Spring Valley Man Sentenced To One Year And One Day In Prison For $1.6 Million COVID-19 Fraud Scheme

Damian Williams, the United States Attorney for the Southern District of New York, announced today that Eliezer Scher was sentenced to one year and one day in prison by U.S. District Judge Philip M. Halpern for his scheme to defraud the U.S. Small Business Administration (“SBA”) of more than $1.6 million in COVID-19 relief funds. SCHER previously pled guilty before Judge Halpern to one count of wire fraud on February 1, 2023.

U.S. Attorney Damian Williams said: “Elizier Scher schemed to steal taxpayer funds intended for small businesses in need of assistance during the pandemic. His intent to illegally profit from a national emergency that affected countless businesses and uprooted lives resulted in a sentencing reflecting the severity of his actions. Exploiting a crisis for personal gain will face the full force of the law.”

According to documents filed in this case and statements made in court proceedings:

The SBA is a federal agency that administers assistance to American small businesses, including the Economic Injury Disaster Loan (“EIDL”) program, which was intended to provide funding to help small business recover from the economic impacts of the COVID-19 pandemic. The maximum amount of an EIDL loan is determined by a formula based on the date the borrower began operating and the borrower’s gross revenue and cost of goods sold for the 12 months prior to January 31, 2020. The loans can only be used for working capital and other normal operating expenses.

Over an approximately four-hour period on or about July 13, 2020, SCHER submitted 12 applications for EIDL loans in a principal amount of $150,000 to the SBA online on behalf of 12 different corporations that he owned and controlled. SCHER made materially false statements in each application with respect to each applicant’s gross revenue and cost of goods sold for the 12-month period prior to January 31, 2020.

Between on or about July 20, 2020, and on or about August 11, 2020, 11 of the 12 applicants received a net total of $1,648,900 in loan proceeds from the SBA. SCHER used the proceeds to buy real estate and to pay credit card expenses instead of using it for working capital for the borrowers, as SCHER had agreed to do in the loan agreements he executed on behalf of the borrowers.

In addition to the prison term, SCHER, 34, of Spring Valley, New York, was sentenced to two years of supervised release and ordered to pay $1,648,900 in forfeiture.

Mr. Williams praised the investigative work of the Federal Bureau of Investigation.

This case is being handled by the Office’s White Plains Division. Assistant U.S. Attorney James McMahon is in charge of the prosecution.