Indictment as to Calvin Butler (1) Count 1, 2. — United States v. Butler (Dkt. 5, S.D. W. Va.)

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U.S. District Court for the Southern District of West Virginia · No. 2:22-cr-00161 · Doc. 5 · 2022-08-23 · Docket on CourtListener

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UNITED STATES DISTRICT COURT FOR THE « FILED
SOUTHERN DISTRICT OF WEST VIRGINIA 7
CHARLESTON GRAND JURY 2022 ANG 4
August 23, 2022 Session 23.2022

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UNITED STATES OF AMERICA 1S Unstnat oui

Scuther. visu ul Wed. Vii yiiite

v. CRIMINAL NO. 2..22-cr~-cvol pl
18 U.S.C. § 1343

CALVIN BUTLER
ZN BLETHRSNE

The Grand Jury Charges:

INTRODUCTION

At all times material to this Indictment:

Lis The Coronavirus Aid, Relief, and Economic Security
("CARES") Act was a federal law enacted in or about March 2020,
designed to provide emergency financial assistance to the millions
who suffered economic effects caused by the COVID-19 pandemic.

2 Among other relief efforts, the United States sought to
provide financial support to eligible businesses that could be
used to offset certain business expenses.

3 The Small Business Administration ("SBA") was an
executive branch agency of the United States government that
provided support to entrepreneurs and small businesses. The SBA
was headquartered in Washington, D.C., and maintained its computer
servers in the State of Virginia. The SBA's mission was to maintain

and strengthen the nation's economy by enabling the establishment
and viability of small businesses and by assisting in the economic
recovery of communities after disasters.

4. As part of this effort, the SBA enabled and provided for
loans through banks, credit unions, and other lenders. These loans
had government-—backed guarantees.

5. One source of relief provided by the CARES Act was the
authorization of up to $349 billion in forgivable loans to small
businesses for job retention and certain other expenses, through
a program referred to as the Paycheck Protection Program ("PPP").
In or around April 2020, Congress authorized over $300 billion in
additional PPP funding.

6. 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 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 then used to calculate
the amount of money the small business was eligible to receive
under the PPP. In addition, a business applying for a PPP loan had

to provide documentation showing its payroll expenses.
7. A PPP loan application had to be processed by a
participating lender, such as a financial institution. If a PPP
loan was approved, the participating lender would fund the PPP
loan using its own monies, which were 100% guaranteed by the SBA.
Data from the application, including the 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.

8. The PPP loan proceeds were required to be used by the
business on certain permissible expenses, such as payroll costs,
interest on mortgages, rent, and utilities. The PPP allowed the
interest and principal of the PPP loan to be entirely forgiven if
the business spent the loan proceeds on these expense items within
a designated period of time and used a certain percentage of the
PPP loan proceeds on payroll expenses.

BACKGROUND

9. A company known to the Grand Jury (the “Tech Company”)
was a technology company that developed an online portal for
prospective PPP loan applicants to submit their PPP loan
application online. The Tech Company received PPP applications
and supporting documentation online utilizing servers in the state

of Virginia.
10. The Tech Company reviewed PPP applications and
determined on a case-by-case basis whether a PPP loan should be
granted. If a PPP loan application met the criteria for approval,
the Tech Company sent, and caused to be sent, the PPP loan
application to the SBA and a prospective third-party lender.

11. A lending institution known to the Grand Jury (the
“Lender”) was a non-bank finance company headquartered in Arizona
and was an SBA approved lender authorized to make loans as part of
the PPP.

12. The Lender authorized funding of approved PPP loans
through automatic clearing house (“ACH”) transfers directly to the
approved applicant’s bank account. The Lender utilized a bank
headquartered in State of Tennessee to initiate ACH transfers.

13. Defendant CALVIN BUTLER was a resident of Charleston,
Kanawha County, West Virginia, within the Southern District of
West Virginia. He claimed to own, as the sole proprietor, a barber
shop called Calvin Butler with a business address in Charleston,
Kanawha County, West Virginia.

14. Huntington National Bank was a financial institution as
defined in 18 U.S.C. § 20 with a headquarters in Columbus, Ohio,
and with branches throughout the Southern District of West
Virginia.

15. Defendant CALVIN BUTLER maintained a personal bank

account at Huntington National Bank.
THE SCHEME TO DEFRAUD

16. From on or about April 25, 2021, through on or about
June 7, 2022, at or near Charleston, Kanawha County, West Virginia,
and within the Southern District of West Virginia, defendant CALVIN
BUTLER, acting with the intent to defraud, did knowingly devise
and intend to devise a scheme and artifice to obtain money and
property from the SBA and the Lender, in connection with an
application for PPP funds, by means of materially false and
fraudulent pretenses, representations, and promises, with the
intent to defraud and with knowledge of the scheme’s fraudulent
nature.

17. It was the purpose of the scheme to defraud for defendant
CALVIN BUTLER to unjustly enrich himself by fraudulently obtaining
loan proceeds through the PPP.

