Northridge Man Charged With Paycheck Protection Program Fraud

NORTHRIDGE, CA — A San Fernando Valley man was arrested Thursday on federal charges alleging he and his business partner fraudulently obtained more than $1.95 million in Paycheck Protection Program loans for their companies by submitting fake tax documents and false employee information to enrich themselves.

Steven R. Goldstein, 36, of Northridge and his business partner, Raymond Magana, 39, of Santa Clarita were named in a federal criminal complaint charging them with making false statements to the government, fraud in connection with major disaster or emergency benefits, wire fraud, bank fraud, conspiracy, and false statements to the Small Business Administration, according to the U.S. Attorney's Office.

They are alleged to have transferred hundreds of thousands of dollars of the funds they received into their personal bank accounts. If convicted of all charges, Magana and Goldstein each would face up to 127 years in federal prison, prosecutors said.

According to an affidavit in support of the complaint, on May 13 and June 3, Magana submitted two applications for PPP loans totaling $1.8 million to U.S. Bank and Customer's Bank, on behalf of The Building Circle LLC, a company registered in his name.

To qualify for the PPP loans, Magana allegedly claimed that The Building Circle had 40 employees and submitted to the banks, and later to the SBA, bogus wage and tax documents that falsely reported $4.5 million in annual employee wages.

Both IRS and California Employment Development Department records showed that the company never reported paying any employees, and the underwriting packet also did not include a list of employees or associates for the company, according to the affidavit.

Investigators later determined that the Pico Rivera address given as The Building Circle's headquarters was a 980-square-foot, single-family home that appeared to be a residence, not a business. Ultimately, one of the two loan applications was approved and $940,416 was funded to Magana's shell company, the affidavit states.

Magana allegedly also applied for and received a PPP loan of $360,415 for Forward Builders LLC, another shell company, using fake tax documents and false employee information, and falsely claiming $1.73 million in employee wages.

When a bank manager contacted Magana after one of the business accounts receiving PPP funds had been frozen because of suspicious activity, he allegedly told the bank, "We have all the documents, we got approved," and he refused to return the improperly obtained PPP funds, the affidavit states.

The affidavit further alleges that Goldstein applied for four different PPP loans to Bank of America totaling more than $1.2 million on behalf of two other companies, Beagle Real Estate and Antelope Valley Real Estate Development LLC, while also using fake tax documents and false employee information.

Two of those PPP loans ultimately were approved and Goldstein's companies received a total of $655,000 in PPP loan funds, the affidavit details. California state business records list Magana as CEO of Antelope Valley Real Estate Development, while Goldstein is listed as its manager.
According to the affidavit, on the same day that the banks issued those PPP loan funds to Goldstein's companies, Goldstein transferred more than half of that amount, $355,000, into his personal bank accounts.

In total, Magana and Goldstein applied for more than five separate PPP business loans totaling more than $2.5 million from various banks, of which more than $1.95 million was issued, according to the affidavit.