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Tarzana accountant pleads guilty to role in $1.2M COVID loan fraud
San Fernando Valley Jul 16, 2022
| Photo courtesy of Marco Verch/Flickr (CC BY 2.0)
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A San Fernando Valley accountant pleaded guilty Friday to a federal criminal charge for helping a long-time client fraudulently obtain a $1.2 million COVID-19 business loan by preparing a false corporate tax return on the client’s behalf.
Bernard Turk, 73, of Tarzana, entered his plea to one count of wire fraud, a crime that carries a maximum sentence of 20 years in federal prison, according to the U.S. Attorney’s Office.
Turk, a certified public accountant who runs a tax preparation business, admitted helping long-time client Mustafa Qadiri, 39, of Irvine, submit a false application for a Paycheck Protection Program loan on behalf of the client’s company, Agency 126, a purported marketing and video production agency based in Orange County.
PPP is a government-backed loan program designed by Congress to help small businesses stay afloat and keep their workforces employed during the COVID-19 pandemic.
In the false federal corporate income tax return, Turk claimed that Agency 126 paid employees over $5.3 million in wages during the 2019 tax year. Turk provided the false return to Qadiri to submit to a bank to support the PPP loan. To hide his involvement, Turk marked the false tax return “self-prepared.”
Turk admitted that both he and Qadiri knew that Agency 126 had no employees, paid no wages, and never filed tax returns with the IRS, according to his plea agreement.
Qadiri electronically submitted the false tax return that Turk prepared to the Small Business Administration and the bank in support of Agency 126’s phony PPP loan application. On the false 2019 tax return submitted to the bank, Qadiri removed the “self-prepared” designation and replaced it with Turk as the preparer, federal prosecutors said.
Relying, in part, on the false tax return, the bank and the SBA approved and funded Agency 126’s PPP loan and wired $1.2 million to a bank account that Qadiri controlled. For his role in the scheme, Turk was to receive a percentage of the loan proceeds when the bank forgave the loan.
U.S. District Judge Josephine L. Staton scheduled Turk’s sentencing hearing for Oct. 7 in Los Angeles federal court.
Qadiri was charged in May 2021 with four counts of bank fraud, four counts of wire fraud, one count of aggravated identity theft and six counts of money laundering.
Federal prosecutors allege he fraudulently obtained $5 million in PPP loans for his sham businesses then used the money on himself, including purchasing Ferrari, Bentley and Lamborghini sports cars.
Qadiri pleaded guilty in July 2021 in the case, but details of the charges he admitted, and the date of his forthcoming sentencing hearing, are sealed.
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