Feds: Doctor pleads guilty to COVID relief fraud

A doctor from Glen Cove pleaded guilty Friday to fraudulently receiving more than $3.7 million in COVID-19 disaster relief loans from the federal government that authorities said he spent on lavish purchases such as Cartier and Rolex wristwatches and a down payment on a yacht, federal prosecutors said.

Dr. Konstantino Zarkadas, 48, pleaded guilty to disaster relief fraud and wire fraud in connection with his receipt of $3,796,849.50 in small business loans from the Paycheck Protection Program, also known as PPP, and the Economic Injury Disaster Loan Program (EIDLP), federal prosecutors said in a news release Friday.

The programs were enacted by Congress on March 29, 2020, as part of the Coronavirus Aid, Relief, and Economic Security Act, or "CARES" Act, in the early days of the pandemic as businesses across the country struggled amid the abrupt shutdown of most commerce nationwide.

Breon Peace, the U.S. attorney for the Eastern District of New York, said in a statement: "The defendant, a medical professional, admits to diverting millions of dollars in COVID-19 disaster relief funds to finance an extravagant lifestyle, including the purchase of luxury watches and vehicles, and the down payment on a yacht. This Office will vigorously prosecute those who steal from government programs that are designed to help struggling small businesses and families stay afloat during the pandemic."

Zarkadas’ Manhattan-based attorney, Ronald G. Russo, said his client took responsibility when confronted by federal authorities.

"He took responsibility from day one," said Russo. "The case is very complicated and I hope to present it all to the court before sentencing in the spring."

Russo added that Zarkadas has been a medical doctor since the early 2000s and has a private practice in Manhattan.

"Dr. Zarkadas has cared for the poorest of the poor in Upper Manhattan throughout the pandemic," Russo said.

Prosecutors allege that between March 2020 and July 2020 Zarkadas received more than $3.7 million from at least 11 PPP and EIDLP loans that he fraudulently applied for on behalf of corporate entities he controlled.

Zarkadas allegedly laundered the loan proceeds through various bank accounts he controlled, prosecutors said. He also withdrew tens of thousands of dollars worth of the loan proceeds, prosecutors said, and used some of the funds to lease luxury vehicles, purchase several Rolex and Cartier watches and pay more than $1 million in judgments against him. Zarkadas agreed to forfeit the watches as part of his plea.

In July 2020, Zarkadas used approximately $194,915.42 in PPP funds intended for distressed small businesses affected by the pandemic to finance the down payment on a $1.75 million yacht. Zarkadas tried to hide the fraud, prosecutors allege, when he wrote the check to a family member, and falsely wrote in the check’s memo line that the funds were "repayment for payroll."

Zarkadas faces up to 30 years in prison at sentencing, as well as forfeiture of $3,796,849.50 and a fine of up to $250,000, prosecutors said.

"It’s always a shame to see the rampant abuse of programs designed to help ordinary people struggling through the pandemic," IRS-CI Special Agent-in-Charge Thomas Fattorusso said in a statement. "Dr. Zarkadas chose greed over honesty by financing a luxury lifestyle on the backs of America’s taxpayers."

By Nicole Fuller

nicole.fuller@newsday.com@NicoleFuller

Nicole Fuller is Newsday's senior criminal justice reporter. She began working at Newsday in 2012 and previously covered local government.