Criminal Complaint by Telephone or Other Reliable Electronic Means — No. 1:22-cr-20529 (Dkt. 1, S.D. Fla.)

Summary

A criminal complaint by telephone against Daniel Hernandez entered August 9, 2022 in the U.S. District Court for the Southern District of Florida, Case No. 22-MJ-03333-Torres, later docketed as No. 1:22-cr-20529. It charges conspiracy to commit bank fraud under 18 U.S.C. § 1349 from April 2020 through March 2021 in Miami-Dade County. The affidavit of Special Agent David Brant of the Federal Deposit Insurance Corporation Office of Inspector General states that Hernandez, who began working for Bank 1 in approximately September 2015, received a commission on every PPP loan and EIDL issued through the conspiracy. It states that the conspiracy attempted to defraud the PPP of more than $30 million and the EIDL program of more than $7 million, and that the investigation had identified over $15 million in fraudulent loans issued.

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Case 1:22-cr-20529-KMM Document 1 Entered on FLSD Docket 08/09/2022 Page 1 of 22

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA

CASE NO. 22-MJ-03333-Torres

United States of America,

V.
Daniel Hernandez,

Defendant. /

CRIMINAL COVER SHEET

1. Did this matter originate from a matter pending in the Northern Region of the United States
Attorney’s Office prior to August 8, 2014 (Mag. Judge Shaniek Maynard)? No

2. Did this matter originate from a matter pending in the Central Region of the United States
Attorney’s Office prior to October 3, 2019 (Mag. Judge Jared Strauss)? | No

Respectfully submitted,

JUAN ANTONIO GONZALEZ
UNITED STATES ATTORNEY

BY: CES. hibit

Eli S. Rubin

Assistant United States Attorney
Court ID No. A5502535

99 N.E. 4th Street

Miami, Florida 33132

Tel: 305-961-9247

Fax: 305-530-6158

Email: Eli.Rubin@usdoj.gov

Case 1:22-cr-20529-KMM Document 1 Entered on FLSD Docket 08/09/2022 Page 2 of 22

AO 91 (Rey. 08/09) Criminal Complaint

UNITED STATES DISTRICT COURT

for the
Southern District of Florida

United States of America
Vv.

Case No. 22-MJ-03333-Torres

Daniel Hernandez,

Nee Nome Soe mee eee See

Defendant(s)
CRIMINAL COMPLAINT BY TELEPHONE OR OTHER RELIABLE ELECTRONIC MEANS

I, the complainant in this case, state that the following is true to the best of my knowledge and belief.

On or about the date(s) of April 2020 through March 2021 in the county of Miami-Dade in the
Southern District of Florida , the defendant(s) violated:
Code Section Offense Description
18 U.S.C. § 1349 Conspiracy to Commit Bank Fraud

This criminal complaint is based on these facts:

SEE ATTACHED AFFIDAVIT.

rif Continued on the attached sheet.

Tusd Brad ID 204

Complainant’s signature

Special Agent David Brant, FDIC-OlG

Printed name and title

Attested to by the Applicant in accordance with the requirements of Fed.R.Cry

VA Judge’s signature
City and state: Miami, Florida Hon. Edw G. Torres, Chief U.S. Magistrate Judge

Printed name and title


Case 1:22-cr-20529-KMM Document 1 Entered on FLSD Docket 08/09/2022 Page 3 of 22

AFFIDAVIT IN SUPPORT OF A CRIMINAL COMPLAINT

I, David Brant, being first duly sworn, hereby depose and state as follows:

INTRODUCTION AND AGENT BACKGROUND

1. I am a Special Agent with the Federal Deposit Insurance Corporation Office of
Inspector General (“FDIC-OIG”) and have been so since September 2019. Prior to that, I was a
Special Agent with the Internal Revenue Service - Criminal Investigation (“IRS-CI’) for
approximately ten years. Throughout the course of my career, I have participated and directed
numerous criminal investigations involving identity theft, fraud against the government, bank
fraud, and many other illegal schemes affecting the government and financial institutions.
Through my training and experience, I am familiar with the tactics, methods, and techniques
individuals use to commit various types of fraud and money laundering schemes.

2. This affidavit is made in support of a criminal complaint charging Daniel
Hernandez (“HERNANDEZ”) with Conspiracy to Commit Bank Fraud in violation of Title 18,
United States Code, Section 1349.

3. This affidavit is based on my personal investigation and investigation by others,
including federal 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.

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OVERVIEW OF CERTAIN CARES ACT RELIEF

A. The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Pub. L. 116-
136, 134 Stat. 281, was a federal law enacted in or around March 2020 designed to provide
emergency financial assistance to the millions of Americans who were suffering the economic
effects caused by the COVID-19 pandemic.

