Criminal Complaint — No. 2:21-mj-00052 (Dkt. 3, D. Ariz.)

Summary

A criminal complaint filed March 17, 2021 in the U.S. District Court for the District of Arizona, No. 2:21-mj-00052, charging James Theodore Polzin in Counts 1-3 with fraud in connection with major disaster or emergency benefits under 18 U.S.C. § 1040 and in Counts 4-6 with wire fraud under 18 U.S.C. § 1343. It alleges that between May 2020 and July 2020 Polzin submitted Economic Injury Disaster Loan applications claiming non-existent employees and revenues. Count 1 alleges approval on or about May 30, 2020 of a $150,000 EIDL on a statement that Transparen CPAS LLC had nine employees and revenues of $645,000. Arizona Department of Economic Security records cited in the complaint show two employees for the first quarter of 2019. Special Agent Gregory N. Luethans of Homeland Security Investigations signed the complaint.

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Case 2:21-mj-00052-MHB Document 3 Filed 03/17/21 Page 1 of 10

UNITED STATES DISTRICT COURT

DISTRICT OF ARIZONA
UNITED STATES OF AMERICA Case No.: 4 \ _ SEM S
Vv. CRIMINAL COMPLAINT

James Theodore Polzin (Counts 1 — 6)

POSE

I, the undersigned complainant, being duly sworn, state that the following is true

and correct to the best of my knowledge and belief:

Counts 1-3: Fraud in connection with major disaster or emergency benefits,
18 U.S.C. § 1040

Between May 2020 through at least July 2020, within the District of Arizona and

elsewhere, the defendant, James Theodore Polzin (Polzin), did knowingly and willingly
commit fraud in connection with a major disaster or emergency benefits in violation
of Title 18, United States Code, Section 1040.
Manner and Means of the Scheme to Defraud

This scheme targeted the Small Business Administration (SBA) with the intention
of defrauding the SBA of funds in connection to the Economic Injury Disaster Loan (EIDL)
Program as authorized under the provisions of the Coronavirus Aid, Relief, and Economic
Security (CARES) Act by providing materially false loan applications claiming non-
existent employees and revenues for business entities owned and operated by POLZIN. In
furtherance of the scheme to defraud, POLZIN submitted supporting loan documents that
contained contradicting information for the same business on each application. These
representations were false and fraudulent. POLZIN made these misrepresentations with
the intent to defraud the United States in order to obtain loan proceeds that he was not
entitled to.

On or about the dates specified as to each count below, the defendant, POLZIN, for

the purpose of executing the aforesaid scheme and artifice, did knowingly make materially


Case 2:21-mj-00052-MHB Document 3 Filed 03/17/21 Page 2 of 10

false, fictitious, or fraudulent statements or representations, or make or uses any false
writing or document knowing the same to contain any materially false, fictitious, or
fraudulent statement or representation as more particularly described below.
COUNT 1
(Transparen CPAS LLC Loan 5556727802)

On or about May 30, 2020, POLZIN was approved for an EIDL in the amount of
$150,000. On the loan application, POLZIN stated that Transparen CPAS utilized EIN
XX-XX19913. In addition, POLZIN stated that Transparen CPAS LLC had nine
employees and revenues of $645,000 for the 12 months prior to January 2020.

A query of EIN XX-XX19913 through the Arizona Department of Economic
Security (DES) database showed no quarterly tax and wage reports for the third and fourth
quarters of 2019. Two employees were shown for the first quarter of 2019, and three
employees were listed for the second quarter of 2019, indicating that Transparen CPAS
LLC—utilizing EIN XX-XX19913—does not have nine employees as indicated on its
EIDL application.

COUNT 2
(Transparen CPAS Loan 7800007909)

On or about June 18, 2020, POLZIN was approved for an EIDL in the amount of
$150,000. On the loan application, POLZIN stated that Transparen CPAS, a Sole
Proprietorship, utilized EIN XX-XX75306. POLZIN’S Social Security Number (SSN) is
XXX-XX-5306. In addition, POLZIN stated that Transparen CPAS had 16 employees and
revenues of $1,205,401 for the 12 months prior to January 2020.

A query of POLZIN’S SSN through the Arizona Department of Economic Security
(DES) database yielded negative results, indicating that Transparen CPAS utilizing EIN
XX-XX75306 does not have 16 employees as indicated on its EIDL application.


