OAKLAND – Christina Burden was arrested today on a federal criminal complaint charging her with bank fraud in connection with a scheme to illegally obtain more than $4.5 million in pandemic relief loans, announced United States Attorney David L. Anderson; Treasury Inspector General for Tax Administration J. Russell George; Federal Bureau of Investigation, Special Agent in Charge Craig D. Fair; and Internal Revenue Service, Criminal Investigation, Acting Special Agent in Charge Michael Daniels.
Christina Burden, 31, of Oakland, is charged in the complaint with one count of committing bank fraud on or about June 20, 2020, when she applied for and later received $684,375 in a forgivable loan from the government’s Paycheck Protection Program (PPP) for her shell entity “Blessing Box Co LLC.” The complaint further describes a scheme in which Burden submitted nine other fraudulent applications for PPP loans between April and June of 2020, one of which resulted in her receiving an additional $307,916 in PPP funds. In total, Burden attempted to obtain over $4.5 million in PPP forgivable loans for four different shell entities.
During this time, Burden also submitted one fraudulent Economic Injury Disaster Loan Program (EIDL) application for one of the same shell entities, for which she received $150,900 in funds. The four entities had recently been created by Burden, according to the complaint, and do not appear to engage in any legitimate business nor to have any employees. Loan applications for both PPP and EIDL loans are required to be certified by the applicant as true, and the criminal complaint describes how Burden’s applications contained false information and misleading statements as well as doctored bank statements and fictitious tax forms.
Burden ultimately obtained a total of over $1 million in fraudulent pandemic relief loans, including almost $1 million in PPP funds. The PPP requires that its funds be used for legitimate business and payroll expenses, and the complaint describes how Burden spent the bulk of the loan money on personal indulgences, including private jet travel, hotel stays, boat rentals, expensive automobiles, luxury goods purchased from Louis Vuitton and Neiman Marcus, and specialty items purchased from the Sunglass Hut and the San Francisco Giants Dugout Store.
“The Paycheck Protection Program provides a financial lifeline to needy businesses and their employees,” said U.S. Attorney Anderson. “We allege that Christina Burden obtained PPP funds by fraud, submitting false business information, false employee numbers, false bank statements, and false tax returns. She used those funds for a spending spree on entertainment, luxury goods, and high end excursions, including travel by private jet.”
“The Treasury Inspector General for Tax Administration aggressively pursues those who endeavor to defraud taxpayer-funded Coronavirus Aid, Relief, and Economic Security Act programs, which were established to provide assistance to American business owners during these unprecedented times,” said J. Russell George, the Treasury Inspector General for Tax Administration. “We appreciate the efforts of the U.S. Department Justice and our law enforcement partners in this effort.”
“As we begin a second round of PPP loans for small businesses who are struggling during this pandemic, we will be on alert for fraudsters who seek to take advantage of the program,” said FBI San Francisco Special Agent in Charge Craig Fair. “Those who wish to defraud programs designed to help those in need should know that the FBI and our partners will pursue every investigative tool available to us to ensure the integrity of those programs and that they remain available to our community’s small business owners.”
“Christina Burden allegedly used fraudulently obtained funds from the Paycheck Protection Program and Economic Injury Disaster Loan program to unjustly enrich herself. According to the criminal complaint, she submitted false documents and records to banks showing that she had employees, paid wages to those employees, and paid employment tax payments to the IRS – none of which is true,” said Michael Daniels, Acting Special Agent in Charge of IRS Criminal Investigation’s Oakland Field Office. “IRS-CI is proud to work with our law enforcement partners by lending our expertise in complex financial cases like this one.
As outlined in the complaint, the PPP is administered by the U.S. Small Business Administration (SBA) as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act is a federal law enacted in March 2020 to provide emergency financial assistance to the millions of Americans suffering from the economic effects caused by the COVID-19 pandemic. PPP loan proceeds must be used by the business on certain permissible business expenses, including payroll costs, interest on mortgages, rent, and utilities. The PPP allows the interest and principal on a PPP loan to be entirely forgiven if the business spends the loan proceeds on these business expense items within a designated period of time and uses at least 60% of the PPP loan proceeds on payroll expenses. Loans made through the PPP are 100% guaranteed by the SBA.
Similarly, the EIDL Program provides low-interest non-forgivable loans to small businesses, among others, in regions affected by disasters. In March 2020 the President of the United States extended the availability of EIDL funds to all states and territories due to the magnitude and severity of the COVID-19 pandemic.
According the complaint, Burden’s loan applications contained multiple false statements certified as true. Among those, Burden falsely affirmed that each business was in operation before February 15, 2020, and her businesses had up to 89 employees and monthly payroll expenses of over $700,000. The complaint alleges, however, that the entities’ tax records reveal that none of them paid payroll taxes nor submitted any payroll tax forms. Bank records submitted in Burden’s applications as evidence of the four shell entities’ payroll expense payments were revealed to be doctored when compared against the actual bank records, per the complaint’s allegations.
The complaint lastly alleges that once Burden received the funds, she did not use the money to pay allowable PPP business expenses but instead spent it on personal indulgences: $184,000 on airfare, private jet travel, and hotel expenses; $124,000 on luxury purchases from Louis Vuitton and Neiman Marcus as well as purchases from Nordstrom, the San Francisco Giants Dugout Store, Sunglass Hut, Tumi, and Wayfair; $16,000 on boat and car rentals; and $14,000 on various restaurant and entertainment expenses, among other purchases. In addition, the complaint alleges Burden wired hundreds of thousands of dollars to friends and family, $150,000 of which was spent in part on Mercedes and Land Rover vehicles.
The charges in the complaint are merely allegations and the defendant is presumed innocent unless proven guilty in a court of law.
Burden is charged with one count of bank fraud, in violation of 18 U.S.C. § 1344. Burden faces a maximum penalty of 30 years in prison and a one million dollar fine, if convicted. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Burden was arrested this morning in Austin, Texas. Her initial appearance in United States District Court will be in the Western District of Texas on Monday, February 8, 2021, before United States Magistrate Judge Mark Lane, who sits in Austin. It is anticipated that Burden will be ordered at that hearing to appear in the United States District Court in Oakland, California, to face the charge in the federal complaint. The date for her initial appearance in Oakland federal court is as yet unscheduled.
Abraham Fine is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Kay Konopaske and Laurie Worthen. The prosecution is the result of an investigation by TIGTA, IRS-CI, and the FBI.