A Braselton couple has been indicted for defrauding the U.S. Small Business Administration out of millions of dollars in emergency loan funding.
The indictment against Paul Kwak, 63, and Michelle Kwak, 60, was handed down Tuesday, May 19 in federal court in Atlanta.
The Kwaks are accused of making application for dozens of loans through the Economic Impact Disaster Loan (EIDL) Program, which is part of CARES Act, designed to help businesses weather the economic impact of the coronavirus pandemic. Investigators said the pair filed 70 fraudulent applications and received more than $4 million in funding as a result.
"Fraudulent applications divert the limited pool of funds Congress allocated for pandemic relief from legitimate businesses in need of assistance," said Acting U.S. Attorney Kurt R. Erskine in a statement released Thursday morning. "By defrauding the Small Business Administration, the defendants harmed hardworking business owners whom the CARES Act was intended to help."
Erskine said the Kwaks created shell companies with no employees that conducted no business in order to apply for the loans.
The FBI was responsible for uncovering the information that led to the indictments.
"This alleged fraud is especially concerning because it takes advantage of a federal program set up to assist legitimate small businesses who need assistance to survive during a pandemic,” said Chris Hacker, Special Agent in Charge of FBI Atlanta. “The FBI is especially vigilant of such abuse and are making it a priority to make sure government assistance goes only to those who deserve it.”
Investigators said Paul Kwak posted related videos on his YouTube channel. In a May 2020 video titled “EIDL, disaster assistance you don’t have to pay back” in Korean, Kwak explained that applicants can receive tens of thousands of dollars in assistance without collateral or a co-signor, using only the applicant’s electronic signature. One of his clients, according to Kwak, had recently received $150,000 in EIDL proceeds.