5. Two sources of relief provided by the CARES Act were the Paycheck Protection
Program (“PPP”) and the Economic Injury Disaster Loan (“EIDL’”) program.

6. Under the PPP, the CARES Act authorized up to $349 billion in forgivable loans
to small businesses for job retention and certain other expenses. Among other increases in PPP
funding, in or around April 2020, Congress authorized over $300 billion in additional PPP funding.

% In order to obtain a PPP loan, a qualifying business had to submit a PPP loan
application signed by an authorized representative of the business. The PPP loan application
required the business (through its authorized representative) to acknowledge the program rules and
make certain affirmative certifications in order to be eligible to obtain the PPP loan. In the PPP
loan application, the small business (through its authorized representative) had to state, among
other things, its: (a) average monthly payroll expenses; and (b) number of employees. These
figures were used to calculate the amount of money the small business is eligible to receive under
the PPP. In addition, businesses applying for a PPP loan had to provide documentation to the
lending institution showing their payroll expenses. Typically, businesses would supply documents
showing the amount of payroll taxes reported to the Internal Revenue Service (“IRS”).

8. A PPP loan application had to be processed by a participating lender. Ifa PPP loan
application was approved, the participating lender funded the PPP loan using its own monies,

which were 100% guaranteed by the U.S. Small Business Administration (“SBA”). Data from the

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application, including information about the borrower, the total amount of the loan, and the listed
number of employees, was transmitted by the lender to the SBA in the course of processing the
loan.

9, PPP loan proceeds had to be used by the business on certain permissible expenses—
payroll costs, interest on mortgages, rent, and utilities. The PPP allowed the interest and principal
on the PPP loan to be entirely forgiven if the business spent the loan proceeds on these expense
items within a designated period of time after receiving the proceeds and used a certain amount of
the PPP loan proceeds on payroll expenses.

10. The EIDL program is an SBA program that provides low-interest financing to small
businesses, renters, and homeowners in regions affected by declared disasters.

11. The CARES Act authorized the SBA to provide EIDLs of up to $2 million to
eligible small businesses experiencing substantial financial disruption due to the COVID-19
pandemic. In addition, the CARES Act authorized the SBA to issue advances of up to $10,000 to
small businesses within three days of applying for an EIDL. The amount of the advance was
determined by the number of employees the applicant certified having. The advances did not have
to be repaid. EIDL applications are submitted directly to the SBA and processed by the agency or
designated contractor. In order to obtain an EIDL and advance, a qualifying business had to submit
an application to the SBA and provide information about its operations, such as the number of
employees, gross revenues for the 12-month period preceding the disaster, and cost of goods sold
in the 12-month period preceding the disaster. The applicant must also certify that all of the
information in the application is true and correct to the best of the applicant’s knowledge. EIDL
funds can be used as working capital to make regular payments for operating expenses, including

payroll, rent/mortgage, utilities, and other ordinary business expenses, and to pay business debt

Case 1:22-cr-20529-KMM Document 1 Entered on FLSD Docket 08/09/2022 Page 6 of 22

incurred at any time.

12. EIDL applications were submitted directly to the SBA and processed by the SBA
with support from a government contractor. All EIDL-related payments are processed by the SBA
from Denver, Colorado.

OVERVIEW OF HERNANDEZ’S CONSPIRACY

[3. HERNANDEZ was the South Florida Retail Market Manager for Bank 1, one of
the nation’s largest retail banks. When the PPP program began, HERNANDEZ oversaw over 80
bank employees and approximately 27 bank branches. One Bank 1 document referred to him as
the “second highest point of escalation [and] contact” within South Florida.

14. From the inception of the PPP process, HERNANDEZ abused his position within
the bank to defraud the U.S. government, his employer, and another leading national bank, Bank
2, for his personal gain. HERNANDEZ conspired with bank customers, a former Bank 1
employee, and others to submit over 90 false and fraudulent PPP loan applications at Bank 1 and
Bank 2. HERNANDEZ recruited applicants to apply for PPP loans; connected applicants with co-
conspirators who could help provide false and fraudulent documentation; and used his position at
the bank to try to ensure that certain applications were reviewed and approved. Importantly,
HERNANDEZ also advised applicants on how to launder the loan proceeds to shield the fraud
from detection. In return, HERNANDEZ received a commission on every loan issued.

15. HERNANDEZ did not stop at PPP loans. He also conspired with others to submit
false and fraudulent EIDL applications with the SBA. HERNANDEZ again received a

commission on every EIDL issued.

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16. HERNANDEZ’s conspiracy attempted to defraud the PPP program out of more
than $30 million and the EIDL program out of more than $7 million. To date, the investigation
has identified over $15 million in fraudulent loans issued.

Background

17. HERNANDEZ was a resident of Miami-Dade County in the Southern District of
Florida. He began working for Bank 1 in approximately September 2015. Prior to working at
Bank 1, he worked at Bank 2.

