The government gave him $1.5 million in COVID-19 paycheck loans. Prosecutors say he spent it on a Tesla.

• A Texas man is facing federal charges for allegedly scamming the government out of $1.5 million in COVID-19 payroll grants and using it to buy a Tesla.
• In an indictment unsealed on Tuesday, Fahad Shah is accused of lying about the number of employees at a seemingly defunct wedding planning company he owned in order to fraudulently collect Paycheck Protection Program grants.
• Shah spent $60,000 of the payroll grants on a Tesla, and put more than $500,000 in his E-Trade account, according to the indictment. He has been arrested and charged with wire fraud.
• The Department of Justice has been cracking down on PPP fraud in the past week. The federal government initially refused to disclose a list of PPP recipients but reversed that decision this month after it was sued by a group of news outlets.

As COVID-19 shutdowns went into effect across the US, small businesses scrambled to get a share of the nearly $700 billion in Paycheck Protection Program loans provided by the federal government.

One of those small business owners was Fahad Shah of Murphy, Texas. Shah was awarded more than $1.5 million in PPP loans to cover the salaries of his 126 employees in May. But according to a federal indictment unsealed Monday, those employees didn't exist — instead, Shah is accused of pocketing the money and using it on personal expenses, including a new $60,000 Tesla.

Shah was arrested Monday and charged with wire fraud, criminal transactions, and making false statements to a bank. He will be tried in the Eastern District of Texas and faces up to 30 years in prison if convicted. Shah is the third person to be charged with fraud related to PPP loans in the Eastern District of Texas this year, US Attorney Stephen Cox said in a statement to Business Insider.

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"The Paycheck Protection Program is a vital tool for American small businesses and their employees who are struggling with the economic fallout from this pandemic. The Eastern District of Texas is committed to pursuing fraudsters who exploit this program to the detriment of others," Cox said.

Shah told the federal government that his company, Weddings by Farrah, needed PPP loans for its 126 employees, according to the indictment. He was initially approved for the loans in May and was granted $1,592,657. But according to prosecutors, Weddings by Farrah hadn't been in operation since 2018, when it was shut down for failing to pay taxes.

Instead, Shah allegedly kept the money, depositing more than $500,000 in an E-Trade account. He also spent $60,000 of the PPP money on a "vehicle from Tesla," according to the indictment.

The Small Business Administration, which oversees PPP, has come under fire from lawmakers and businesses owners for sloppy handling of COVID-19 relief funds in recent months. The agency initially refused to disclose a list of PPP recipients, but reversed that decision last week after blowback from media outlets who threatened to file an open records lawsuit. Meanwhile, the Department of Justice has started cracking down on businesses who allegedly defrauded the government to siphon PPP money.

Shah could not be immediately reached for comment. Weddings by Farrah did not immediately respond to an emailed request for comment.