IN THE COURTS | D.C. Man Sentenced to 10 Years in Prison For Attempting to Steal More than $31 Million in COVID-19 Funds

FOR IMMEDIATE RELEASE
Tuesday, September 20, 2022

Defendant Successfully Stole $2,385,000

            WASHINGTON – Elias Eldabbagh, 31, of Washington, D.C., was sentenced today to 10 years in prison for carrying out a scheme to steal more than $31 million under the CARES Act and laundering the proceeds of the crime. Eldabbagh succeeded in stealing $2,385,000 under the Paycheck Protection Program (PPP) loans and Economic Injury Disaster Loan (EIDL) program.

            The announcement was made by U.S. Attorney Matthew M. Graves, Special Agent in Charge Darrell J. Waldon of the Internal Revenue Service-Criminal Investigation, Washington, D.C. Field Office, and Special Agent in Charge Amaleka McCall-Brathwaite of the U.S. Small Business Administration, Office of the Inspector General.

            “This defendant shamelessly took advantage of a global health crisis to create his own get-rich scheme at the expense of the government’s COVID relief programs,” said U.S. Attorney Graves. “He stole more than $2.3 million – and tried to collect many millions more – that was targeted for small businesses and employees struggling to get by. While others were suffering, this defendant was draining government money to purchase a Tesla, invest in speculative stock options and cryptocurrency, and cover rent, hotels, dog boarding, and other personal expenses. Today’s sentence holds him accountable for these crimes and demonstrates our resolve to prosecuting those who cheat government programs.”

            “Elias Eldabbagh is facing the consequences of shamelessly stealing an identity and trying to steal tens of millions of dollars of taxpayer money that the CARES Act provided for legitimate business owners and employees during a time of national crisis,” said IRS-Criminal Investigation Special Agent in Charge Waldon. “Although he succeeded in fraudulently receiving nearly $2.4 million to pursue an extravagant lifestyle, it was short lived due to the efforts of our IRS-CI special agents and law enforcement partners. IRS-CI will continue to root out and pursue COVID-19-related and other financial fraudsters to hold these criminals accountable.”

            “OIG relentlessly will pursue fraudsters that seek selfish gain from SBA programs intended to support American small business,” said SBA OIG’s Eastern Region Special Agent in Charge McCall-Brathwaite. “OIG is focused on rooting out bad actors in these vital SBA programs. I want to thank the Department of Justice and our law enforcement partners for their dedication and commitment to seeing justice served.”

            Eldabbagh pleaded guilty on April 8, 2022, in the U.S. District Court for the District of Columbia, to wire fraud and laundering the proceeds of the wire fraud scheme. He was sentenced by the Honorable Trevor N. McFadden. Following his prison term, Eldabbagh will be placed on three years of supervised release. He also must pay $2,452,050 in restitution. The judge also ordered the forfeiture of a Tesla and seized bank accounts, as well as a money judgment in the amount of $2,385,000.

            From July 2020 through May 2021, Eldabbagh used his company, Alias Systems, LLC, to fraudulently apply for at least 25 PPP loans totaling more than $30 million. He also submitted at least four false EIDL applications totaling $950,000. During the course of his scheme, Eldabbagh used a stolen identity to disguise the ownership of Alias Systems, LLC, and used the same stolen identity to submit the vast majority of the applications. In support of his fraudulent applications, Eldabbagh used stolen identities, stolen tax returns and stolen financial records from a Washington, D.C. consulting company. Eldabbagh fraudulently doctored the stolen documents to appear to be tax returns and payroll records of his company, Alias Systems, LLC. Eldabbagh successfully stole $2,385,000 from the PPP and EIDL programs.

            Eldabbagh wired the proceeds of his scheme to at least 13 separate bank and brokerage accounts and to purchase a Tesla Model 3. Eldabbagh then converted at least $288,000 of proceeds from fiat currency into multiple cryptocurrencies. Using fraud proceeds, Eldabbagh conducted over 2,000 transactions involving at least 43 different cryptocurrencies.

            Eldabbagh also used the money he stole to pay for rent, hotels, dog boarding, attorney fees, ride shares, electronics, and various personal expenses.

            In May 2021, IRS-CI executed seizure warrants on Eldabbagh’s bank accounts and investment accounts.  Eldabbagh proceeded to make multiple attempts to transfer seized funds prior to being thwarted by federal agents. As part of his plea agreement, Eldabbagh had agreed to forfeit the Tesla Model 3, the contents of 21 bank accounts, and he had agreed to liquidate his interest in the cryptocurrency obtained with proceeds and to remit the funds to the United States government.

            The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act is a federal law enacted in or around March 2020 and was designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic.  One source of relief that had been provided by the CARES Act was the authorization of billions in forgivable loans to small businesses for job retention and certain other expenses, through a program referred to as the Paycheck Protection Program (PPP). 

            An Economic Injury Disaster Loan (“EIDL”) is a Small Business Administration administered loan designed to provide assistance to small businesses that suffer substantial economic injury as a result of a declared disaster. An EIDL helped businesses meet necessary financial obligations that could have been met had the disaster not occurred. It provided relief from economic injury that the disaster caused and permitted businesses to maintain a reasonable working capital position during the period that the disaster affected.

            In announcing the sentence, U.S. Attorney Graves, Special Agent in Charge Waldon, and Special Agent in Charge McCall-Brathwaite commended the work of those who investigated the case from IRS-CI and the SBA Office of the Inspector General. This case was prosecuted by Assistant U.S. Attorney Leslie A. Goemaat of the Fraud, Public Corruption, and Civil Rights Section, supported by Paralegal Specialist Mariela Andrade.