A set of handcuffs is pictured.
San Diego, California – In a stark warning to would-be fraudsters, the United States has filed a civil complaint accusing two California brothers of fraudulently obtaining over $8 million in Paycheck Protection Program (PPP) loans during the height of the COVID-19 pandemic. The brothers—Duraid A. Zaia and Kusay Karana—allegedly created fake companies, inflated payroll figures, and submitted falsified documents in a scheme that ultimately cost U.S. taxpayers more than $8.6 million.
The PPP, part of the federal CARES Act passed in March 2020, was designed to support small businesses struggling to stay afloat during the pandemic. The loans were meant to help employers retain workers, and could be forgiven if used appropriately. But according to the complaint, Zaia and Karana used deception—not desperation—to get their hands on the funds.
The federal complaint, filed after the government intervened in a whistleblower suit, outlines how the brothers applied for four separate PPP loans between March and April 2021. Among the businesses they claimed to operate were “Ramona Egg Ranch” and “The Duraid A. Zaia Sole Proprietorship.” According to federal prosecutors, these businesses either didn’t exist or had vastly exaggerated payrolls.
For example, Zaia claimed the egg ranch employed 75 people with payroll costs over $9.5 million—yet the tax records he submitted only reported $62,848 in payroll. In another application, he claimed a business employed 137 people but had no Employer Identification Number (EIN) until March 2021, meaning it couldn’t legally pay employees at all during 2020, a key requirement for eligibility.
Perhaps most telling, the brothers submitted employee rosters showing dozens of the same individuals working full-time for multiple companies simultaneously. One name appeared on two separate lists with identical salaries—hardly a sign of legitimate operations.
After the government denied forgiveness on the loans and the brothers defaulted, the Small Business Administration (SBA) was forced to repay lenders—leaving taxpayers with the bill. Now, the Department of Justice is suing under the False Claims Act, a law that allows whistleblowers to help expose fraud and potentially receive a share of any recovered funds.
“COVID-relief programs were designed to help people and businesses under extreme financial stress,” said U.S. Attorney Adam Gordon. “We will continue to pursue those who knowingly cheat taxpayers.”
Officials urge anyone with knowledge of fraud involving COVID-19 aid to report it to the National Center for Disaster Fraud.
The case highlights a critical message: abusing public emergency funds is not only unethical—it’s illegal, and it can come with a very steep price.
