A San Jose restaurant owner has been sentenced to 30 months in prison for fraudulently obtaining and misusing millions of dollars in COVID-19 relief funds.
Federal authorities said Thursday that David Tai Leung, 58, of Sacramento, pleaded guilty in February 2024 to three counts of bank fraud in connection with fraudulently obtained loans he received from the Restaurant Revitalization Fund (RRF) and the Paycheck Protection Program ( PPP). .
According to his plea deal, Leung — who co-owned and controlled the finances of a San Jose restaurant — applied in May 2021 for $5 million in RRF funds that he stated he would use for approved business-related expenses such as payroll, business rental or mortgage costs, and business maintenance costs and utilities.
The U.S. Attorney’s Office said Leung, who was charged in August 2022, admitted he intended to use the RRF funds for purposes other than those he indicated in the filing.
The SBA granted the request and fully funded the loan in June 2021. U.S. Justice Department officials said Leung admitted that he then transferred $3.5 million to a personal investment account he controlled and used RRF funds to purchase securities and pay fees related to the refinancing of the loan . mortgage on his personal residence in Sacramento, all in violation of the RRF program requirements that limit the use of RRF funds to specified eligible business-related applications.
Leung also admitted in his plea agreement that he previously applied for and received two PPP loans that he misused to enrich himself: one for $257,100, funded in April 2020, and a second for $360,055, funded in March 2021.
Instead of using that money for approved business-related expenses, Leung said he spent the money on himself, including making payments to a Lexus dealer and spending money at a casino in Northern California.
Leung admitted that he received approximately $5.6 million in RRF and PPP funds and that he improperly used $3,359,701.28 of those funds. Leung will repay that amount.
Leung will also be on supervised release for three years, beginning after his prison sentence expires.
The PPP was part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a federal law enacted in 2020 to provide billions of dollars in emergency financial assistance to millions of Americans suffering from the economic fallout of the pandemic.
The RRF was part of the American Rescue Plan Act (ARPA), a federal law enacted in 2021 to provide funding and support to restaurants, bars, and similar food and beverage businesses that have suffered a loss of revenue during the pandemic.
