Man arrested after fraudulently obtaining $3 million in COVID business loans

A Los Angeles man was arrested on a federal grand jury indictment alleging he fraudulently obtained nearly $3.2 million in COVID-19 loans for his businesses, the Justice Department announced.

Mark Farag Shehata, 70, also known as "Samy Farag," "Mark Farag," and "Mark Fshehata," pleaded not guilty to seven counts of wire fraud.

According to a federal grand jury indictment, Shehata organized and registered four limited liability companies that purportedly operated in Marina del Rey: Shirmak Group LLC; Cynergy Group Internatioal (sic) LLC; Global Network Investments LLC; and Alpha and Omega Group LLC.

From May 2020 to May 2021, Shehata allegedly submitted at least seven false and fraudulent loan applications under the Paycheck Protection Program (PPP), a financial aid plan to support businesses impacted by the COVID-19 pandemic.

Officials say the PPP loans were to be used by recipients to pay only certain authorized business expenses, such as payroll, mortgage interest, lease, and utilities. However, Shehata’s four businesses were nothing more than shell companies, the indictment alleges. 

None of the PPP loans Shehata obtained were used to make payments to employees for payroll or any business expenses.

According to the DOJ, Shehata also submitted to the Small Business Administration and several lenders false applications requesting a total of $5,423,989 in PPP loans, and fraudulently obtained approximately $3,154,265 in PPP proceeds.

If convicted, Shehata could face a maximum sentence of 20 years in federal prison for each count.