18. Conspirator 1 conspired with HERNANDEZ to apply for, and receive, three false
and fraudulent PPP loans on behalf of two Miami-based entities that he controlled, netting over
$800,000 in fraud proceeds. Conspirator 1 also recruited applicants to apply for false and
fraudulent PPP loans through HERNANDEZ on behalf of entities they controlled. Conspirator 1,
HERNANDEZ, and their co-conspirators submitted over 20 false and fraudulent applications,
netting nearly $5.5 million in fraud proceeds.

19. Conspirator 2 worked with HERNANDEZ and Conspirator 3 to file over 40 false
and fraudulent PPP loan applications on behalf of co-conspirators’ companies. Conspirator 2
recruited applicants; submitted fraudulent applications on co-conspirators’ behalf; directed co-
conspirators on how to apply; and worked with HERNANDEZ and Conspirator 3 to help have the
applications reviewed and approved. When a loan was issued to a company that Conspirator 2
recruited, Conspirator 2 personally received a portion of the loan proceeds and shared a portion,
at HERNANDEZ’s direction, in U.S. currency with HERNANDEZ and/or Conspirator 3.

20. Conspirator 3 was a former employee of Bank 1. His employment with the bank
was terminated in approximately January 2021 after he submitted, at Bank 1, two false and

fraudulent PPP loan applications on behalf of entities he controlled. HERNANDEZ recruited

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Conspirator 3 into the conspiracy knowing that Conspirator 3 had been dismissed for engaging in
PPP fraud. In furtherance of the conspiracy, Conspirator 3 used his banking expertise to, inter
alia, (1) help HERNANDEZ open accounts at Bank 1 for co-conspirators who then applied for
fraudulent PPP loans; (i1) advise Conspirator 2 on how best to respond to requests for additional
information from Bank 1 employees concerning fraudulent PPP loan applications; and (iii) monitor
the status of fraudulent loan applications that co-conspirators submitted. Conspirator 3 also
submitted false and fraudulent EIDL applications on behalf of co-conspirators. As described more
fully below, Conspirator 3 maintained a spreadsheet listing over 80 fraudulent PPP loan
applications and over 50 fraudulent EIDL applications that he, HERNANDEZ, and Conspirator 2
worked on. Conspirator 3 received a portion of every successful loan application he worked on,
and gave HERNANDEZ the same.

21. Banks 1 and 2 are financial institutions federally insured by the FDIC. Bank 1 is
headquartered in New Jersey. Bank 2 is headquartered in North Carolina. Both banks participated
in the SBA’s PPP as lenders and, as such, were authorized to lend funds to eligible borrowers
under the terms of the PPP.

HERNANDEZ CONSPIRED WITH CONSPIRATOR 1 TO
OBTAIN APPROXIMATELY 21 FALSE AND FRAUDULENT PPP LOANS

22. According to Conspirator 1, Conspirator 1 met HERNANDEZ prior to the PPP
program when HERNANDEZ helped Conspirator 1 obtain a line of credit for one of Conspirator
1’s businesses. At HERNANDEZ’s request, Conspirator 1 paid HERNANDEZ a commission for
the line of credit in U.S. currency. Conspirator 1 handed HERNANDEZ the commission inside
HERNANDEZ’s office in a Bank 1 branch in the Miami neighborhood of Brickell.

48 A According to Conspirator 1, in early 2020, HERNANDEZ notified Conspirator 1

of the PPP program and instructed him how to apply online. Based on WhatsApp messages

Case 1:22-cr-20529-KMM Document 1 Entered on FLSD Docket 08/09/2022 Page 9 of 22

between HERNANDEZ and Conspirator 1 that Conspirator 1 provided to law enforcement,
HERNANDEZ texted Conspirator 1 photographs of what appeared to be internal Bank 1
documents identifying what documents were required to prove an applicant’s payroll. Conspirator
1 texted HERNANDEZ at a phone number ending in 4035 (the “HERNANDEZ Cell Phone
Number’). That number is displayed as HERNANDEZ’s in HERNANDEZ’s signature block in
his Bank 1 email account.

24. HERNANDEZ and Conspirator 1 agreed that Conspirator 1 would submit
applications online and HERNANDEZ would work to have the applications reviewed and
approved by specific bank employees. In certain circumstances, HERNANDEZ would help
applicants open an account at Bank 1 prior to the submission of an application. Conspirator 1
would review every application with HERNANDEZ prior to submission and notify
HERNANDEZ whenever applications were submitted. Conspirator 1 was to submit applications
on behalf of entities he controlled; recruit others on whose behalf he would apply; and help
HERNANDEZ with applicants that HERNANDEZ referred to Conspirator 1.

