Spring Valley man charged in White Plains Federal Court with $1.6m Covid-19 fraud scheme | USAO-SDNY

Damian Williams, United States Attorney for the Southern District of New York, and Michael J. Driscoll, Deputy Director in Charge of the New York Bureau of the Federal Bureau of Investigation (“FBI”), today announced the lifting of sealed of an indictment in federal court in White Plains accusing ELIZIER SCHER of wire fraud in connection with his scheme to defraud the U.S. Small Business Administration of more than $1.6 million in COVID-19 relief funds . SCHER was arrested this morning and appeared in federal court in White Plains earlier today.

US Attorney Damian Williams said: ‘As alleged, the defendant conspired to steal taxpayer funds earmarked for small businesses in need of assistance during the pandemic. My office will continue to investigate and prosecute those who unlawfully seek to profit from a national emergency.

FBI Assistant Director-in-Charge Michael J. Driscoll said, “Administering more than $1.6 million in COVID-19 relief funds. Elizier Scher is said to have made materially false statements in at least a dozen requests for money intended to help honest businesses overcome the financial difficulties they have faced as a result of the pandemic. As today’s action shows, the FBI remains committed to bringing to justice those who would seek to serve their own greed at the expense of the US government and taxpayers.

According to the indictment unsealed today in federal court in White Plains[1]:

The SBA is a federal agency that administers assistance to U.S. small businesses, including the Economic Disaster Loan (“EIDL”) program, which was intended to provide financing to help small businesses recover from economic impacts of the COVID-19 pandemic. The maximum amount of an EIDL loan is determined by a formula based on the date the borrower began operating and the borrower’s gross revenue and cost of goods sold for the twelve months prior to January 31, 2020 Loans can only be used for working capital. and other normal operating expenses. Although loans generally must be repaid, some borrowers are eligible for advances of up to $15,000 that do not need to be repaid.

Over a period of approximately four hours, on or about July 13, 2020, SCHER submitted twelve applications for EIDL loans in the principal amount of $150,000 to the SBA over the Internet on behalf of twelve different companies he owned and was controlling. SCHER further requested on each application that the borrower be considered for an advance of up to $10,000 that did not need to be repaid. SCHER made materially false statements in each application with respect to each applicant’s gross revenues and cost of goods sold for the twelve month period prior to January 31, 2020.

Between on or about July 20, 2020 and on or about August 11, 2020, eleven of the twelve applicants received a net total of $1,648,900 in loan proceeds from the SBA. SCHER used the proceeds to purchase real estate and pay credit card expenses instead of using it for borrowers’ working capital, as SCHER had agreed to do in the loan agreements it signed in name of borrowers.

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SCHER, 33, of Spring Valley, New York, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison.

The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr Williams praised the FBI’s investigative work.

This case is handled by the White Plains Division of the Bureau. Assistant U.S. Attorney James McMahon is charged with the prosecution.

The counts in the indictment are charges only and the accused is presumed innocent until proven guilty.

[1] As the introductory sentence indicates, the entire text of the Indictment and the description of the Indictment set forth therein are allegations only, and each fact described is to be treated as an allegation. .