Court filing

Motion to Dismiss Counts One through Four of the Superseding Indictment — USA v. Crowther (Dkt. 41, M.D. Fla. No. 2:20-mj-01094, docketed in No. 2:20-cr-00114)

Filed November 13, 2020 in USA v. Crowther; one of 318 filings from this case.

Record facts

Court	U.S. District Court for the Middle District of Florida
Filed	2020-11-13

U.S. District Court for the Middle District of Florida · No. 2:20-cr-00114 · Doc. 41 · 2020-11-13 · Docket on CourtListener

Full text

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION

UNITED STATES

Criminal No. 2:20-cr-114-FTM-66MRM

CASEY DAVID CROWTHER

Defendant.
_____________________________/

DEFENDANT’S MOTION TO DISMISS COUNTS ONE THROUGH FOUR OF THE
SUPERSEDING INDICTMENT
OR, IN THE ALTERNATIVE, REQUEST A BILL OF PARTICULARS
AND SUPPORTING MEMORANDUM OF LAW

NOW COMES the Defendant, Casey David Crowther through undersigned counsel, and
respectfully moves this Honorable Court to dismiss Counts One through Four of the Superseding
Indictment [D.E. 32] against him pursuant to Federal Rules of Criminal Procedure 7(c) and
12(b)(3)(B). The Government fails to state an offense for which Mr. Crowther (“Crowther”) can
be prosecuted by fundamentally misinterpreting and misapplying the federal regulations that
govern the Paycheck Protection Program (“PPP”). In the alternative Crowther respectfully moves
this Court to direct the Government to file a bill of particulars in accordance with Rules 7(f) and
12(b) of the Federal Rules of Criminal Procedure. Specifically, Crowther requests that the
Government state the specific violation of the regulations governing the Coronavirus Aid, Relief,
and Economic Security Act (“CARES Act”) that Crowther allegedly violated. A bill of particulars
will adequately apprise Crowther of the scope of the Government’s allegations and allow Crowther
to prepare his defense and avoid unfair and prejudicial surprise at trial. Crowther incorporates the
below Memorandum of Law in support of his motion pursuant to Local Rule 3.01.

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REQUEST FOR ORAL ARGUMENT

Pursuant to Local Rule 3.01, Crowther respectfully requests that oral arguments be
scheduled on this Motion. Crowther does not anticipate more than one hour for argument.
WHEREFORE, as further set out in their accompanying memorandum of law, Crowther
respectfully moves the Court to dismiss Counts One through Four of the Superseding Indictment,
or in the alternative, respectfully moves the Court to direct the Government to file a bill of
particulars.
Respectfully Submitted,
/s/ Nicole H. Waid____
Nicole H. Waid, Esq.

FISHERBROYLES, LLP

2390 Tamiami Trail North, Suite 100

Naples, Florida 34103

Florida Bar # 0121720

Phone: (202) 906-9572

Fax: (239) 236-1360

Email: nicole.waid@fisherbroyles.com

/s/ Brian E. Dickerson
Brian E. Dickerson, Esq.

