A monetary advisor and YouTube persona well-known in Atlanta’s Korean group was sentenced to greater than three years in jail for defrauding a mortgage program set as much as assist small companies climate the COVID-19 pandemic.
Paul Kwak, who pleaded responsible to fraud prices on June 20, was sentenced to a few years and 4 months in jail, adopted by three years of supervised launch, and ordered to pay almost $1.2 million in restitution.
“Not solely did Kwak defraud the federal government by making use of for aid funds for firms that didn’t exist, however he additionally recruited and taught others the best way to do the identical,” Keri Farley, FBI Particular Agent in Cost of the Bureau’s Atlanta workplace, stated.
The Financial Impression Catastrophe Mortgage (EIDL) Program was one among two emergency help packages overseen by the Small Enterprise Affiliation (SBA) created by the CARES Act in early 2020 (the opposite was the extra well-known, and fraud-ridden, Paycheck Safety Program). The EIDL was created to supply emergency aid for companies to pay money owed, payroll and different bills not coated by the PPP.
In line with the Justice Division, Kwak conspired with others to submit fraudulent EIDL purposes totaling thousands and thousands from shell firms with no workers or enterprise exercise.
The investigation started with a South Korean nationwide dwelling in South Korea, who reached out to Kwak after seeing a few of his YouTube movies (this particular person, who later contacted federal authorities, isn’t named within the unique grievance in opposition to Kwak).
In March 2020, the South Korean nationwide despatched funds to Kwak, who then established Bomnal LLC. In August, Kwak informed the informant he’d apply for an EIDL program mortgage on behalf of Bomnal LLC, although the person was doubtful, as the corporate had solely existed since March, in accordance with the grievance. However the mortgage went by means of, and Kwak and the nationwide obtained $150,000.
Concurrent with this transaction, Kwak launched movies touting EIDL loans by means of his “International Monetary Academy” YouTube channel. One video in Might 2020 was entitled “EIDL: Catastrophe Help You Don’t Need to Pay Again.” In it, Kwak defined in Korean that candidates may obtain monetary help with out collateral or a co-signer.
“He acknowledged that he believed many individuals have been hesitant to use as a result of they’re fearful about getting “free cash,’” the grievance learn, describing a distinct video revealed in June. “Later within the video, Paul Kwak predicted that the EIDLs will probably be forgiven because the federal authorities mentioned forgiving federal scholar loans if a second coronavirus Pandemic comes or one other communal illness outbreak occurs.”
The FBI started investigating Kwak that November, discovering a number of misstatements on the Bomnal EIDL mortgage utility, specifically, falsely claiming it had greater than $549,000 in income, seven workers and was established in 2019.
However Bomnal wasn’t Kwak’s solely fraudulent utility, in accordance with the DOJ; Kwak ran a “nationwide conspiracy,” with EIDL purposes from residents of Washington, California and New Jersey, with Kwak’s workplace in Georgia listed because the enterprise handle on the loans. Ultimately, the DOJ discovered the SBA paid out greater than $1 million to Kwak’s fraudulent purposes.
A number of different co-conspirators, together with Joosoo Choi-Bang, Jon Solar Hun and Sook Hee Kim, beforehand pleaded responsible; Choi-Bang was sentenced to 18 months in jail, whereas the others will serve two years.
As a part of the sentencing deal, Kwak agreed to forfeit three properties and a Mercedes GLD 580 he bought with income from the fraud.