronavirus pandemic.
According to the U.S. Attorney’s Office, all of Sary’s fraudulent loans were funded, resulting in a $17.9 million loss.
“The losses are high,” Assistant U.S. Attorney Paul Riley said. “They are staggering.”
Sary was ordered to pay back the money, although much of it is believed to have been spent in his home country of Egypt, Riley said. Sary has been a naturalized U.S. citizen since 2007, according to information presented in court, but often traveled to Egypt to visit family.
Sary used the money he obtained to open a beachfront restaurant in Alexandria, Egypt, called Sary’s Kitchen, to buy other real estate in Egypt and to finance travel and luxury hotel stays, the U.S. Attorney’s Office said.
According to Sary’s plea agreement, he and several co-conspirators prepared false credit applications for borrowers for borrowers in exchange for kickbacks, usually about 20% to 30% of the loan amount. The applications increased the number of employees, wage costs and income of the companies. They also include cases where the company did not actually exist.
Once the loans were disbursed, recipients would provide Sary with multiple checks leaving the beneficiary name blank. Sary would write a name on each check and deposit it for safekeeping, the U.S. Attorney’s Office said. Sary also helped some loan recipients set up payrolls so that it appeared the money was being used for legitimate purposes.
The companies Sary helped are not named in the charging documents, although Riley said in court that the conspiracy “touched various parts of the United States.”
Sary also received more than $950,000 in PPP and EIDL funds for his own alleged businesses, including a financial services company and a meatpacking company, among others. None of them existed “in any legitimate capacity,” the U.S. Attorney’s Office said.
Two of Sary’s co-conspirators, who participated in the scheme to a lesser extent, previously pleaded guilty and received two years in prison, court records show. Another alleged co-conspirator is awaiting trial.
Riley said Sary was the “mastermind” of the scheme, which earned him millions of dollars in kickbacks. The government has been unable to locate much of the missing money because it is believed to be in Egypt, Riley said.
U.S. District Judge Richard D. Bennett told Sary he could qualify for a reduced sentence if he helps locate and return the money.
“This situation here is more than distressing, it is simply scandalous,” the judge said. “Right now, no one can tell me where all the money went.”
Bennett sentenced Sary to three years of supervised release, beginning with a year of house arrest, which would begin after his seven-year sentence. The prison sentence was less than the 9.5 years requested by prosecutors and fell below federal sentencing guidelines, but was higher than the five-year term sought by the defense.
In brief remarks, Sary apologized and said he was remorseful.
“I’m sorry I put myself and my family in this position,” he said. “It’s out of character for me.”
His attorney, Julie Reamy, said Sary faced financial pressure when his parents became ill and required medical care before their deaths in 2018 and 2021. Reamy also said Sary’s accountant implicated Sary in the conspiracy and helped in preparing loan applications for Sary’s companies.
Riley declined to say in court whether the accountant has been charged, but pointed out that he received much smaller kickbacks than Sary.
Bennett repeatedly commented on the scale of the scheme, calling it “one of the largest pandemic fraud cases” he has seen.
“It’s mind-boggling,” the judge said.
The two pandemic relief programs that Sary defrauded were the targets of widespread theft schemes, according to a recent investigation by the U.S. Small Business Administration Office of Inspector General. The SBA distributed a total of $1.2 trillion through the PPP and EIDL programs, of which more than $200 billion may have been fraudulently obtained.
“This means that at least 17% of all COVID-19 EIDL and PPP funds were paid out to potentially fraudulent actors,” the study concluded.
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