Indian American man arrested for $5mn COVID-relief loan fraud


An Indian American man from Orange Country, California, was arrested on Thursday, February 24, at the US-Mexico border after federal officials accused him of falsely receiving more than $5 million in COVID relief loans.

Reddy Raghav Budamala, 35, was charged with one count of wire fraud, the U.S. Attorney’s Office announced Friday, February 25.

Budamala made his initial court appearance on Thursday afternoon in the US District Court in Los Angeles, where the judge ordered Budamala to be held without bond because he posed a flight risk.

If convicted of the charge, he faces up to 20 years in federal prison.

Officials said Budamala was caught at the border after he fled from his Irvine home as it was searched by police.

According to the complaint, Budamala in 2019 formed or acquired three shell companies with no operations – Hayventure LLC, Pioneer LLC, and XC International LLC.

Following the outbreak of the COVID-19 pandemic, and the enactment of federal programs designed to address the economic fallout from the pandemic, Budamala allegedly submitted to the Small Business Administration (SBA) seven applications for pandemic-relief loans under the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL).

As part of the applications filed from April 2020 through March 2021, 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 affidavit alleges.

He claimed his businesses had dozens of employees and earned millions of dollars in revenue, the U.S. Attorney’s office said.

In reality, he had no employees or profits, officials said. The addresses Budamala listed for his businesses were also fake or belonged to residential homes, the U.S. Attorney’s Office said.

Federal officials said they could find no financial records proving the businesses had employees and paid wages.

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, 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.