23% According to Conspirator 1, HERNANDEZ advised Conspirator 1 how much to
request in loan proceeds independent of a company’s actual finances. Further, HERNANDEZ
wanted to be notified when an application was submitted so that he could direct its review to
someone HERNANDEZ trusted. HERNANDEZ and Conspirator 1 would charge each applicant
a fee in return for their services. According to Conspirator 1, HERNANDEZ initially charged
12%, but increased it to 15%.

26. According to Conspirator 1, HERNANDEZ had a very specific and clear

requirement for all applicants they worked with: after receiving the loan proceeds, the applicant

Case 1:22-cr-20529-KMM Document1 Entered on FLSD Docket 08/09/2022 Page 10 of 22

had to transfer the loan proceeds out of Bank 1 so that Bank 1 could not trace how the funds were
used.

21: In April, May, and June 2020, Conspirator 1 submitted approximately 21
applications at HERNANDEZ’s direction. Bank 1 records, corporate emails, Conspirator 1’s own
emails, obtained pursuant to a search warrant, and copies of WhatsApp messages, confirm
Conspirator 1’s account. For example:

- On approximately April 10, 2020, Conspirator 1 emailed HERNANDEZ, at his Bank

1 email account, information concerning Florida Entity 1 and a copy of the driver’s
license of Florida Entity 1’s owner. HERNANDEZ forwarded Conspirator 1’s email
to a Bank 1 employee but deleted all references to Conspirator 1. That Bank 1
employee immediately opened an account at Bank 1 in the name of Florida Entity 1
and ending in 9148 (“Account 9148”).

- Two days later, approximately Sunday, April 12, 2020, Conspirator 1 texted
HERNANDEZ, at the HERNANDEZ Cell Phone Number, that Conspirator 1 was
planning to submit PPP applications on behalf of three companies, including Florida
Entity 1.

- That same day, HERNANDEZ replied, “Llamame[.]” (English translation: Call me.)

- Approximately that same day, Conspirator 1 submitted a false and fraudulent PPP loan
application on behalf of Florida Entity 1. Despite the fact that the company had not
reported any employment activity with the Florida Department of Revenue, as all
Florida-based employers are required to do, and had not filed a single tax return with
the IRS, the PPP loan application stated that the company had 27 employees and had

an average monthly payroll of $210,600.

Case 1:22-cr-20529-KMM Document1 Entered on FLSD Docket 08/09/2022 Page 11 of 22

- Later that same day, at approximately 9:28 p.m., HERNANDEZ and Conspirator 1
texted about the proprietor of Florida Entity 1’s Instagram account.

- Minutes later, at approximately 10:09 p.m., HERNANDEZ used his Bank 1 email
account to email Bank 1 employee “N.A.” and ask that she complete reviewing the PPP
application for Florida Entity 1 and notify HERNANDEZ when complete.

- Approximately the following day, April 13, 2020, N.A. emailed HERNANDEZ,
“DONE.”

- Onapproximately April 20, 2020, Florida Entity 1 received $526,500 in fraud proceeds
into Account 9148.

- On approximately April 28, 2020, the proprietor of Florida Entity 1 transferred
$480,000 of the $526,500 loan to a newly opened account in the name of Florida Entity
1 at Bank 3.

28. Of the 21 companies for whom Conspirator 1 and HERNANDEZ obtained PPP
loans, not a single one had reported to the Florida Department of Revenue the same number of
employees listed in their respective PPP loan application. At the time their PPP loans were
submitted, only one of the 21 entities had reported any employment activity at all. That applicant
reported a single employee; in its PPP loan application, that same company stated that it had 16
employees.

29. To date, the investigation has received information from the IRS concerning eight
of the 21 applicants. That information establishes that all eight applicants included at least one
false and fraudulent IRS tax form in their respective PPP loan application. Information requests

concerning the remaining 13 entities are pending.

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30. Further, nearly all of the applicants, pursuant to HERNANDEZ’s requirement,
quickly transferred the majority of loan proceeds out of Bank 1. For example:

- Florida Entity 2 received a fraudulent $232,500 PPP loan from Bank 1 on
approximately April 20, 2020, and wire transferred $202,500 out of the account on
approximately April 23, 2020.

- Florida Entity 3 received a fraudulent $396,000 PPP loan from Bank 1 on
approximately April 20, 2020, and wire transferred $337,000 out of the account on
approximately April 23, 2020.

- Florida Entity 4 received a fraudulent $414,000 PPP loan from Bank 1 on
approximately April 20, 2020, and wire transferred $370,000 out of the account on
approximately April 24, 2020.

- Florida Entity 5 received a fraudulent $232,500 PPP loan from Bank 1 on
approximately April 20, 2020, and wire transferred $209,250 out of the account on
approximately April 27, 2020.