Case 2:21-mj-00052-MHB Document 3 Filed 03/17/21 Page 3 of 10

COUNT 3
(Polzin Holdings Loan 9193768002)

On or about July 14, 2020, POLZIN was approved for an EIDL in the amount of
$150,000. On the loan application, POLZIN stated that Polzin Holdings LLC utilized EIN
XX-XX90157. In addition, POLZIN stated that Polzin Holdings LLC had eight employees
and revenues of $554,650 for the 12 months prior to January 2020.

A query of EIN XX-XX90157 through the Arizona Department of Economic
Security (DES) database yielded negative results, indicating that Polzin Holdings LLC—
utilizing EIN XX-XX090157—does not have eight employees as indicated on its EIDL
application.

All in violation of Title 18, U.S.C. § 1040.

Counts 4-6: Wire Fraud, 18 U.S.C. § 1343
Between about May 2020 and July 2020, in Maricopa County, in the District of

Arizona, POLZIN did knowingly and willfully devise and intend to devise a scheme
and artifice to defraud and obtain money and property by means of materially false
and fraudulent promises, pretenses and representations, and concealment of material
facts, in violation of Title 18, U.S.C. § 1343.

On or about the dates specified as to each count below, POLZIN, for the purpose of
executing the aforesaid scheme and artifice, did knowingly transmit and cause to be
transmitted, by means of wire communications in interstate and foreign commerce, certain
writings, signs, signals, pictures, and sounds, as more particularly described in the

following table.


Case 2:21-mj-00052-MHB Document 3 Filed 03/17/21 Page 4 of 10

IP Address

Receiving Server

184.187.219.220
Chandler, AZ /

Count | Date Requestor / Amount
Transparen CPAS LLC /
4 5/30/2020 $150,000

188.163.21.106
Chernihiv Ukraine

Rapid Finance, Central US
Region, lowa

174.192.78.49 Green

Transparen CPAS /

5 6/17/2020 $150,000

Bay, WI /
104.143.92,249 San
Francisco, CA

Rapid Finance, Central US
Region, lowa

74.213.234.35
Gardena, CA/

Polzin Holdings LLC /

6 7/7/2020 $150,000

All in violation of Title 18, U.S.C. § 1343.

184.187.219.220
Chandler, AZ

Rapid Finance, Central US
Region, lowa

I further state that I am a Special Agent with the Homeland Security Investigations,

and this complaint is based on the following facts:

See Attached Statement of Probable Cause Incorporated By Reference Herein.

Continued on the attached sheet and made a part hereof:

AUTHORIZED BY: Kevin Rapp, AUSA

Special Agent Gregory N. Luethans
Name of Complainant

Sworn, to telephonically

/7__202/

Date

United States Magistrate Judge
HONORABLE MICHELLE H. BURNS

at

XlYes LINo
GREGORY N Digitally signed by GREGORY N
_LUETHANS Date: 2021.03.17 10:19:48

-07'00°

Signature of Complainant

Phoenix, Arizona
City and State

VAM AL

Signature of Judicial Officer


Case 2:21-mj-00052-MHB Document 3 Filed 03/17/21 Page 5 of 10

STATEMENT OF PROBABLE CAUSE

I, Gregory Luethans, being first duly sworn, hereby depose and state as follows:
1, Affiant’s Background

1. I am a Special Agent with U.S. Immigration and Customs Enforcement
(“ICE”) Homeland Security Investigations (“HSI”) currently serving in the Phoenix Field
Office, Financial Crimes Unit. I have been employed as a federal agent for over 11 years.
I have conducted numerous criminal investigations involving violations of Immigration
and Customs law committed against the United States, such as financial crimes, weapons
violations, narcotics violations, document and benefit fraud, and human smuggling.
Recently, I have been assigned to work with other law enforcement partners to investigate
possible fraud associated with the stimulus and economic assistance programs created by
the federal government in response to the COVID-19 pandemic.

Il. Purpose of Affidavit

2. This affidavit is made in support of a criminal complaint charging James
Theodore Polzin (“Polzin”) with 18 U.S.C. § 1040 (fraud in connection with major disaster
or emergency benefits) and 18 U.S.C. § 1343 (wire fraud).

3. This affidavit is based on my personal investigation and investigation by
others, including federal and local law enforcement officials whom I know to be reliable
and trustworthy. The facts contained herein have been obtained by interviewing witnesses
and examining documents obtained in the course of the investigation as well as through
other means. This affidavit does not include every fact known to me about this
investigation but rather, only those facts sufficient to establish probable cause.

