An Orange County man was sentenced Sept. 26 to four years in prison for fraudulently obtaining more than $5 million in COVID-19 relief loans to buy properties in Eagle Rock, Malibu, and Irvine.
Reddy Budamala, 36, of Irvine, was also ordered to pay $5.15 million in restitution to the Small Business Administration, according to the U.S. Attorney’s Office.
He will be deported to his native India once he completes his prison sentence, according to a sentencing memorandum.
He was arrested in February when he attempted to flee to Mexico via the San Ysidro border.
His defense attorney Diane C. Bass wrote in papers filed in Los Angeles federal court that he had “fallen on hard times and became desperate'‘ and was suffering from a ”mental breakdown’' when he committed the fraud.
“It was his intention to invest the funds, which he did, and then repay the loans but he did not get a chance to do that before being arrested,'' the attorney wrote.
Budamala launched the scheme in 2019—before the COVID-19 outbreak—when he formed or acquired three shell companies with no operations, Hayventure LLC, Pioneer LLC, and XC International LLC, according to court papers.
After the federal relief programs were set up in 2020 to address the economic fallout caused by the pandemic, Budamala submitted seven applications to the Small Business Administration for pandemic-relief loans under the Paycheck Protection Program and Economic Injury Disaster Loan.
In the applications, Budamala told the banks handling the loans that his companies had dozens of employees and millions of dollars in revenue, and that he needed the money for payroll and business expenses.
The listed addresses of the companies were also “bogus, nonexistent, or residential” addresses, according to the statement.
The Small Business Administration and the banks approved six of the applications and disbursed more than $5.15 million.
Once Budamala received the loans, he applied to have several forgiven and claimed he had used the money for payroll while in fact, he used it to pay for personal expenses—including purchasing a $1.2 million investment property in Eagle Rock, a $600,000 property in Malibu, and a private residence in Irvine, according to federal prosecutors.
He also allocated $970,000 of the funds to what’s known as the EB-5 Immigrant Investor Visa Program, which allows some foreign investors to obtain permanent residency in the United States, and deposited nearly $3 million into his personal account with TD Ameritrade, a financial asset trading platform, prosecutors said.
