In a warning to small business owners, Bryan Ochoa Diaz, owner of Casa Colima in Vancouver, Oregon, pleaded guilty to money laundering related to COVID-19 relief loans from the U.S. Small Business Administration (SBA). This case highlights the importance of strict compliance with the terms of such loans and serves as a warning against misuse of federal funds earmarked for recovery.
The case, which was investigated by multiple federal agencies, including the SBA Office of Inspector General, involved a $350,000 loan that was intended solely for working capital to mitigate economic damage related to the pandemic. Instead, Ochoa Diaz transferred $100,000 to his parents’ personal bank account immediately after receiving the funds, which he then used to pay their mortgage.
The implications of this incident for small business owners are very significant. A variety of government-backed loans are available as businesses work to recover from the economic impact of the pandemic, but these loans come with strict requirements. As stated in the press release, the provision states that the funds must not be used for personal, family or household purposes, highlighting the need for owners to understand and comply with the regulations surrounding such financial assistance.
“Financial assistance requirements are important to the integrity of the program,” an SBA spokesperson said. “Misuse of funds can result in serious consequences, including criminal charges.” This reinforces the recognition that small business owners must approach financial assistance cautiously, given the increased scrutiny on federal funding.
Ochoa Diaz’s actions carry serious legal consequences, including up to 10 years in prison and a $250,000 fine. He is scheduled to be sentenced on December 15, 2025 and has already paid full restitution to the SBA. This is a stark reminder that the consequences of financial misconduct can go beyond simple compensation.
This case also highlights an important method for reporting fraud. The Justice Department has made clear that it is actively investigating possible misuse of COVID-19 relief funds. Small business owners should know that they can report allegations through the National Center for Disaster Fraud hotline at 866-720-5721 or through the NCDF web complaint form. NCDF Complaint Form.
For small business owners navigating the post-pandemic landscape, it is important to focus on compliance with lending regulations to secure the support many businesses desperately need. In addition to potential criminal penalties, improper use of funds can seriously damage a company’s reputation and relationships with lenders and community stakeholders.
When exploring financial assistance options, owners must ensure that every dollar is utilized in accordance with federal guidelines to maintain the integrity of the business and support the broader economic recovery. As many small businesses continue to grapple with the effects of the pandemic, it is more important than ever to understand how to utilize financial support ethically and effectively.
For more information about this case and ongoing loan compliance expectations, see SBA’s original press release. here.
