LOS ANGELES - An Orange County man was sentenced Monday to four years behind bars for fraudulently obtaining more than $5 million in COVID-19 relief loans, which he used to purchase 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.
Budamala -- who was arrested in February when he attempted to abscond from the United States to Mexico via the San Ysidro border crossing -- pleaded guilty in June to one federal count each of bank fraud and money laundering.
Defense attorney Diane C. Bass wrote that Budamala 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 in papers filed in Los Angeles federal court.
The scheme stemmed from 2019, when Budamala formed or acquired three shell companies with no operations -- Hayventure LLC, Pioneer LLC and XC International LLC, according to court papers.
Following the outbreak of the COVID-19 pandemic, and the enactment of federal programs designed to address the subsequent economic fallout, Budamala submitted to the SBA seven applications for pandemic-relief loans under the Paycheck Protection Program and Economic Injury Disaster Loan.
In the applications, Budamala falsely represented to the banks administering the loan programs that his companies employed dozens of individuals and earned millions of dollars in revenue, and that he needed the money for payroll and business expenses.
The listed addresses for the companies were bogus, nonexistent or residential.
The SBA and the banks funded six of the loans and disbursed more than $5.15 million. Budamala applied to have several of the loans forgiven and falsely represented that he had used the SBA money entirely for payroll.
Once the loans were funded, Budamala used the money to pay for personal expenses, including the purchase of a $1.2 million investment property in Eagle Rock, the purchase of a $600,000 property in Malibu, the purchase of a personal residence in Irvine, a $970,000 investment in an EB-5 Immigrant Investor Visa Program and a nearly $3 million deposit into Budamala's personal TD Ameritrade account, federal prosecutors said.
According to the government's sentencing memorandum, Budamala will be deported to his native India once he completes his prison sentence.