A San Jose father of six who scammed the federal government out of $3.6 million in fraudulent COVID-relief business loans — and blamed his “bad decisions” in part on a pandemic-related hit to his six rental properties — received a five-year prison sentence and was ordered to give up a pricey Tesla and pay back $1.7 million.
Lebnitz Tran, also known as Viet Tran, must surrender himself for imprisonment by Jan. 10, according to the sentence from Judge William Orrick in U.S. District Court in San Francisco.
Over a four-month period early in the pandemic, Tran “created shell companies, lied on application forms, created fake IRS tax forms, and dispersed the funds he received through a byzantine labyrinth of bank accounts and third parties,” federal prosecutors said in a memo ahead of Tran’s sentencing. Tran tried to get $8.5 million through the federal Paycheck Protection Program and Economic Injury Disaster Loan program, and succeeded in pulling in $3.6 million, prosecutors said. After a TV-news exposé highlighted Tran’s fraud, he paid back some of his ill-gotten money, but still netted $1.7 million, prosecutors said.
Tran’s six children are aged 2 to 19, and he has worked in information technology since he was 16, according to a memo submitted by his lawyer.
“When the new year dawned in 2018, Lebnitz Tran had every reason to believe that his happiness and prosperity would continue unabated,” the memo filed in U.S. District Court in San Francisco said. “But a string of events changed his life and resulted in him making a series of bad decisions. By the middle of February 2018, his father had died and his marriage to the mother of three of his children had crumbled.
“His IT business had flourished throughout the years because of his work ethic, but by March 2020, with the onset of the Covid-19 pandemic, his revenue shrunk dramatically. Moreover, his leveraged real estate holdings, comprising of six rental properties, were teetering in part due to the rent payment freeze imposed by many jurisdictions.”
The Small Business Administration’s Office of the Inspector General has concluded that fraudsters ran rampant with the Paycheck Protection and Economic Injury Disaster loan programs, both intended to help small businesses weather the economic troubles of the coronavirus pandemic. The agency pointed to “unprecedented fraud” amounting to billions of dollars in the Paycheck Protection program — which has seen loans overwhelmingly transformed into grants — and found that “potentially ineligible” businesses had received more than $1 billion from the Economic Injury program.
Prosecutors said Tran, sentenced last month, “used his ill-gotten gains to enrich himself, paying for housing costs, credit card debt and other loans, purchases at various retail stores, and making deposits into personal investment accounts.”
The $110,000 Tesla Model X was bought in June 2020 — around the middle of the period Tran was defrauding the government between April and July 2020 — with Tran’s proceeds after he transferred the money for it to a person identified in a court filing only by their initials.
Tran, who pleaded guilty to two of nine fraud counts. was ordered earlier this month to forfeit the Tesla to the federal government, and pay $1.7 million in restitution to the Small Business Administration.
