Austin man arrested for allegedly defrauding SBA out of millions

AUSTIN, Texas - Federal authorities have arrested a man in Austin after he allegedly defrauded the U.S. Small Business Administration (SBA) out of $2 million, according to the Department of Justice. 

Federal authorities arrested Micheal George McQuarn, 51, for charges of wire fraud and making false statements to the SBA, a criminal complaint unsealed Thursday morning stated. 

Earlier this year, Congress authorized over $600 billion in emergency funds in order to assist millions of Americans suffering from economic hardships due to the COVID-19 outbreak. A portion of those funds included forgivable loans to small businesses for job retention and certain other expenses through Paycheck Protection Program (PPP). 

RELATED: Small business owners say applying for emergency funds has been anything but easy

The complaint alleges that McQuarn implemented a scheme in April whereby he submitted fraudulent applications and supporting paperwork for two "fictitious companies" that he had created to secure SBA-backed PPP funds. McQuarn then claimed the funds were for legitimate business needs when instead he used the money for his own personal use, including buying a 2026 Pavati Wake Boat and a Rolls Royce. 

“The defendant egregiously sought personal gain from a program intended to assist hardworking Americans in this challenging time,” said SBA OIG Central Region Special Agent in Charge Donald Abram. “SBA OIG and its law enforcement partners will aggressively pursue allegations of wrongdoing to maintain the integrity of SBA’sprograms. I want to thank the U.S. Attorney’s Office and our law enforcement partners for their dedication and pursuit of justice.”

The complaint further alleges that McQuarn fraudulently received an excess of $2 million dollars in PPP funds. 

If convicted, McQuarn can face terms of imprisonment of up to 20 years for wire fraud and up to five years for making false statements to the SBA. 

“We are pleased to join our law enforcement partners in pursuit of those individuals using the COVID-19pandemic as an opportunity to defraud the nation’s financial institutions and government relief programs,” stated FDIC-OIG Special Agent in Charge Laurie Younger.

RELATED: SBA unveils new, 'borrower-friendly' forgiveness application for PPP loan recipients

SBA OIG, IRS-CI, FDIC-OIG, TIGTA, and the Texas Attorney General’s Office are conducting this ongoing investigation. Assistant U.S. Attorneys Matthew Devlin, Michael Galdo and Robert Almonte are prosecuting this case on behalf of the government.

“The Paycheck Protection Program was designed to help Americans struggling with financial hardship during the pandemic. Our office will be aggressive in targeting anyone who defrauds this critical program,” stated U.S.Attorney John F. Bash.

The attorney's office also notes that anyone who feels that they or their family were victims of a scam or attempted fraud involving stimulus payments related to COVID-19 should report it to the Center for Disaster Fraud Hotline at 866-720-5721. 

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