Glen Cove Doctor Sentenced In $3.7M COVID Relief Fraud Case: Feds

GLEN COVE, NY — A Glen Cove doctor was sentenced to more than four years in prison Friday for fraudulently obtaining millions of dollars in COVID-19 emergency relief funds.

The U.S. Attorney's Office for the Eastern District of New York said Konstantinos Zarkadas, 48, was sentenced to 51 months' imprisonment. He was also ordered to pay about $3.5 million in restitution.

Zarkadas pleaded guilty last year to stealing roughly $3.7 million in Payment Protection Program (PPP) and Economic Injury Disaster Loan Program (EIDLP) loans between March and July 2020.

Federal prosecutors say he fraudulently received 11 PPP and EIDLP loans on behalf of the corporate entities he controlled. And the funds were used "for extravagant personal purchases and other impermissible purposes," such as financing the down payment on a $1.75 million yacht.

To conceal the fraudulent nature of the purchase, prosecutors said Zarkadas made the check payable to a family member who was not the ultimate beneficiary of the funds and, in the check's memo line, falsely indicated that the funds were "repayment for payroll."

Congress created the PPP and EIDLP as part of the CARES Act, which was enacted on March 27, 2020. Designed to stimulate the economy, the CARES Act provided emergency financial assistance to qualifying businesses and households during the COVID-19 pandemic.

The PPP allowed small businesses to receive loans that they would use for specified expenses, including payroll costs and interest on mortgages. The EIDLP provided low-interest financing to small businesses, renters, and homeowners suffering from the pandemic's economic impacts.

"It's always a shame to see the rampant abuse of programs designed to help ordinary people struggling through the pandemic," said Thomas Fattorusso, special agent-in-charge for the IRS-Criminal Investigation, New York. "Dr. Zarkadas chose greed over honesty by financing a luxury lifestyle on the backs of America's taxpayers."