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Issaquah, Washington man pleads guilty to COVID-19 relief fraud scheme

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 Made false statements on applications for more than $1 million in COVID-19 relief funds

Seattle – An Issaquah, Washington man pleaded guilty today to perpetrating a scheme to fraudulently obtain COVID-19 relief guaranteed by the Small Business Administration (SBA) through the Economic Injury Disaster Loan (EIDL) and the Paycheck Protection Program (PPP) under the Coronavirus Aid, Relief and Economic Security (CARES) Act.

Nicholas L. McQuaid, Acting Assistant Attorney General of the Justice Department’s Criminal Division; Brian T. Moran, U.S. Attorney for the Western District of Washington; J. Russell George, Inspector General of the U.S. Treasury Inspector General for Tax Administration (TIGTA); Gail S. Ennis, Inspector General of the Social Security Administration (SSA); Hannibal “Mike” Ware, Inspector General of the SBA, and Cardell Morant, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s Homeland Security Investigation (HSI), made the announcement.

AUSTIN HSU, 46, of Issaquah, pleaded guilty to an information charging him with one count of wire fraud before U.S. Magistrate Judge Michelle L. Peterson in the Western District of Washington. Sentencing has been scheduled for April 19, 2021, before U.S. District Court Judge James L. Robart.

As part of his guilty plea, HSU admitted that he submitted nine fraudulent disaster loan applications seeking over $1.1 million. HSU, who is the owner and CEO of a company named Blackrock Services P.S. doing business as “Back 2 Health Bellevue” (Back 2 Health), received EIDL and PPP funds for Back 2 Health, and then used the names of Back 2 Health’s current and former employees to apply for additional PPP loans under the names of four other companies that he owned and controlled. HSU further admitted that, in support of the fraudulent PPP loan applications, Hsu submitted fake federal tax filings. 

HSU also admitted that he incorporated a company named Blueline Capital LLC (Blueline) in June 2020 for the purpose of applying for an EIDL loan in July 2020, and then misrepresented to the SBA that Blueline had been in business since 2017 and that, as of Jan. 31, 2020, Blueline had nine employees and gross receipts of over $1.5 million. HSU admitted that, in truth, Blueline had no business or operations.

Six of HSU’s nine fraudulent loan applications were approved, and he fraudulently obtained more than $700,000 in COVID-19 relief funds.

The CARES Act is a federal law enacted March 29. It is designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic. One source of relief provided by the CARES Act is the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses through the PPP. In April 2020, Congress authorized over $300 billion in additional PPP funding, and in December 2020, Congress authorized another $294 billion in additional PPP funding.   

The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of one percent. Businesses must use PPP loan proceeds for payroll costs, interest on mortgages, rent and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.

The EIDL program is designed to provide economic relief to small businesses that are currently experiencing a temporary loss of revenue. EIDL proceeds can be used to cover a wide array of working capital and normal operating expenses, such as continuation of health care benefits, rent, utilities and fixed debt payments. If an applicant also obtains a loan under the PPP, the EIDL funds cannot be used for the same purpose as the PPP funds.

This case was investigated by the TIGTA, SSA – Office of Inspector General (OIG), SBA – OIG, and HSI. Trial Attorney Christopher Fenton of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Steven Masada of the Western District of Washington are prosecuting the case.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at:


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