Jl. According to Conspirator 1, Conspirator 1 received his and HERNANDEZ’s
commission in U.S. currency from each applicant. Conspirator 1 then delivered the commission
to HERNANDEZ. HERNANDEZ visited Conspirator 1’s apartment twice to pick-up
commissions, and Conspirator 1 visited HERNANDEZ at HERNANDEZ’s home numerous times.
According to Conspirator 1, while Conspirator 1 was in the doorway of HERNANDEZ’s home
dropping off a commission, a Bank 1 employee arrived. HERNANDEZ walked outside and gave
the employee at least a portion of the commission. HERNANDEZ returned to Conspirator 1 and

told Conspirator 1 something to the extent that that employee was always on drugs.

10

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HERNANDEZ Tried to Charge Applicants to Have Their PPP Loans Forgiven

32, In approximately June 2020, news articles began to circulate regarding the
forgiveness aspect of the PPP process. According to Conspirator 1, HERNANDEZ wanted to
charge their applicants an additional fee to have their loans forgiven. Conspirator 1 objected,
arguing that was unfair to the applicants. HERNANDEZ reportedly responded by saying
something to the extent that the applicants were already receiving more money than they were
entitled to.

33. In light of their disagreement, HERNANDEZ and Conspirator 1 stopped working
with each other in approximately June 2020.

HERNANDEZ RECRUITED CONSPIRATOR 2 INTO THE CONSPIRACY

34. According to Conspirator 2, HERNANDEZ and Conspirator 2 met in
approximately 2017 or 2018 when Conspirator 2 received a line of credit from Bank 1. Conspirator
2 paid HERNANDEZ a percentage of the loan in U.S. currency as compensation for his assistance.

35. Soon thereafter, Conspirator 2 began recruiting others to receive lines of credit from
HERNANDEZ at Bank 1. HERNANDEZ reportedly gave Conspirator 2 a commission in U.S.
currency for each line of credit Conspirator 2 directed towards HERNANDEZ.

36. According to Conspirator 2, after passage of the CARES Act, HERNANDEZ called
Conspirator 2 and offered to help him obtain a PPP loan at Bank 1. HERNANDEZ explained to
Conspirator 2 how the PPP program worked and what supporting documentation Conspirator 2
would need to get a loan. Conspirator 2 told HERNANDEZ that Conspirator 2’s company, Florida
Entity 6, did not have employees, payroll, or other items necessary to apply. HERNANDEZ said
that that would not be a problem. HERNANDEZ provided Conspirator 2 with Conspirator 1’s
name and telephone number, and said that Conspirator 1 could help Conspirator 2 get the required

documentation. Conspirator 2 saved Conspirator 1’s phone number, ending in 7985, in his phone

11

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as “[Misspelling of Conspirator 1’s First Name] Daniel Prestamo Sba [Bank 1].” “Daniel” is
HERNANDEZ’s first name. “Prestamo” is Spanish for loan and “Sba” refers to the SBA, the
guarantor of all PPP loans. ‘[Bank 1]’” was HERNANDEZ’s employer.

37. Following HERNANDEZ’s instructions, on approximately April 12, 2020,
Conspirator 1 emailed Conspirator 2 a false and fraudulent PPP loan application on behalf of
Florida Entity 6. The application sought $252,000 in loan proceeds and included six false and
fraudulent Internal Revenue Service (“IRS”) tax returns to support the application.! At the time,
Florida Entity 6 did not have a single employee.

38. Approximately two days later, April 14, 2020, HERNANDEZ, using his Bank 1
email account, emailed Conspirator 2 a link where Conspirator 2 could upload his PPP loan
application for submission.

39. Conspirator 2 initially submitted the application at Bank 1, but soon withdrew it.
He agreed with HERNANDEZ, however, to find other applicants and, at HERNANDEZ’s
direction, have them apply for PPP loans on behalf of entities that they controlled.

40. And that is what HERNANDEZ and Conspirator 2 did. Over the following four
months in 2020, Conspirator 2 helped at least 11 entities submit at least 11 false and fraudulent
PPP loan applications. Many of the applications sought exactly $252,000, the exact amount sought
in the fraudulent PPP loan application Conspirator 2 received from Conspirator 1, or a multiple
thereof.

41. For example, Conspirator 2 worked with Willian Alexander Posada Sandrea

(“Posada”) to submit a false and fraudulent PPP loan application at Bank 1 on behalf of Autenticos

‘In May 2021, then Chief United States Magistrate Judge O’ Sullivan issued a search warrant for
Conspirator 1’s email account.

12

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Autos Sales Corp. (“Autenticos Autos”), a Miami-based entity that Posada controlled. The
application requested $504,000, exactly twice the amount requested in the application that
Conspirator 1 prepared for Conspirator 2.