FISHERBROYLES, LLP

2390 Tamiami Trail North

Suite 100

Naples, Florida 34103

Florida Bar # 106615

Phone: (202) 570-0248

Fax: (239) 236-1360

Email: brian.dickerson@fisherbroyles.com

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MEMORANDUM OF LAW

I.
INTRODUCTION

The theory of fraud that the Government relies upon for Counts One through Four of the
Superseding Indictment is premised on the Government’s misunderstanding and misapplication of
the regulations that govern the CARES Act that was signed into law on March 27, 2020. The
Government’s misinterpretation of the standards and rules adopted by the Small Business
Administration (“SBA”) have created a legal deficiency in the Superseding Indictment as a matter
of law. As described below, the regulations require specific loan terms and loan forgiveness
requirements - the government summarily dismissed those legal requirements by prematurely
arresting Crowther and filing a Superseding Indictment that completely disregards the legislative
intent of the CARES Act.
The facts are not in dispute. For purposes of this Motion, Crowther stipulates that he:
• Was a resident of North Fort Myers and, Florida who served as president, director,
and registered agent of Target Roofing and Sheet Metal, Inc. (“Target Roofing”).
[D.E. 32, ¶1];
• Submitted a PPP loan application on or about April 7, 2020 and revised PPP loan
application on April 13, 2020 to the Lender and SBA. [See D.E. 32, p. 5 ¶11b];
• Certified that the PPP funds acquired would be used to retain workers and maintain
payroll or make mortgage [interest]1 payments, lease payments and utility
payments on behalf of Target Roofing. [See D.E. 32, p. 5 ¶11d];
• Caused the SBA to approve the PPP application and the SBA to issue

1 The Government misstates the regulation; the regulation states “mortgage interest payments.”
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$2,098,700.00 in PPP funds to the Lender, which the Lender deposited into an
account under the defendant’s control. [See D.E. 32, p. 5 ¶11e];
• Caused $100,000 to be transmitted via wire from the Lender account ending in 6781
in the name of Target Roofing to S.A. in connection with a $722,474.00 promissory
note. [See D.E. 32, p. 8 ¶2];
• Caused $689,417.00 to be transmitted via wire from the Lender account ending in
6781 in the name of Target Roofing to Sara Bay Marina in connection with the
defendant’s purchase of a 40’ Invincible Catamaran Boat [See D.E. 32, p. 8 ¶2];
The only dispute is that of a matter of law. The Superseding Indictment fails to specify
which regulations governing the CARES Act, if any, Crowther violated. The regulations
governing the CARES Act, as applied to the facts stipulated above for purposes of this Motion, do
not constitute a violation of the SBA Interim Final Rules. Without a violation of the regulations
governing the PPP, there is no sufficient legal basis for the Government’s theory of fraud.
Application of the regulations that govern the PPP also make it legally impossible for the
Government to prove that Crowther knowingly made false statements on his PPP application as
the designated time period “Covered Period”) within which Target Roofing was permitted to
make allowable expenses had yet to expire at the time of Crowther’s arrest.
Crowther certified that the PPP funds acquired would be used to retain workers and
maintain payroll or make mortgage interest payments, lease payments and utility payments on
behalf of Target Roofing. There is no factual dispute that Target Roofing retained employees and
maintained payroll during the Covered Period established by the CARES Act. The Government
has been in possession of these payroll records for months and knows that Target Roofing spent
well over the $2,098,700.00 in PPP loan proceed amounts to pay employees during the Covered
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Period. However, without taking into consideration this undisputed fact2 and remaining within the
four corners of the Superseding Indictment, the Government still cannot legally prove its case
because the arrest was premature. The regulations establishing the twenty-four (24) week Covered
Period3 do not require that specific funds for payroll be paid out of a specific account and they do
not designate when the allowable expenses need to be spent. For example, a company that received
PPP funds can spend the amount of the loan proceeds in the last week of the Covered Period and
still be eligible for forgiveness. Target Roofing submitted its PPP application on April 13, 2020
[D.E. 32, pg. 5(b)] and the loan was disbursed thereafter on April 14, 2020.4 Target Roofing had
until September 29, 2020 to spend the allotted loan amount on allowable expenses within the
twenty-four week Covered Period to qualify for forgiveness. Crowther was arrested and charged
via Complaint on September 3, 2020, prior to the end of the regulatory time period by which Target
Roofing was permitted to spend the amount of the loan proceeds for allowable expenses and
qualify for forgiveness. The Government simply cannot establish intent in light of their premature
arrest and based upon the current charges in Counts One through Four of the Superseding
Indictment in conjunction with the regulations that govern the CARES Act.
Moreover, the deadline for both loan repayment and the application for forgiveness,
pursuant to the PPP and established in the SBA Final Interim Rules, is not until 2021. Thus, at the