Ill. Background Information and Summary of Criminal Activity

4. On March 27, 2020, the U.S. President signed a $2.2 trillion stimulus bill
called the CARES Act, which was intended to ameliorate the economic impact of the
COVID-19 Pandemic. See Pub. L. 116-136. Under the provisions of the CARES Act, $2.2

trillion dollars in economic stimulus was passed by the 116th U.S. Congress and signed


Case 2:21-mj-00052-MHB Document 3 Filed 03/17/21 Page 6 of 10

into law by the President in March 2020 in response to the economic decline caused by the
COVID-19 pandemic in the United States.

5. The provisions of the CARES Act, in conjunction with an officially declared
disaster by the United States Government, allowed for the Small Business Administration
(SBA) to offer Economic Injury Disaster Loan (EIDL) funding to business owners
negatively affected by the COVID-19 pandemic. Using the SBA online portal, EIDL
applicants submit personal and business information in support of each EIDL application,
and they do not have to submit supporting documentation of any sort.

6. The application includes a jurat-like paragraph where the applicant affirms
that the information submitted is true and correct under the penalty of perjury and
applicable criminal statutes. The application process involves filling out assorted data
fields relating to the size of the affected business entity, the ownership of said business,
and other information such as the number of employees and gross business revenues
realized in the 12 months prior to the COVID-19 impact on the national economy. This
information, submitted by the applicant, is then used by SBA systems to calculate the
principal amount of money the small business is eligible to receive in the form of an EIDL.
However, in conjunction with the submission of an EIDL application, by simply clicking
on and checking a box within the on-line application, an applicant may request and then
receive up to $10,000.00 in an EIDL Cash Advance Grant based on the number of
employees claimed. The EIDL Cash Advance Grant need not be repaid to the SBA if the
loan application is ultimately denied by the SBA, or if the applicant declines the EIDL that
may be offered by the SBA at a later date.

7. The SBA Office of Disaster Assistance (ODA) controls the EIDL program
and is headquartered at 409 3rd Street SW, Washington, DC 20416. The ODA has
authority over all loans created and disbursed under the EIDL program. EIDL principal
proceeds and available Cash Advance Grants (up to $10,000) are solely funded by the SBA


Case 2:21-mj-00052-MHB Document 3 Filed 03/17/21 Page 7 of 10

and are disbursed from government-controlled accounts maintained with the U.S. Treasury
at Federal Reserve Banks throughout the United States.

8. Pursuant to the provisions governing the EIDL program, loan proceeds must
be used by that business on certain permissible expenses. The EIDL (working capital)
loans may be used by the afflicted business, which must have existed in an operational
condition on February 1, 2020, to pay fixed debts, payroll, accounts payable, and other bills
that could have been paid had the COVID-19 disaster not occurred.

A. EIDL APPLICATIONS SUBMITTED BY POLZIN
“Transparen CPAS LLC/Transparen CPAS/Polzin Holdings LLC”

9. The Small Business Administration (SBA) is responsible for extending loans
to businesses applying for loans associated with the EIDL program. The SBA provided
me with loan documents submitted on or about May 2020 through July 2020 bearing the
signature of Polzin, as referenced in Counts 4-6 of the complaint. Each application sought
an EIDL loan for businesses identified as Transparen CPAS LLC, Transparen CPAS, and
Polzin Holdings LLC. Separate loans were filed for Transparen CPAS and Transparen
CPAS LLC as the former is Polzin’s Sole Proprietorship and the latter is his Limited
Liability Company. Each application identified Polzin as owning 100% of the business.
On each of the applications, Polzin listed his residential address as XXXX S. Val Vista Dr.
#218 Mesa, AZ.

10. According to the Arizona Corporation Commission, Transparen CPAS LLC
was formed/registered on or about May 22, 2017. In order to support an EIDL in the
amount of $150,000 for application 5556727802 utilizing EIN XX-XX19913, Polzin
represented that the business, Transparen CPAS LLC, had revenue of $645,000 and nine
employees.

11. Inorder to support a second EIDL in the amount of $150,000 for application
7800007909 utilizing EIN XX-XX75306, Polzin represented that the business, Transparen
CPAS, had revenue of $1,205,401 and 16 employees. In addition, Polzin provided the


Case 2:21-mj-00052-MHB Document 3 Filed 03/17/21 Page 8 of 10

SBA with an IRS Schedule C (Form 1040 or 1040-SR) which represented Transparen
CPAS had wages of $864,000.00.

12. According to the Arizona Corporation Commission, Polzin Holdings LLC
was formed/registered on or about March 14, 2019. In order to support an EIDL in the
amount of $150,000 for application 9193768002 utilizing EIN XX-XX90157, Polzin
represented that the business, Polzin Holdings LLC, had revenue of $554,650 and eight
employees.

