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Hudson Valley Man Charged For $1.6 Million Fraud Scheme

A man from the region has been charged in connection to a scheme to defraud the US Small Business Administration of more than $1.6 million in COVID-19 relief funds, federal authorities announced.
A man from the region has been charged in connection to a scheme to defraud the US Small Business Administration of more than $1.6 million in COVID-19 relief funds, federal authorities announced. Photo Credit: Pixabay/NikolayFrolochkin

A man from the region has been charged in connection to a scheme to defraud the US Small Business Administration of more than $1.6 million in COVID-19 relief funds, federal authorities announced.

An indictment outlining the charge against Rockland County resident Elizier Scher, age 33, of Spring Valley, were unsealed on Thursday, June 9 at White Plains federal court after his arrest earlier in the morning, Damian Williams, the US Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director-in-Charge of the New York Office of the FBI, announced.

The SBA is a federal agency that administers assistance to American small businesses, including the Economic Injury Disaster Loan program, which was intended to provide funding to help small business recover from the economic impacts of the COVID-19 pandemic. 

The maximum amount of an EIDL loan is determined by a formula based on the date the borrower began operating and the borrower’s gross revenue and cost of goods sold for the twelve months prior to Jan. 31, 2020. The loans can be used for only working capital and other normal operating expenses. While the loans generally need to be repaid, some borrowers are eligible for up to $15,000 in advances that do not need to be repaid.

According to the Indictment:

  • Over an approximately four-hour period on or about July 13, 2020, Scher submitted 12 applications for EIDL loans in a principal amount of $150,000 to the SBA over the Internet on behalf of 12 different corporations that he owned and controlled. 
  • Scher further requested on each application that the borrower be considered for an advance of up to $10,000 that did not need to be repaid. 
  • Scher made materially false statements in each application with respect to each applicant’s gross revenue and cost of goods sold for the twelve-month period prior to Jan. 31, 2020.
  • Between on or about July 20, 2020 and on or about August 11, 2020, 11 of the 12 applicants received a net total of $1,648,900 in loan proceeds from the SBA. 
  • Scher used the proceeds to buy real estate and to pay credit card expenses instead of using it for working capital for the borrowers, as Scher had agreed to do in the loan agreements he executed on behalf of the borrowers.

Scher was charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison.

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