2 We understand we are bound to the four corners of the Superseding Indictment; however, it is important to note that
the Government provided the payroll records in discovery and should be able to stipulate to those records. Because
we understand that the Government is not required to do so, we do not rely on this fact (which clearly negates criminal
intent) for purposes of this Motion. See United States v. Zayas-Morales, 685 F.2d 1272 (11th Cir. 1982).
3 The Paycheck Protection Program Flexibility Act of 2020 amended the definition of ‘‘covered period’’ for a PPP loan
from ‘‘the period beginning on February 15, 2020 and ending on June 30, 2020’’ to ‘‘the period beginning on February
15, 2020 and ending on December 31, 2020. Paycheck Protection Program—Revisions to First Interim Final Rule, Fed.
Reg. Vol. 85, No. 116 (June 16, 2020). It also extended the loan forgiveness covered period from eight (8) weeks to
twenty-four (24) weeks from the date of loan disbursement. Id.
4 The exact date of disbursement is not reflected in the Superseding Indictment. For purposes of this Motion, we can
calculate the twenty-four-week time period from the April 13, 2020 application date providing Target Roofing until
September 28, 2020 to expend the allowable expenses for forgiveness.
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time of his arrest and the filing of the Superseding Indictment, the loan terms of Crowther’s PPP
loan were not due (no payments were required) and the eligibility period for filing a loan
forgiveness application had not yet opened. The Government cannot possibly prove a scheme or
intent to defraud when there has been no default on a loan, no loan forgiveness request filed, no
actual loss amount, no intended loss amount, no victim and no violation of any regulation that
governs the PPP.
More importantly, an expenditure that does not qualify for forgiveness is not per se illegal,
it is simply paid back by the borrower in due course pursuant to the terms of the loan with the
Lender. Without any allegations of misrepresentations in the Superseding Indictment pertaining
to qualifying requirements of the PPP loan application (ie. number of employees, payroll
calculations, etc.), the government cannot impute illegality on how a company accounts for the
PPP funds or when those funds are spent if those requirements are not found within the regulations
themselves. The Government can enforce the regulations, it cannot create them. For all of these
reasons, we respectfully request that Counts One through Four of the Indictment be dismissed.

