Garner Man Faces Charges for Fraudulent Scheme Involving COVID Relief Funds

United States Attorney for the Eastern District of North Carolina Robert J. Higdon Jr., along with Interim Assistant Attorney General Brian C. Rabbit of the Department of Justice – Criminal Division, announced the charges made against a North Carolina man for engaging in a fraudulent scheme that was designed to swindle the United States government’s Paycheck Protection Program (PPP) out of around $6 million in bank loans.

Tristan Bishop Pan, 38, Chief Executive Officer of Pan Insurance Agency, has been charged with Bank Fraud, Wire Fraud, and Engaging in Unlawful Monetary Transactions. The indictment was published on September 29, 2020. The defendant is also related to several other entities, including Technology for Teaching and Digital Encryption Storage LLC, Pan Realty LLC.

The lawsuit alleges that the defendant has submitted 14 fraudulent applications, in total, to different lenders and federally insured banks that have been approved by the United States Small Business Administration. In these applications, it was noted that the defendant had filed the documents under several made-up businesses that he owned or controlled, seeking approximately $6.1 million of proceeds from the PPP. The businesses stated in the applications were named White Walker LLC, Khaleesi LLC, and The Night’s Watch LLC – titles that were based off the characters in the popular American fantasy drama television series Game of Thrones. The lawsuit further alleges that the defendant wrongfully claimed that the businesses declared in the application files had numerous employees and hundreds of thousands of dollars in payroll expenses; however, investigations revealed that the PPP loan applications submitted by the defendant were supported by altered documents particularly, forged federal tax filings and falsified bank statements of the reported companies. All files submitted by the defendant to the U.S. government’s PPP were fraudulent, contained false information, and misleading statements regarding the companies’ respective business operations.

Through the United States government’s Paycheck Protection Program, the defendant was able to receive more than $1.7 million in benefits and bank loans, which is around %28 of the total $6.1 million that he was initially seeking as funding for his said businesses. The $1.7 million funds are financial assistance in bank loans that resulted from the approval of the Pan Insurance Agency and White Walker PPP loan applications. It was reported that the government was able to seize a considerable amount of the $1.7 million loan benefits that were allegedly obtained through the fraudulent scheme of the defendant.

The Payroll Protection Program is being administered by the United States Small Business Administration as a part of the $2.2 trillion Coronavirus Aid Relief and Economic Security (CARES) Act – a federal law that was enacted in March of 2020 as a response to the COVID-19 pandemic, to provide emergency financial assistance to American citizens who are suffering from the economic distress that the pandemic has brought to the nation. The program offers loans to businesses, in which it is specified that proceeds from the PPP shall be used only on certain permissible expenses, including interests on mortgages, payroll costs, rent, and utilities. Additionally, the Payroll Protection Program has declared the authorization of up to $349 billion in forgivable loans, where interests and principal on the PPP loan shall be entirely forgiven, if and only if, the business is able to utilize 60% of the loan proceeds on payroll expenses and spend the loan on the aforementioned permissible expenses within a designated period of time. All loans made through the Paycheck Protection Program are fully guaranteed by the U.S. Small Business Administration.

In April of 2020, the Congress has authorized additional PPP funding amounting to over $300 billion, making the total amount of funds for the PPP to be $649 billion. The Paycheck Protection Program currently allows qualifying small business and other eligible organizations to receive loans with a maturity of two years, and an interest rate of only one percent.

Acting Assistant Attorney General Brian Rabbitt said in his previous statements addressing the increasing number of fraudulent schemes targeting the United States government’s Payment Protection Program that the PPP is made to assist small business in surviving through the economic crisis that has struck the nation. Yet, Acting Assistant Attorney General Rabbitt noted that more than 50 people had been charged for allegedly engaging in fraudulent schemes seeking to get loans from the PPP.

General Counsel for the Association of Certified Fraud Examiners (ACFE) John Warren previously said in a statement that the rapid injection of trillions of dollars in government’s PPP loans has, unfortunately, created a high risk of targeting many fraudsters, even though the program was designed to aid small businesses in operating under the kind of intense financial pressure due to the pandemic.

The successful investigation of the case was led by the Federal Bureau of Investigations, the Federal Deposit Insurance Corporation Office of the Inspector General, the United States Treasury Inspector General for Tax Administration, and the United States Small Business Administration Office of Inspector General. Prosecution of the case is being handled by the Department of Justice – Criminal Division Fraud Section Trial Attorney Justin M. Woodard, and by the Assistant United States Attorneys Ethan A. Ontjes and John Harris.

Tristan Bishop Pan was arrested on September 29, 2020 and has made his initial court appearance before the United States Magistrate Judge Robert T. Number in Raleigh, who ordered the defendant released without bond.

With the provided criminal documents containing allegations that are not evidence of guilt, the public is reminded that the defendant shall be presumed innocent and is entitled to a fair trial at which the state has the burden of proving guilt beyond a reasonable doubt.

Further information regarding any possible allegations of attempted fraud involving the Paycheck Protection Program, the Coronavirus Aid Relief and Economic Security (CARES) Act, and other COVID-19 related schemes shall be reported to the National Center for Disaster Fraud of the Department of Justice by contacting them through their Hotline at (866)-720-5721.

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