Area man charged with getting millions in Covid-relief loans for employees he didn't have

A Carlisle man was indicted this week on charges that he obtained millions of dollars in Paycheck Protection Program loans during the first year of the Covid-19 pandemic based on fraudulent statements about the scores of employees he didn't actually have and then used some of the money for prohibited things: Buying a pricey New York condo and sending money to a company he controlled in India.

Durgaprasad Rao, 65, was formally charged with four counts of wire fraud and three counts of money laundering, the US Attorney's office in Boston reports. He had been arrested in May on one count of wire fraud and was free on $6 million bail. He secured the bail with his $2.1-million, four-bedroom home on 2.4 acres in Carlisle and a $4.5-million condo in New York City - the one the feds charged he illegally used PPP funds to buy.

The indictment only covers the $7 million he allegedly got for two companies he ran out of Bedford, but the government indicated it could also go after him in other courts for another $11 million he obtained in loans for companies he owned in Georgia and Wisconsin. His PPP providers had forgiven $1.5 million of the Massachusetts loans - as allowed by PPP rules, but denied his requests to forgive the rest.

According to an affidavit by an IRS agent on the case, Rao obtained PPP loans in both rounds of government funding in 2020 and 2021 for his two Bedford-based companies, Accelerated Engineering, LLC and Upstream Global Services, Inc., citing an alleged 77 employees for one and 93 for the other. In fact, the agent wrote, he had far fewer employees, possibly as few as, well, none, for one of them.

RAO’s assertions in the PPP loan application that UGS had 93 employees and a yearly payroll of approximately $10,297,708.53 are false.

Since UGS’ inception in January 2012, UGS has not submitted any Forms 940, 941, W2, W3, 1099, 1120 or 1120S to the IRS. Furthermore, there are no Forms 1040,
associated with UGS’ EIN 45-440XXXX that would show individuals that claimed to have been employees or independent contractors for UGS.

The agent said his review of the company's bank account showed that, at most, the company might have had as many as 27 employees, still far fewer than Rao claimed, at least through the first quarter of 2020, but that after that, account transactions consisted mainly of deposits, with no evidence of any withdrawals that might have gone to paying workers.

Also, Rao was already being investigated by the IRS when the pandemic hit and the government began throwing money at small businesses, he continued:

Moreover, in or around February 28, 2020, prior to the COVID-19 pandemic and the initiation of the PPP, the IRS interviewed RAO related to his payroll liabilities for his companies. In the course of that interview, RAO specifically stated that UGS does not employ anyone, but rather UGS contracts with people.

In addition to making up employees, Rao allegedly used bogus forged tax forms and forms from a payroll-accounting firm to win approval of the loans.

In the First Draw PPP loan forgiveness application submitted to BoA, RAO stated that UGS had 93 employees and a payroll of $4,292,322.00 during the “covered period” from May 8, 2020, through October 22, 2020. To support these assertions, RAO submitted a purported PPP Loan Forgiveness Worksheet from PayChex during the covered period, which showed a total employee payroll of $4,292,322.00.

In response to a request for records from PayChex, PayChex reported that it had not handled payroll for UGS since 2013.

The maximum sentence for wire fraud is 20 years on each count; for money laundering, 10 years.

Innocent, etc.