II.
PAYCHECK PROTECTION PROGRAM REGULATIONS

The CARES Act was signed into law on March 27, 2020 after President Trump declared the
ongoing Coronavirus Disease 2019 (“COVID–19”) pandemic of sufficient severity and magnitude
to warrant an emergency declaration. SBA Paycheck Protection Program, Fed. Reg. Vol. 85, No.
73, pg. 20811 (April 25, 2020) (to be codified in 13 CFR Part 120). The SBA received funding
and authority through the Act to modify existing loan programs and establish a new loan program
to assist small businesses nationwide adversely impacted by the Covid-19 emergency. Id. Among
the provisions contained in the CARES Act are provisions authorizing SBA to temporarily
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guarantee loans under a new 7(a) loan program known as the PPP. Id at 20812. Loans guaranteed
under the PPP will be 100 percent (100%) guaranteed by the SBA, and the full principal amount
of the loans may qualify for loan forgiveness. Id.
Businesses were eligible for a PPP loan if the business had 500 or fewer employees and a
principal place of residence in the United States. Id. Under the PPP, the maximum loan amount
was the lesser of $10 million or an amount calculated using a payroll-based formula specified in
the Act. Id. The SBA’s funds were facilitated through low interest loans through federally insured
Lenders to the borrower. Id at 20813. The low-interest loan provided low cost funds to borrowers
to meet eligible payroll costs and other eligible expenses during this temporary period of economic
dislocation caused by the coronavirus. Id.
The SBA will forgive loans if all employee retention criteria are met and the funds are used for
eligible expenses. Eligible expenses include the following: i. payroll costs; ii. costs related to the
continuation of group health care benefits during periods of paid sick, medical, or family leave, and
insurance premiums; iii. mortgage interest payments; iv. rent payments; v. utility payments; vi. interest
payments on any other debt obligations that were incurred before February 15, 2020; and/or refinancing
an SBA EIDL loan made between January 31, 2020 and April 3, 2020. Id at 20814. The CARES Act
defines the term ‘‘payroll costs’’ broadly to include compensation in the form of salary, wages,
commissions, or similar compensation. SBA Paycheck Protection Program – Requirements – Loan
Forgiveness, Fed. Reg. Vol. 85, No. 105, pg. 33006 (June 1, 2020). Payroll costs paid or incurred
during the covered period are eligible for forgiveness. Id. A nonpayroll cost is eligible for
forgiveness if it was: i. paid during the covered period; or ii. incurred during the covered period
and paid on or before the next regular billing date, even if the billing date is after the covered
period. Id at 33007. In order to qualify for forgiveness, the borrower must submit documentation
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to aid in verifying payroll and nonpayroll costs as specified in the instructions to the Loan
Forgiveness Application Form. Id. Proof that the borrower has spent money on an eligible
expense any time during the Covered Period would qualify the borrower for forgiveness.
An expenditure that does not qualify for forgiveness is not per se illegal, it is simply paid back
by the borrower in due course pursuant to the terms of the loan agreement with the Lender. If [the
borrower] used PPP funds for unauthorized purposes, SBA will direct [the borrower] to repay those
amounts. Fed. Reg. Vol. 85, No. 73, pg. 20814. If you knowingly use the funds for unauthorized
purposes, you will be subject to additional liability such as charges for fraud. Id.
On June 5, 2020, the Paycheck Protection Program Flexibility Act of 2020 (Flexibility Act) was
signed into law, amending the CARES Act. This interim final rule revises SBA’s interim final rule
published in the Federal Register on April 15, 2020, by changing key provisions, such as the loan
maturity, deferral of loan payments, and forgiveness provisions, to conform to the Flexibility Act.
Paycheck Protection Program—Revisions to First Interim Final Rule, Fed. Reg. Vol. 85, No. 116 (June
16, 2020). Section 3(a) of the Flexibility Act amended the definition of ‘‘covered period’’ for a
PPP loan from ‘‘the period beginning on February 15, 2020 and ending on June 30, 2020’’ to ‘‘the
period beginning on February 15, 2020 and ending on December 31, 2020.’’ Id at 36309. It also
extended the loan forgiveness covered period from eight (8) weeks to twenty-four (24) weeks from
the date of loan disbursement. Id. The Flexibility Act also provides that a borrower shall use at
least 60 percent of the PPP loan for payroll costs to receive loan forgiveness during the Covered
Period. Id at 36310.
Section 3(c) of the Flexibility Act extended the deferral period on PPP loans. Id at 36310. If [a
borrower] submits to [the] lender a loan forgiveness application within 10 months after the end of
[the] loan forgiveness covered period, [the borrower] will not have to make any payments of
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principal or interest on [the] loan before the date on which SBA remits the loan forgiveness amount
on [the] loan to [the borrower’s] lender (or notifies your lender that no loan forgiveness is allowed).
Id. If [the borrower] does not submit to [the] lender a loan forgiveness application within 10
months after the end of [the] loan forgiveness covered period, [the borrower] must begin paying
principal and interest after that period. For example, if a borrower’s PPP loan is disbursed on June
25, 2020, the 24-week period ends on December 10, 2020. If the borrower does not submit a loan
forgiveness application to its lender by October 10, 2021, the borrower must begin making
payments on or after October 10, 2021. Id. Thus, the deadline to apply for forgiveness and the loan
repayment date are both scheduled in 2021.
Since the inception of the CARES Act, the SBA has issued twenty-five (25) Interim Final Rules
related to the PPP. Although the regulations are continually changing, one thing is perfectly clear:
businesses that spend the amount of money loaned to the business pursuant to the PPP on payroll, or
other allowable expenses, qualify for forgiveness of the loan5. The regulations governing the PPP do
not require segregation of PPP loan proceeds into a separate bank account. The regulations do not
prohibit the commingling of loan proceeds with business operating funds; the PPP proceeds are
not specifically “earmarked” by the SBA or the Lender for use by the Company. The regulations
do not require that a borrower utilize the funds in the first week or the last week of the Covered
Period, as long as the amount of money loaned to the business is utilized on payroll or other
allowable expenses at any time during the Covered Period, the borrower qualifies for forgiveness
of the loan. Furthermore, an expenditure that does not qualify for forgiveness is not per se illegal,
it is simply paid back by the borrower in due course pursuant to the terms of the loan agreement
with the Lender.

