Date: June 26, 2023 Contact: newsroom@ci.irs.gov Baltimore, MD — Chief U.S. District Judge James K. Bredar sentenced Alexander Barabash of Baltimore, Maryland, today to 14 months in federal prison, followed by six months of home detention as part of three years of supervised release, for wire fraud relating to the submission of fraudulent Coronavirus Aid, Relief, and Economic Security ("CARES") Act loan applications. The CARES Act was enacted in March 2020 to provide emergency financial assistance to Americans suffering from the economic effects caused by the COVID-19 pandemic. Chief Judge Bredar ordered that Barabash pay a fine of $400,000, a money judgment in the amount of $1,295,000 and pay restitution of $1,317,352.05. Barabash must forfeit $504,869.54 in funds seized from the iDesignBuild business bank account and his interest in a property in Sparks Glencoe, Maryland, both of which will be applied to the money judgment. The sentence was announced by United States Attorney for the District of Maryland Erek L. Barron; Acting Special Agent in Charge Kareem A. Carter of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office; and Special Agent in Charge Ross Luciano of the United States Secret Service - Baltimore Field Office. Financial assistance offered through the CARES Act included forgivable loans to small businesses for job retention and certain other expenses, through the Paycheck Protection Program ("PPP"), administered through the Small Business Administration ("SBA") and participating lenders. According to his plea agreement, between April 2020 and January 2021, Barabash submitted three fraudulent PPP loan applications on behalf of his construction company iDesignbuild LLC ("iDesignBuild"). As detailed in the plea agreement, on April 9, 2020, Barabash, the CEO of iDesignBuild, submitted a PPP loan application falsely stating that the company had four employees and an average monthly payroll of $18,750. In fact, the company did not have any employees, but engaged independent contractors for work-related matters. Based on the representations made in the fraudulent application, on April 23, 2020, Barabash received $46,800 in PPP loan proceeds in the iDesignBuild bank account. On April 25, 2020, Barabash submitted a second fraudulent PPP loan application on behalf of iDesignBuild, stating that the company had seven employees and an average monthly payroll of $38,777.60. In support of the application, Barabash submitted IRS Forms 941 for each quarter of 2019 and a 2019 IRS Form 940 for iDesignBuild, signed by Barabash and his tax preparer, knowing that they had never been filed with IRS. Barabash admitted that on January 20, 2021, he submitted a third fraudulent loan application on behalf of iDesignBuild, representing that the company had 37 employees and an average monthly payroll of $525,227. In support of the application, Barabash again submitted fraudulent IRS Forms 941 for each quarter of 2019 and a fraudulent 2019 IRS Form 940. Compared to the fraudulent forms submitted with the unsuccessful April 25, 2020 PPP loan application, the forms submitted in January 2021 reported more than six times the number of employees and nearly $1.5 million more in wages in each quarter. The forms were again signed by Barabash and his tax preparer. Barabash knew that the forms did not accurately reflect iDesignBuild's wages or revenues, nor had they been filed with the IRS. Based on Barabash's false representations, the bank funded a PPP loan of $1,295,000, which was credited to iDesignBuild's bank account on February 26, 2021. Barabash used the fraudulently obtained loans to facilitate the purchase of two properties in Sparks Glencoe, Maryland, and to purchase a 2016 Chevrolet Corvette. Barabash admitted that he knew those were not permissible uses of PPP funds and the transactions would not have been made without the receipt of the PPP funds. The District of Maryland Strike Force is one of three strike forces established throughout the United States by the U.S. Department of Justice to investigate and prosecute COVID-19 fraud, including fraud relating to the CARES Act. The strike forces focus on large-scale, multi-state pandemic relief fraud perpetrated by criminal organizations and transnational actors. The strike forces are interagency law enforcement efforts, using prosecutor-led and data analyst-driven teams designed to identify and bring to justice those who stole pandemic relief funds. United States Attorney Erek L. Barron commended the IRS-CI and U.S. Secret Service for their work in the investigation. Mr. Barron thanked Assistant U.S. Attorney Darryl L. Tarver, who is prosecuting the case. He also recognized the assistance of the Maryland COVID-19 Strike Force Paralegal Specialist Joanna B.N. Huber and Paralegal Specialist Juliette Frase.
