Austin Hsu, COVID-19 Relief Loan Fraud, Washington 2024

Austin Hsu, 46, of Issaquah, Washington, has been sentenced to two years in prison for perpetrating a scheme to fraudulently obtain COVID-19 disaster relief loans guaranteed by the Small Business Administration (SBA) through the Economic Injury Disaster Loan (EIDL) and the Paycheck Protection Program (PPP) under the Coronavirus Aid, Relief and Economic Security (CARES) Act.

According to court documents, Hsu submitted nine fraudulent disaster loan applications seeking over $1.1 million. Hsu, the owner and CEO of a company named Blackrock Services P.S. dba Back 2 Health Bellevue (Back 2 Health), received EIDL and PPP funds for Back 2 Health, and then used the names of Back 2 Health’s current and former employees to apply for additional PPP loans under the names of four other companies that he owned and controlled. In support of the fraudulent PPP loan applications, Hsu submitted fake federal tax filings.

Hsu also incorporated a company named Blueline Capital LLC (Blueline) in June 2020 for the purpose of applying for an EIDL loan in July 2020, and then misrepresented to the SBA that Blueline had been in business since 2017 and that, as of Jan. 31, 2020, Blueline had nine employees and gross receipts of over $1.5 million. In truth, Blueline had no business or operations.

Six of Hsu’s nine fraudulent loan applications were approved, and he fraudulently obtained more than $700,000 in COVID-19 relief funds. In addition to the prison sentence, Hsu was ordered to pay a fine in the amount of $25,000 and $709,104.97 in restitution.

The case was investigated by the U.S. Treasury Inspector General for Tax Administration (TIGTA), the Social Security Administration (SSA) – Office of Inspector General (OIG), the SBA – OIG, and U.S. Immigration and Customs Enforcement’s Homeland Security Investigation (HSI).

Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division; Acting U.S. Attorney Tessa M. Gorman for the Western District of Washington; Inspector General J. Russell George of the U.S. Treasury Inspector General for Tax Administration (TIGTA); Inspector General Gail S. Ennis of the Social Security Administration (SSA); Inspector General Hannibal “Mike” Ware of the SBA; and Special Agent in Charge Cardell Morant of U.S. Immigration and Customs Enforcement’s Homeland Security Investigation (HSI) made the announcement.

The Fraud Section leads the department’s prosecution of fraud schemes that exploit the PPP. In the months since the PPP began, Fraud Section attorneys have prosecuted more than 100 defendants in more than 70 criminal cases. The Fraud Section has also seized more than $65 million in cash proceeds derived from fraudulently obtained PPP funds, as well as numerous real estate properties and luxury items purchased with such proceeds.

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