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San Jose restaurant owner convicted of COVID relief fraud sentenced to 30 months in prison

PIX Now - Morning Edition 6/14/24
PIX Now - Morning Edition 6/14/24 11:52

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 wire 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 agreement, Leung - who co-owned and controlled the finances of a San Jose restaurant - submitted an application in May 2021 for $5 million in RRF funds that he certified he would use for approved business-related expenses like payroll, business rent or mortgage costs, and business maintenance expenses and utilities.

The U.S, Attorney's office said Leung, who was indicted in August 2022, admitted he intended to use the RRF funds for purposes other than those he had indicated on the application.

The SBA granted the application and funded the loan in full in June 2021. U.S. Justice Department officials said Leung admitted he then transferred $3.5 million to a personal investment account he controlled and used RRF funds to purchase securities and pay fees associated with the refinancing of the mortgage on his personal residence in Sacramento, all in violation of RRF program requirements restricting the use of RRF funds to specified eligible business-related uses.

Leung also admitted in his plea agreement he previously applied for and received two PPP loans that he had misused to enrich himself--one for $257,100 that was funded in April 2020 and a second for $360,055 that was funded in March 2021.

Rather than use those funds for approved business-related expenses, Leung said he spent the money on himself, including making payments to a Lexus dealership and spending money at a casino in Northern California.

Leung admitted he received approximately $5.6 million in RRF and PPP funds and that he unlawfully used $3,359,701.28 of those funds. Leung will pay that amount in restitution.

Leung will also serve three years of supervised release to begin after his prison term is completed.

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 effects 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 businesses serving food and drink that suffered revenue losses during the pandemic.  

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