Feds: Newton man got $5.6M COVID relief loan, then spent it on stocks, luxury car

A Newton man accused of illegally pocketing $5.6 million in federal coronavirus loans was arrested last week just before he boarded a plane for Pakistan, federal authorities said.

Azhar Sarwar Rana, 30, falsified payroll and tax information to obtain the money from the federal Paycheck Protection Program, which was created to help small businesses stay afloat during the pandemic, U.S. Attorney Craig Carpenito said in a statement this week. Rana was charged Monday with bank fraud and money laundering.

Instead of using the loan to pay employees at a purported real estate business, Rana spent millions on himself for stock-market investments, a luxury car and other items, prosecutors said.

Federal authorities arrested Rana outside his Newton home on Dec. 12 as he was headed to the airport for a flight to Pakistan, according to the complaint filed by Carpenito's office. Rana said he expected to be confronted by authorities at the airport, according to the documents.

Rana was detained without bail after a virtual court hearing Monday afternoon. If convicted, he faces up to 40 years in federal prison and fines of $1.25 million.

From May 2017 to June 2020, the Newton man worked as an internal audit specialist at a bank not identified in the court documents. In July of last year, he formed Azhar Sarwar Rana LLC, documents show.

When applying for the loan, Rana allegedly said he had 11 employees, not including himself and family members, and a monthly payroll of $722,352. He later amended that to indicate monthly payroll was closer to $1.4 million and requested a loan for $10 million, according to the complaint.

State Labor Department records allegedly paint a different picture. Since 2019, Rana paid a total of just $30,000 in wages to 10 purported employees, including himself and relatives, prosecutors said.

An investigation revealed the names and Social Security numbers of those listed as employees were either fake or belonged to individuals who had worked with him at the bank, authorities said.

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Once Rana got the $5.6 million, he allegedly dispersed it into various bank accounts. He spent the money on personal expenses, including stock investments and a $13,000 payment to a BMW dealership in Roxbury, and also sent $450,000 to a bank in Pakistan, according to prosecutors.

While many businesses have credited the federal relief program with keeping them alive as the economy shut down in the spring, congressional investigators also found thousands of ineligible companies received loans, according to a report in September.

More than 11,000 loans totaling about $3 billion went to recipients who did not provide complete information about their businesses, a U.S. House of Representatives committee said. Another $195 million was awarded to businesses flagged for "significant performance and integrity issues" and $96 million went to firms that had been either "debarred or suspended" from receiving federal contracts.

Last month, federal authorities charged a Hackettstown man with fraudulently obtaining $1.8 million in PPP loans. Rocco Malanga, 37, submitted applications for three different business entities and fabricated the number of employees and average monthly payroll before moving the funds into bank accounts for his wife and children, according to Carpenito's office.

Lori Comstock can also be reached on Twitter: @LoriComstockNJH, on Facebook: www.Facebook.com/LoriComstockNJH or by phone: 973-383-1194.