A Marina del Rey man pleaded guilty Thursday to submitting fraudulent loan applications to obtain nearly $3.2 million in COVID-19 loans for businesses that prosecutors say were shell companies.
Mark Shehata, 72, entered a plea to single counts of wire fraud, transactional money laundering and making false statements to federal agents, according to the U.S. Department of Justice.
Shehata, who remains free on bond with electronic monitoring, is scheduled to be sentenced on March 16 in downtown Los Angeles.
According to court papers, Shehata organized and registered four limited liability companies that purportedly operated in Marina del Rey: Shirmak Group, Cynergy Group, Global Network Investments, and Alpha and Omega Group.
From May 2020 to May 2021, he submitted at least seven phony loan applications under the Paycheck Protection Program, a financial aid plan Congress enacted to support businesses harmed by the pandemic’s economic impact. The PPP loans were to be used by recipients to pay only certain authorized business expenses, such as payroll, mortgage interest, lease and utilities.
According to federal prosecutors, Shehata’s businesses were nothing more than shell companies. None of the loan proceeds Shehata fraudulently obtained were used to make payments to employees for payroll or any business expenses, the DOJ said.
Shehata submitted to the Small Business Administration and several lenders false applications requesting a total of $5.42 million in PPP loans, and fraudulently obtained about $3.15 million, the indictment states.