Federal Charges for Illinois Man that Defrauded $3.6M in Covid Relief

Why do people keep thinking they can get away with these hair-brained schemes? Every day I come to work I see some new “ingenious” way to make a quick buck and ruin your life in the process. Take for instance Farooq Khan of Chicago. He is a tax preparer who thought defrauding the government out of millions in COVID relief funds was a good idea. Obviously, we know how that worked out.

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This week (7/22/2025), Khan, 31, was sentenced to 42 months in federal prison for orchestrating a scheme that defrauded over $3.6 million from federal COVID-19 relief programs, including the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) program. He also has to pay back every cent. That's $3,645,104 in restitution.

Khan ran a tax prep business called Hannan Tax Services in Chicago. Between May 2020 and October 2021, he used that business to file at least 30 fake loan applications for supposed small businesses. Here's the catch. These businesses didn’t actually operate. Some didn’t exist at all. Khan cooked the books. He was falsifying tax records, inflating employee numbers, and lying about revenues. He did all this to make these non-companies look legit. And it worked for a while.

The government distributed millions based on those lies. Khan even attempted to grab nearly $600,000 more through other applications that never made it through. In the end, he personally pocketed about $1.2 million. That’s not a bad payout, until you realize it came with three and a half years behind bars, a full repayment plan, and a federal fraud mark on his record.

The case was investigated by the FBI’s Chicago Field Office and Homeland Security Investigations, and prosecuted by the Justice Department’s Criminal Division Fraud Section. According to the DOJ, this is just one of many prosecutions tied to COVID-19 relief fraud, a problem that’s still being unraveled nationwide.

This whole mess is another reminder that trying to scam the government (especially under the guise of a national crisis) isn’t just illegal. It’s stupid. The money was meant to keep real businesses afloat and real people employed during a once-in-a-century pandemic. Instead, Khan used it to line his own pockets and will now pay the price. If you suspect fraud like this, you can report tips to the National Center for Disaster Fraud at 866-720-5721 or online.