42. On approximately May 4, 2020, HERNANDEZ used his Bank 1 email account to
as Bank 1 employees “J.E.” to try and approve Autenticos’s outstanding loan application. The
loan was subsequently approved and Posada received $504,000 in fraud proceeds.

43. On July 20, 2022, Posada pled guilty to conspiracy to commit bank fraud in
violation of 18 U.S.C. §§ 1344, 1349. See Minute Entry, United States v. Willian Alexander
Posada Sandrea, 22-20194-CR-MARTINEZ (S.D. Fla. July 20, 2022).

44. According to Conspirator 2, Conspirator 2 paid HERNANDEZ approximately ten
percent of the fraud proceeds that his recruits received. Conspirator 2 picked up the commission
in U.S. currency from the applicants and paid HERNANDEZ his share of the proceeds in person
in U.S. currency.

HERNANDEZ RECRUITED CONSPIRATOR 3 INTO THE CONSPIRACY
AFTER CONSPIRATOR 3 WAS FIRED FOR ENGAGING IN PPP FRAUD

45. On approximately January 14, 2021, the SBA and Treasury Department made
available to the public additional PPP funds to allow eligible borrowers to receive a second PPP
loan.

46. That same day, Conspirator 2 texted HERNANDEZ a link, via WhatsApp, to a
press release announcing the re-opening of the PPP.? Conspirator 2 added, “Ya tengo los soldados

listos jaja.” (English translation: I already have the soldiers ready. Haha.) HERNANDEZ replied

2 Co-Conspirator 1 provided law enforcement photographs of text messages he exchanged with
HERNANDEZ over WhatsApp.

13

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with a thumbs-up emoji.

47. Conspirator 2 and HERNANDEZ continued to text each other that evening:

CONSPIRATOR 2: “Espero las condiciones y listo[.]” (English translation: I

wait for the conditions and ready[.])

HERNANDEZ: “Majfiana.” (English translation: Tomorrow.)

CONSPIRATOR 2: “Y con cualquier banco no[,]” (English translation: And with

any bank, no?)

HERNANDEZ: 100%

CONSPIRATOR 2: “Bellizimooooo[.] Este es nuestro afio[.]” (English

translation: Beautifulllll[.] This is our year[.]’)

HERNANDEZ: “110%[.]”

HERNANDEZ Recruited Conspirator 3 into the Conspiracy

A8. HERNANDEZ served as Conspirator 3’s supervisor prior to Conspirator 3’s
dismissal from the bank. According to Conspirator 3, HERNANDEZ participated in discussions
at the bank regarding the fraudulent PPP loan applications Conspirator 3 had submitted and
therefore knew the basis for Conspirator 3’s dismissal. Knowing this, HERNANDEZ recruited
Conspirator 3 into the conspiracy in approximately January 2021.

49. According to Conspirator 3, HERNANDEZ told Conspirator 3 that Conspirator 2
would be in touch with a business proposal. Conspirator 3 said that one of the reasons
HERNANDEZ recruited Conspirator 3 into the conspiracy was because HERNANDEZ did not

Oo
want to be directly involved in the process and wanted to protect himself.

50. On approximately January 22, 2021, HERNANDEZ, via WhatsApp, provided
Conspirator 2 with Conspirator 3’s phone number. Conspirator 2 saved the number in his phone
as “[Conspirator 3’s First Name] Daniel Sba.” “Daniel” is HERNANDEZ’s first name and “Sba”
refers to the SBA, the guarantor of all PPP loans and processor of the EIDL program.

51. In furtherance of the conspiracy, Conspirator 3 worked on filing fraudulent EIDL

applications and assisting with false and fraudulent PPP loan applications submitted at Bank 1.

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Conspirator 3 Kept a List of the Conspiracy’s Loan Applications

Da, On approximately January 27, 2020, Conspirator 2 texted Conspirator 3 several
photographs of filled-out forms titled “Economic Disaster Relief Program,” along with one or
more driver’s licenses and social security cards. The forms, which included information about
certain companies’ revenue, payroll, and number of employees, appeared to constitute information
Conspirator 3 would use to submit EIDL applications online. Upon receiving the messages, and
in light of how many applications were being submitted overall, Conspirator 3 replied, “Wow].]
Lol. Menos mal que tengo un Excel para tener control. [Smiling face emoji.]” (English translation:
Wow. Lol. Good thing I have an Excel to have control.)