13. A review of the Department of Economic Security (DES) payroll records for
Transparen CPAS LLC (EIN XX-XX19913) showed no quarterly tax and wage reports for
the third and fourth quarters of 2019. The first quarter of 2019 listed two employees,
Polzin and Leonard Pennock, with total wages of $18,450.00. The second quarter listed
three employees: Polzin, Leonard Pennock, and Roxanne Gates. Second quarter wages
totaled $21,100.00.

14. A review of DES payroll records for Polzin’s SSN (XXX-X7-5306), which
was used as his EIN for Transparen CPAS, showed no additional wages. Further, a review
of DES payroll records for Polzin Holdings LLC (EIN XX-XX90157) revealed no
records/wages.

15. | Aphysical site check of the business address listed for Transparen CPAS and
Polzin Holdings LLC, both located at 1 North Macdonald Suite B8, Mesa, AZ 85204,
showed a business matching the name Transparen CPAS on the building directory. Access
to Transparen CPAS floor and office was inaccessible to the general public and appeared
to only be accessible via a keypad or access card.

16. Oneach of the EIDL applications, Polzin signed the Loan Authorization
and Agreement documents using DocuSign technologies.
B. CNN ARTICLE
17. On March 5, 2021, CNN published an article titled, “Fake tax preparer gets

six Covid-19 bailout loans worth more than $1 million.” The article documents Polzin


Case 2:21-mj-00052-MHB Document 3 Filed 03/17/21 Page 9 of 10

obtained at least six Covid-19 bailout loans from the federal government totaling around
$1.2 million through the SBA’s Paycheck Protection Program (PPP). Further, the article
claims Polzin misrepresented himself as a CPA to multiple clients and that a complaint was
filed with the Arizona State Board of Accountancy.!

C. PURCHASE OF 902 N. CORONADO DR. GILBERT, ARIZONA 85234

18. Areview of Maricopa County Recorder documents showed Polzin purchased
the property located at 902 N. Coronado Dr., Gilbert, Arizona 85234, on June 19, 2020, for
$385,000.00. Recorded documents show the house was purchased with cash.

19. A review of bank records provided by BMO Harris showed Polzin opened a
BMO Harris Business Advantage Checking Account XXXXXX1088 (Account 1) on
December 17, 2019, in the name of Transparen CPAS LLC. Also, on December 17, 2019,
Polzin opened a BMO Harris Smart Advantage Account XXXXXX7848 (Account 2) in
the name of James Polzin and Svitlana Popsii.

20. Account 1 was opened with a $100.00 deposit and received no further
deposits until April 27, 2020, when the account received a PPP loan disbursal of
$180,095.37. Between April and June 2020, Account 1 received approximately
$740,957.37 in EIDL and PPP loans. During the same time period, Account | received
approximately $161,114.45 in other deposits. Notably, approximately $45,636.75 appears
to be related to assisting two other companies with obtaining PPP loans.

21. Account 2 received a $218,962.00 PPP loan disbursal on June 10, 2020, and
a total of $475,000.00 in transfers from Account 1 between May and June 2020. Bank
records show on June 23, 2020, $388,198.34 was wired to a title company from Account
2.

22. The loan applications signed by Polzin specifically require that the EIDL

funds be used for working capital to alleviate economic injury caused by disaster occurring

‘ https://www.cnn.com/2021/03/05/business/polzin-tax-preparer-ppp-loan-invs/index.html

5


Case 2:21-mj-00052-MHB Document 3 Filed 03/17/21 Page 10 of 10

in the months of January 31, 2020, and continuing thereafter and not for the purchase of a
private residence or vacation home.
IV. Conclusion

23. Based on my training and experience and the information provided in this
affidavit, I respectfully submit that there is probable cause to believe that, beginning on a
date unknown but from at least in or around May 2020 to July 2020, within the District of
Arizona, James Theodore Polzin committed violations of 18 U.S.C. § 1040 (fraud in
connection with a major disaster or emergency benefits) and 18 U.S.C. § 1343 (wire fraud).

I declare under penalty of perjury that the statements above are true and correct to

the best of my knowledge and belief.

GREGORY N Digitally signed by GREGORY N

LUETHANS

LU ETHANS Date: 2021.03.17 10:21:34 -07'00'

Special Agent Gregory N. Luethans
Homeland Security Investigations

Sworn to and subscribed telephonically this l ) day of March, 2021.

Vleet Me Born —
HONORABLE MICHELLE H. BURNS
United States Magistrate Judge

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