Court Battles

FBI probing company suspected of pocketing federal disaster aid funds for personal use

The FBI is probing a company suspected of pocketing millions in federal disaster aid funds intended for Puerto Rico for its owners’ personal use, the Daily Beast reported Monday.

The Textile Corporation of America (TCA) fabricated evidence of work performed at a Pikeville, Tenn., textile plant in order to draw federal grants, according to affidavits filed in by the FBI in a federal court in Tennessee in October and February obtained by the Daily Beast.

{mosads}The FBI alleges that the company’s owners pocketed much of that money for personal use.

However, more than $1 million went toward the purchase of tarps to fulfill a $30 million Federal Emergency Management Agency (FEMA) hurricane relief contract, chiefly intended for Puerto Rico, authorities allege.

TCA’s sister company, Master Group USA (MGUSA), which was awarded that contract from FEMA, used more fraudulent paperwork, including fabricated copies of invoices and wire transfers, to conceal the fact that it was purchasing those tarps from China, in violation of federal sourcing laws, according to the affidavits.

FEMA had awarded MGUSA almost $4 million before canceling the contract when the tarps failed to meet quality requirements.

The affidavits sought the seizure of millions of dollars from the owners of both companies, brothers Karim and Rahim Sadruddin, and search warrants for their email accounts and those of family members allegedly involved in the scheme.

No criminal charges have been filed yet, according to the Daily Beast.

The Justice Department did not immediately respond to a request for comment from The Hill.

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