53. In approximately May 2021, then Chief Magistrate Judge John J. O’ Sullivan issued
a search warrant for one of Conspirator 3’s email accounts. A review of responsive material
identified a workbook that De Leon maintained that listed over 50 EIDL applications and over 80
PPP applications. One spreadsheet, titled “Master,” listed the “Business Name,” “Owners [sic]

2

Name,” and “Loan # [Number]” for each EIDL application the conspiracy worked on. The
spreadsheet also had an entry for who referred the applicant to the conspiracy, for example
HERNANDEZ, Conspirator 2, Conspirator 3, or someone else. The spreadsheet also had an entry
for “Fee %,” the amount the conspiracy was to charge the applicant should the loan go through.
54. On approximately January 27, 2021, HERNANDEZ, using the email address
dhsh72@gmail.com, forwarded to Conspirator 3 three filled-out “Economic Disaster Relief
Program” forms. The forms contained information about three entities controlled by the same
individual. Conspirator 3 subsequently filed identical fraudulent EIDL applications on behalf of

two of the entities and recorded the applications on his spreadsheet. Neither application was

approved.

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Case 1:22-cr-20529-KMM Document1 Entered on FLSD Docket 08/09/2022 Page 18 of 22

55. On another spreadsheet, titled “PPP,” Conspirator 3 recorded information for over
80 PPP loan applications filed at Bank 1, including the “Loan #,” “Req[uested] Amount,” “Fee
%,” and who at Bank 1 was reviewing the loan. This latter field was titled “Decision” and
populated with numerous Bank 1 employees.

56. Conspirator 3 told law enforcement that the loans listed on the spreadsheets were
fraudulent. He said that the purported business owners were just trying to get “free money” before
the program expired.

ST. Conspirator 3 said that he reviewed the spreadsheet with HERNANDEZ at least
once. On one occasion, Conspirator 3 brought his own laptop to HERNANDEZ’s home, printed
out the spreadsheets from HERNANDEZ’s color printer, and reviewed the spreadsheet with
HERNANDEZ. Conspirator 3 subsequently deleted the spreadsheets at HERNANDEZ’s
direction.?

58. In their text messages, Conspirators 2 and 3 were explicit regarding the fraudulent
nature of the applications. For example, on approximately February 10, 2021, regarding the
submission of certain PPP loan applications at Bank 1, Conspirator 3 texted Conspirator 2 over
WhatsApp, “Recuerda de tratar de enviar los estados de cuentas de [Bank 4] al menos que sean
reales de [Bank 2]. Si se puede enviar tax returns para las excepciones seria perfecto ya que los
taxes no lo pueden verificar.” (English translation: Remember to try to send [Bank 4] account
statements unless they are real from [Bank 2]. If tax returns can be sent for exceptions it would

be perfect as the taxes cannot be verified.)

3 Law enforcement preserved a copy of the email account in which the spreadsheets were saved
prior to Conspirator 3’s deletion. Law enforcement subsequently obtained a copy of the
spreadsheets pursuant to a search warrant.

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Case 1:22-cr-20529-KMM Document1 Entered on FLSD Docket 08/09/2022 Page 19 of 22

59. Conspirators 2 and 3 referenced HERNANDEZ often throughout their text
messages. For example:

a. On approximately January 25, 2021, Conspirator 2 sent Conspirator 3 photographs
of one or more “Economic Disaster Relief Program” forms along with someone’s
driver’s license and social security card. Conspirator 2 wrote, “Ahi tienes tres mas
... Se las mande a Daniell.]” (English translation: Here you have three more...
I sent them to Daniel[.]) “Daniel” refers to HERNANDEZ.

b. On January 29, 2021, Conspirator 3 texted, “Me lo envio Danny con un grupo de
los tuyos. Pens[é] que estaban todos juntos. Dejame ver a Danny entonces.”
(English translation: Danny sent it to me with a group of yours. I thought that they
were all together. Let me see Danny then.) “Danny” refers to HERNANDEZ.

c. On February 5, 2021, regarding how to respond to a Bank 1 employee’s questions
about a fraudulent PPP application, Conspirator 3 texted, “. . . Madasela a ella.
Tengo a Danny revisando las aplicaciones ahora mismo conmigo[.|” (English
translation: Send it to her [ie., the Bank 1 employee]. I have Danny
revising/reviewing the same applications with me.) “Danny” refers to
HERNANDEZ.

d. On February 23, 2021, Conspirator 3 texted,“Estoy con Danny mirando todas. Pero
estamos también en el teléfono con un jefe grande[.]” (English translation: I am
with Danny looking at all of them. But we are also on the phone with a big boss.)
“Danny” refers to HERNANDEZ.

As Bank 1 Began Asking Questions, HERNANDEZ Tried to Evade Bank Detection

60. In approximately March 2021, Bank 1 employees began investigating certain PPP

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Case 1:22-cr-20529-KMM Document1 Entered on FLSD Docket 08/09/2022 Page 20 of 22

loan applications that Conspirator 2 had filed at HERNANDEZ’s direction. The bank froze at
least one account that had received one of the conspiracy’s loans. As a result, HERNANDEZ,
Conspirator 2, and Conspirator 3 spoke multiple times a day to strategize how to evade detection.

