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COVID-19 fraud scheme lands Bay Area restaurateur behind bars

Jason Green, The Mercury News on

Published in News & Features

SAN JOSE – A Bay Area restaurateur has been sentenced to 2½ years in federal prison for fraudulently obtaining and misusing millions of dollars in COVID-19 relief aid, according to authorities.

David Tai Leung, 58, of Sacramento, pleaded guilty in February to three counts of wire fraud. Leung owned Kome Japanese Seafood Buffet in Daly City, Tomi Japanese Seafood and Grill in San Jose, and Tomi Japanese Seafood Buffet in Concord.

In May 2021, Leung submitted an application for $5 million in Restaurant Revitalization Funds, or RRF, he certified would be used for approved business-related expenses like payroll, rent and utilities, the U.S. Attorney’s Office said in a news release. The application was approved and Leung received the funds in June 2021.

Prosecutors said Leung admitted he transferred about $3.5 million to a personal investment account he controlled and used the funds to purchase securities and pay fees associated with the refinancing of a mortgage on his personal residence in Sacramento.

Leung also admitted he had previously applied for and received two Paycheck Protection Program, or PPP, loans, which he used to enrich himself, prosecutors said. He spent some of the money at a Northern California casino and on payments to a Lexus dealership.

Prosecutors said Leung ultimately misused about $3.36 million of the $5.6 million in RRF and PPP funds he received.

In addition to the prison term, U.S. District Court Judge Charles Breyer ordered Leung to serve three years of supervised release and pay more than $3.3 million in restitution.

 

The PPP was administered by the Small Business Administration, or SBA, as part of the Coronavirus Aid, Relief and Economic Act. The law was enacted in 2020 to provide emergency financial assistance to Americans suffering from the economic effects of COVID-19.

The SBA also oversaw the RRF as part of the American Rescue Plan Act. Enacted in 2021, the law provided funding and support to restaurants, bars and similar businesses serving food and drink that experienced revenue losses as a result of the pandemic.

Both programs provided forgivable loans to small businesses for job retention and other qualified business expenses.

The sentence follows a separate case in which Leung was charged with stealing $893,000 in wages from employees and evading hundreds of thousands of dollars in sales and employment taxes, according to the California Attorney General’s office.

In November, he pleaded guilty to six counts of wage theft, tax evasion and filing a false tax return.


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