NEW YORK (AP) — A Chinese man who tried to get $20 million in federal aid for distressed businesses affected by the coronavirus created two bogus businesses and falsely claimed he was trying to procure COVID-19 tests and protective equipment in an official capacity for New York state, authorities said Thursday.
Muge Ma, 36, also claimed he was paying millions of dollars to hundreds of workers when he was really his only employee, working out of his posh $1.5 million Manhattan condominium, federal authorities said as they announced his arrest.
Prosecutors said Ma claimed to a COVID-19 test kit manufacturer and a medical equipment supplier that one of his companies was representing New York state and Gov. Andrew Cuomo in procuring COVID-19 test kits and personal protective equipment to respond to the pandemic.
They said he falsely claimed in a recorded call on Monday that one of his companies was a registered vendor for New York state and that the company had a large team of employees working on a deal for the state.
An email seeking comment was sent to Assistant Federal Defender Tamara Giwa, who told a U.S. magistrate judge that her client had no criminal history and should be released on $50,000 bail so he can take care of his parents who are visiting from China. The judge denied bail, citing arguments by a prosecutor who said Ma had the motive and money to flee.
During the hearing, held by video conference because of the pandemic, Ma admitted he was not a U.S. citizen but said: “For many, many years, I see myself as American.” He said he came to the U.S. in 2011 on a student visa and obtained a degree from UCLA.
Manhattan U.S. Attorney Geoffrey S. Berman called Ma’s alleged crimes “as audacious as they are callous.”
“Ma described one of the companies as a ‘patriotic American’ firm, and said of the other company that it would ‘help the country reduce the high unemployment rate caused by the pandemic by helping unemployed American workers and unemployed American fresh graduates find jobs as quickly as possible,’” Berman said in a statement.
FBI Assistant Director William F. Sweeney Jr. said the arrest should serve as a warning to anyone contemplating fraud to profit in bad times.
“There are many people in desperate need of federal money right now to get them through an unbelievably difficult time. The last thing they need to hear is that a fraudster allegedly tried to steal millions of dollars for his own selfish use,” he said.
Documents filed in Manhattan federal court alleged that Ma from March through last Friday applied to at least five banks to get over $20 million in government-guaranteed loans.
Authorities said Ma told the banks he was the sole owner and executive director of the Ma Companies, purportedly based on the sixth floor of his luxury condominium building.
They said he submitted fraudulent and doctored bank records, tax records, insurance records, payroll records and financial statements to the banks, providing links to his companies’ websites, which claimed he owned “global” companies.
Court documents allege he also falsely claimed to be a U.S. citizen when he is a Chinese national with lawful permanent resident status in the U.S.
According to court papers, the Small Business Administration had approved a $500,000 loan for one of Ma’s companies and a $150,000 loan for another, with at least a $10,000 loan advance provided to him.
Authorities said a bank also disbursed over approximately $800,000 in government loan funds for one of the companies, although the money was frozen during the investigation. They said Ma tried to withdraw his loan applications from the banks and return the funds after the probe began.
Ma was charged with bank fraud, wire fraud, making false statements to a bank and major fraud against the United States. Three of the charges carry a maximum sentence of 30 years in prison.