MANNER AND MEANS OF THE SCHEME

18. It was part of the scheme that in early 2021 defendant
CALVIN BUTLER prepared, and caused to be prepared, a fraudulent
PPP loan application (the “Fraudulent PPP Loan Application”). The
Fraudulent PPP Loan Application included multiple materially false
and fraudulent representations and pretenses, such as:

a. The Fraudulent PPP Loan Application falsely claimed
that defendant CALVIN BUTLER operated a barber shop
as a sole proprietorship under the name Calvin

Butler.
b. The Fraudulent PPP Loan Application falsely
represented that Calvin Butler received $77,000 in
gross income in 2020.

c. The Fraudulent PPP Application falsely stated that
Calvin Butler was established in 2019 and in
operation on February 15, 2020.

d. The Fraudulent PPP Loan Application included a
false IRS Form 1040, Schedule C for the Profit or
Loss from a Business (“Form 1040%), for the year
2020. The Form 1040 again falsely stated that
Calvin Butler had earned $77,000 in 2020.

e. The Fraudulent PPP Loan Application fraudulently
affirmed the truth of the statements made in the
application.

19. In furtherance of the scheme, on or about April 25, 2021,
defendant CALVIN BUTLER submitted and caused to be submitted the
Fraudulent PPP Loan Application utilizing the Tech Company’s
online portal. Defendant CALVIN BUTLER did this despite knowing
the Fraudulent PPP Loan Application was false in material respects
and that he was not entitled to a PPP loan.

20. It was part of the scheme that on or about May 27, 2021,
after the PPP loan was provisionally approved, defendant CALVIN
BUTLER electronically signed and submitted, and caused to be

electronically signed and submitted, a note to the SBA as the owner
of the purported barber shop, even though he knew he did not own
a barber shop and that the submitted Fraudulent PPP Loan
Application contained information that was materially false.

21. In furtherance of the scheme, on or about June 7, 2021,
defendant CALVIN BUTLER received a $16,040 PPP loan deposited into
his Huntington National Bank account through an ACH transfer
authorized by the Lender and guaranteed by the SBA.

22. It was part of the scheme that defendant CALVIN BUTLER
used the fraudulently obtained funds to benefit himself personally
and not to pay legitimate business expenses. Examples of defendant
CALVIN BUTLER’S fraudulent transactions include:

a. On June 7, 2021, defendant CALVIN BUTLER withdrew
$5,000 cash from a Huntington National Bank branch
located in South Charleston, West Virginia.

b. On June 8, 2021, defendant CALVIN BUTLER withdrew
$5,000 cash from a Huntington National Bank: branch
located in South Charleston, West Virginia.

on On June 9, 2021, defendant CALVIN BUTLER withdrew
$5,000 cash a Huntington National Bank branch
located in South Charleston, West Virginia.

23. In this manner, from on or about April 25, 2021, through
on or about June 7, 2021, defendant CALVIN BUTLER defrauded the

SBA and the Lender out of approximately $16,040.
WIRE TRANSMISSIONS TO EXECUTE THE SCHEME TO DEFRAUD

24. On or about the dates listed below for each Count, at
or near Charleston, Kanawha County, West Virginia, in the Southern
District of West Virginia, and elsewhere, defendant CALVIN BUTLER,
having devised, the above-described scheme and artifice to defraud
the SBA and the Lender, and to obtain money and property by means
of materially false and fraudulent pretenses, representations, and
promises, and for the purpose of executing such scheme and
artifice, did knowingly transmit and cause to be transmitted by
means of wire communication in interstate commerce, the writings,
signs, signals, pictures, and sounds described below for each

count, each transmission constituting a separate count:

COUNT | APPROXIMATE INTERSTATE | ‘FROM
1 4/25/21 Electronic Dunbar, Kanawha / Virginia
submission of County, West
the Fraudulent Virginia
PPP Loan
Application.
2 6/7/21 Deposit of Tennessee South
$16,040. Charleston,
West
Virginia

All in violation of Title 18, United States Code, Section

1343.

NOTICE OF FORFEITURE

1. The allegations contained in this Indictment are hereby
re-alleged and incorporated by reference for the purpose of giving
notice of forfeiture pursuant to 18 U.S.C. §§ 981, 982 and 28
U.S.C. § 2461 {(c).

2. Notice is hereby given of 18 U.S.C. §§ 981, 982 and 28
U.S.C. § 2461 (c). Under Section 2461(c), criminal forfeiture is
applicable to any offenses for which forfeiture is authorized by
any other statute, including, but not limited to 18 U.S.C. §§ 981,
982 and all specified unlawful activities listed or referenced in
18 U.S.C. § 1956(c) (7), which are incorporated as to proceeds by
Section 981(a) (1) (C).

The following property is subject to forfeiture in accordance
with Section 982 and/or 2461 (c):

a. All property which constitutes or is derived from

proceeds of the violations set forth in this Indictment;

b. All property involved in such violations or traceable to

property involved in such violations; and

Cc. If, as set forth in 21 U.S.C. § 853(p), any property

described in (a) or (b) cannot be located upon the
exercise of due diligence, has been transferred or sold
to, or deposited with, a third party, has been placed
beyond the jurisdiction of the court, has been

substantially diminished in value, or has been
commingled with other property which cannot be divided
without aditiieulty, all other property of the
defendant’s to the extent of the value of the property

described in (a) and (b).
The following property is subject to forfeiture on one or
more grounds stated above: a forfeiture money judgment in the
amount of approximately $16,040, such amount constituting the

proceeds of the violations set forth in this Indictment.

WILLIAM S. THOMPSON
United States Attorney

By:
MO

M. AN BLACKWELL
Assistant United States Attorney

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