61. HERNANDEZ told Conspirators 2 and 3 that the bank would not contact law
enforcement if it did not sustain a financial loss on any of the suspicious loans. Consequently,
HERNANDEZ directed Conspirator 2 to tell the applicants to try and return the loan proceeds of
any loan where the corresponding bank account was frozen. Conspirator 2 recorded numerous
calls between himself, HERNANDEZ, and/or Conspirator 3, and provided copies to law
enforcement. HERNANDEZ stated on the calls that he would return his commission to ensure
that the applicants paid back the loans in full so that law enforcement would not be involved.

62. Throughout the calls, HERNANDEZ was adamant that the bank could not find out
about his involvement in the conspiracy. In one telephone call, HERNANDEZ and Conspirator 2
discussed an individual whom HERNANDEZ referred to Conspirator 2 (and who had received
three false and fraudulent PPP loans totaling approximately $882,000). During the call,
HERNANDEZ told Conspirator 2 that HERNANDEZ could not tell bank investigators the truth
concerning the loans: “Si, no, no le puedo decir que sé detalles, huev6n. Si digo que sé detalles,
no jodas. [se rie] Me tiro del barranco.” (English translation: If I say that I knew details, fuck.
[laughs] Might as well jump off of a cliff.)

63. In sum, for roughly one year, HERNANDEZ agreed with Conspirator 1,
Conspirator 2, Conspirator 3, and others, to knowingly submit false and fraudulent PPP and EIDL
loan applications. As described above, the evidence of HERNANDEZ’s knowledge of the fraud
includes:

a. HERNANDEZ instructed Conspirator 1 on how large of a PPP loan to apply for

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Case 1:22-cr-20529-KMM Document1 Entered on FLSD Docket 08/09/2022 Page 21 of 22

independent of an applicant’s actual finances;

b. HERNANDEZ directed Conspirator 1 to notify HERNANDEZ when PPP loan
applications were submitted so that HERNANDEZ could direct which Bank 1
employees reviewed the application;

c. HERNANDEZ required that certain applicants transfer their loan proceeds out of
Bank 1 accounts so that Bank 1 could not trace the applicants’ use of the proceeds;

d. HERNANDEZ encouraged Conspirator 2 to apply for a PPP loan knowing
Conspirator 2 did not have employees and other items necessary to apply;

e. HERNANDEZ directed Conspirator 2 to work with Conspirator 1, who
subsequently prepared a fraudulent PPP loan application on behalf of Conspirator
2’s company;

f. HERNANDEZ recruited Conspirator 3 into the conspiracy knowing that
Conspirator 3 had just been dismissed from Bank 1 for engaging in PPP fraud;

g. HERNANDEZ used his personal email account to forward to Conspirator 3 EIDL
application forms containing false and fraudulent information, which Conspirator
3 used to file additional fraudulent applications;

h. HERNANDEZ received tens of thousands of dollars in cash for assisting PPP and
EIDL applicants to fraudulently obtain loan proceeds;

i. HERNANDEZ took steps to conceal his involvement in the conspiracy, even
directing conspirators to destroy evidence of the fraud, and actively sought to
prevent Bank 1 from notifying law enforcement of at least some of the loans

obtained by the conspiracy.

1?

Case 1:22-cr-20529-KMM Document 1 Entered on FLSD Docket 08/09/2022 Page 22 of 22

CONCLUSION

64. Based on my training and experience, and the information provided in this affidavit,
I respectfully submit that there is probable cause to believe that:

From in or around April 2020, and continuing through in or around March 2021, in Miami-Dade
County, in the Southern District of Florida, and elsewhere, the defendant, DANIEL
HERNANDEZ, did willfully, that is, with intent to further the object of the conspiracy, and
knowingly combine, conspire, confederate, and agree with Conspirator 1, Conspirator 2,
Conspirator 3, and others, to commit an offense against the United States, that is, to knowingly
execute, and cause the execution of, a scheme and artifice to defraud one or more financial
institutions, including Banks 1 and 2, which scheme and artifice did employ a material falsehood,
and knowingly, and with intent to defraud, execute, and cause the execution of, a scheme and
artifice to obtain money and funds owned by, and under the custody and control of, one or more
financial institutions, by means of false and fraudulent pretenses, representations, and promises,
relating to a material fact, in violation of Title 18, United States Code, Sections 1344(1) and (2),
and 1349.

FURTHER YOUR AFFIANT SAYETH NAUGHT

Ord Bast
David Brant
Federal Deposit Insurance Corporation

Office of Inspector General
Special Agent

Attested to by the a ant in accordance with the requirements of Fed. R. Crim. P. 4.1 by
telephone on this day of August, 2022, in Miami, Florida.

HONOPABLE EDWIN G. TORRES
CHIE¥Y UNITED STATES MAGISTRATE JUDGE

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