Earlier right this moment, in federal court docket in Central Islip, Konstantinos Zarkadas, a Glen Cove-based medical physician, was sentenced by United States District Choose Gary R. Brown to 51 months’ imprisonment for fraudulently acquiring thousands and thousands of {dollars} in COVID-19 emergency aid funds. The Courtroom additionally ordered Dr. Zarkadas to pay roughly $3.5 million in restitution. Dr. Zarkadas pleaded responsible in November 2021 to catastrophe aid fraud and wire fraud in connection along with his receipt of small enterprise loans beneath the Paycheck Safety Program (PPP) and Financial Harm Catastrophe Mortgage Program (EIDLP). As a part of the plea settlement, Dr. Zarkadas forfeited $200,000 and 4 luxurious wristwatches.
Breon Peace, United States Legal professional for the Japanese District of New York, Michael J. Driscoll, Assistant Director-in-Cost, Federal Bureau of Investigation, New York Discipline Workplace (FBI), and Thomas Fattorusso, Jr., Particular Agent-in-Cost, Inner Income Service Felony Investigation, New York (IRS-CI), introduced the sentence.
“At the moment’s sentence demonstrates there are penalties for many who deal with very important authorities packages as money give-a-ways and shamefully search to revenue from an unprecedented public well being disaster,” acknowledged United States Legal professional Peace. “This Workplace will vigorously prosecute and produce to justice medical professionals just like the defendant and different fraudsters who’re pushed by greed to keep up a lavish life-style on the expense of small companies in official want of COVID-19 emergency help.”
“It’s a disgrace to see rampant abuse of packages designed to assist extraordinary individuals struggling by the pandemic. Dr. Zarkadas selected greed over honesty by financing a luxurious life-style on the backs of America’s taxpayers,” acknowledged IRS-CI Particular Agent-in-Cost Fattorusso. “Because of the investigative work of IRS-CI and the FBI, he’ll sail straight to federal jail as an alternative of onboard his $1.7 million yacht that was illegally bought with CARES Act funds.”
Between March 2020 and July 2020, amid the COVID-19 pandemic, Dr. Zarkadas fraudulently utilized for, and acquired primarily based on the false data that he offered, at the very least 11 PPP and EIDLP loans totaling roughly $3,700,000, on behalf of company entities he managed. Dr. Zarkadas laundered the mortgage proceeds by varied financial institution accounts, in the end utilizing the funds for extravagant private purchases and different impermissible functions. For instance, in July 2020, Dr. Zarkadas used roughly $194,915.42 in PPP funds to finance the down cost on a $1.75 million yacht. To hide the fraudulent nature of the acquisition, Dr. Zarkadas made the examine payable to a member of the family who was not the final word beneficiary of the funds and, within the examine’s memo line, falsely indicated the funds had been “reimbursement for payroll.” Dr. Zarkadas additionally withdrew tens of hundreds of {dollars}’ price of mortgage proceeds in money and used a number of the proceeds to fulfill greater than $1 million in judgments towards him, to lease luxurious cars, and to make private purchases, together with a number of Rolex and Cartier wristwatches which he forfeited as a part of his responsible plea on this case.
Congress created the PPP and EIDLP as a part of the Coronavirus Assist, Reduction, and Financial Safety (“CARES”) Act. Enacted on March 29, 2020, the CARES Act offered emergency monetary help in reference to financial results of the COVID-19 pandemic. One supply of aid offered by the CARES Act was the allocation of funds for the issuance of forgivable loans to small companies for job retention and sure different bills by the PPP. The PPP allowed qualifying small companies to obtain unsecured loans on favorable phrases, which they had been required to make use of for specified bills, together with payroll prices, curiosity on mortgages, lease and utilities. The PPP offered for forgiveness of the mortgage if recipient companies spent the proceeds on these specified bills inside a restricted time interval and used a sure proportion for payroll prices.
One other supply of aid offered by the CARES Act was the EIDLP, which offered low-interest financing to small companies, renters and owners in areas affected by declared disasters. Underneath this system, EIDLP recipients had been eligible to obtain advances of as much as $10,000 for small companies inside three days of making use of for an EIDL (EIDL Advance). The quantity of an EIDL Advance was decided primarily based on the variety of staff working for the applicant. The EIDL Advance didn’t should be repaid.
The federal government’s case is being dealt with by the Workplace’s Lengthy Island Felony Division. Assistant United States Legal professional Anthony Bagnuola is answerable for the prosecution.
The Defendant:
KONSTANTINOS ZARKADAS
Age: 48
Glen Cove, New York
E.D.N.Y. Docket No. 21-CR-363 (GRB)