Moustapha Diakhate, 46, of Stamford, was sentenced today by U.S. District Judge Michael P. Shea in Hartford to 42 months of imprisonment, followed by three years of supervised release, for fraudulent receiving more than $4 million in COVID-19 relief funds guaranteed by the U.S. Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Judge Shea also ordered Diakhate to serve three months in home detention when he is released from prison, and to perform 75 hours of community service while on supervised release.
Today’s announcement was made by U.S. Attorney Vanessa Roberts Avery, Special Agent in Charge Amaleka McCall-Brathwaite of the Small Business Administration Office of Inspector General’s Eastern Region, Special Agent in Charge David Sundberg of the New Haven Division of the Federal Bureau of Investigation, and Special Agent in Charge Joleen D. Simpson of IRS Criminal Investigation in New England.
According to court documents and statements made in court, in March 2020, the CARES Act provided emergency financial assistance to Americans suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of forgivable loans to small businesses for job retention and certain other expenses through the Paycheck Protection Program (PPP). In April 2020, Congress authorized more than $300 billion in additional PPP funding. The PPP allowed qualifying small businesses and other organizations to receive unsecured loans at an interest rate of 1%. PPP loan proceeds must be used by businesses on payroll costs, interest on mortgages, rent and utilities. The PPP allowed the interest and principal to be forgiven if businesses spent the proceeds on these expenses within a certain period of time of receipt and used at least a certain percentage of the amount to be forgiven for payroll.
The PPP was overseen by the Small Business Administration, which has authority over all PPP loans. Individual PPP loans, however, were issued by private approved lenders, such as Citibank, which received and processed PPP applications and supporting documentation, and then made loans using the lenders’ own funds, which were guaranteed by the SBA.
Diakhate maintained an ownership or management interest in certain small business entities, including Ansonia Developers LLC, Winsbay Inc., Buyers Association Group LLC, Washington Management LLC, Diakhate Capital, Inc., and Poulson & Gold Inc. Beginning in May 2020, Diakhate provided Citibank and M&T Bank with false and fraudulent information during the PPP loan application process in order to obtain PPP loans for each of his six entities totaling more than $4 million. Diakhate then used a portion of the funds for various personal expenses, including to pay off a loan he had been provided to purchase of a 2010 Porsche Panamera Turbo, and to purchase both a Mercedes and BMW. He also purchased a $50,000 certificate of deposit with PPP funds, and disbursed funds to various and individuals unrelated to his business entities.
Citibank and M&T Bank successfully recovered more than $2 million after discovering Diakhate’s fraud. Judge Shea ordered Diakhate to pay restitution of $1,702,479.
Diakhate was arrested on a federal criminal complaint on May 7, 2021. On January 26, 2022, he pleaded guilty to one count of wire fraud and one count of making an illegal monetary transaction.
Diakhate, who is released on a $450,000 bond, is required to report to prison on October 14.
This matter was investigated by the Small Business Administration Office of Inspector General, Federal Bureau of Investigation, and Internal Revenue Service – Criminal Investigation. The case was prosecuted by Assistant U.S. Attorney Christopher W. Schmeisser.
Individuals with information about allegations of attempted fraud involving COVID-19 are encouraged to report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721, or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.