Commerce Twp. man charged in COVID-19 loan fraud scheme

Anna Liz Nichols
The Detroit News

A Commerce Township man has been charged in connection with applying for nearly $1 million worth of pandemic loans for fake businesses, including one sharing a name associated with “The Karate Kid,” federal officials said Friday.

Ryan Carruthers, 42 is charged with wire fraud in a criminal complaint for filing for $963,000 in pandemic loan programs, according to a statement from the U.S. Attorney for the Eastern District of Michigan.

He faces up to 20 years in prison on the wire fraud charge, officials wrote.

According to the complaint filed Jan. 25 and unsealed Friday, Carruthers applied for 14 Paycheck Protection Program, or PPP, loans meant to keep employers from having to release employees during the COVID-19 pandemic.

However, the complaint says the businesses listed for the loans were fake, with no evidence showing there were any staffers and many of the businesses were not legally registered until after March 2020, making them ineligible for the loans.

Businesses awarded PPP loans were eligible for loan forgiveness if the money was used for the business and all its employees were kept on the payroll for eight weeks.

Investigators said Friday Carruthers sought a 15th loan for the Economic Injury Disaster Loan program.

One of the businesses Carruthers applied under was listed as “Cobra Kai Karate," named similarly as a dojo known for its unethical practices in "The Karate Kid" film from 1984, authorities reported.

Carruthers filed the applications for loans from about April 2020 through April 2021, according to the complaint, receiving around $851,000 believed to have been used to pay off his mortgage and buy a Sea-Doo personal watercraft, among other purchases.

“Mr. Carruthers is charged with lying repeatedly to obtain loan funds intended to help businesses keep their doors open during the Covid-19 pandemic,” U.S. Attorney Dawn Ison said Friday. “My office is committed to prosecuting anyone who exploited our national crisis to enrich themselves, and today’s charges are a reflection of that commitment.”

An attorney listed as representing Carruthers did not immediately respond to a request for comment Friday.

The investigation is being conducted by Homeland Security Investigations.

“Our communities suffered during the pandemic, yet some sought to line their own pockets at the expense of the American taxpayer,” said Angie M. Salazar, HSI Detroit Special Agent in Charge. “Our agents will continue to investigate PPP fraud and help hold these offenders accountable to the American people.”

Carruthers made his first appearance Friday in U.S. District Court in Detroit, records show.

He was released on a $10,000 bond. A preliminary examination is scheduled for 1 p.m. Feb. 24.