5 See [D.E. 32, ¶8, pgs. 3-4].
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III.
LEGAL STANDARD
“A party may raise by pretrial motion any defense, objection or request that the court can
determine without a trial of the general issue.” Fed. R. Crim. P. (12)(b)(2). The general issue is
evidence relevant to the question of guilt or innocence. United States v. Ayarza-Garcia, 819 F.2d
1043, 1048 (11th Cir. 1987). “An indictment is sufficient if it: (1) presents the essential elements
of the charged offense, (2) notifies the accused of the charges to be defended against, and (3)
enables the accused to rely upon a judgment under the indictment as a bar against double jeopardy
for any subsequent prosecution for the same offense.” United States v. Steele, 178 F.3d 1230, 1233-
34 (11th Cir. 1999) (quotation marks omitted). “The sufficiency of a criminal indictment is
determined from its face.” United States v. Salman, 378 F.3d. 1266, 1268 (11th Cir. 2004). In order
to avoid dismissal, the charging document “must contain the elements of the offense intended to
be charged, and sufficiently apprise the defendant of what he must be prepared to meet.” United
States v. Sharpe, 438 F.3d 1257, 1263 (11th Cir. 2006). A district court may not dismiss an
indictment based on a determination of facts that should have been developed at trial. See id.
Indeed, in United States v. Critzer, 951 F.2d 306 (11th Cir. 1992), we held that a district court
cannot properly dismiss an indictment on the ground that there is insufficient evidence to support
the allegations. Id. at 307.
The Government’s Superseding Indictment is insufficient on its face. Within the four corners
of the document, the Government misstates and misinterprets the regulations that govern the
CARES Act and constitute the alleged regulatory violations that are the underlying basis for the
fraud and false statement charges against Crowther. The Government relies upon regulations
within the Superseding Indictment [D.E. 32, ¶8, pgs.3-4] which directly contradict the
government’s theory of the case. Without reviewing any facts alleged outside the Superseding
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Indictment, the Government’s misapplication of the law and fundamental misunderstanding of the
regulations governing the PPP require dismissal of Counts One through Four of the superseding
indictment.
IV.
ARGUMENT
A.
The Indictment Should Be Dismissed in its Entirety Because the Government has
Misinterpreted the CARES Act and its Governing Regulations and Crowther’s
Arrest was Premature

Congress’ overarching goal in passing the CARES Act was to retain jobs and keep
employees on the payroll. See Fed Reg Vol. 85, No. 73. Congress facilitated this goal through low-
interest loans to businesses via a Lender. If the amount of the loan was utilized by the business
“for certain permissible expenses, including payroll costs, mortgage interest payments, rent and/or
utilities, the interest and principal on the PPP loans was eligible for forgiveness if the business
spent the loan proceeds on the expense items within a designated period of time and used a certain
portion of the loan towards payroll expenses.” [See D.E. #32, §8, pgs. 3-4]. Because this
undisputed fact is not addressed within the Superseding Indictment and for purposes of this
Motion, we are setting aside the argument that the Government has been in possession of Target
Roofing’s payroll records for several months and knows that Target Roofing paid its employees
well over the amount of the PPP loan proceeds in payroll costs during the designated time period
and, as such, qualifies for forgiveness. Instead, we will focus on the specific language of the
Superseding Indictment as stated above. The Government’s own Superseding Indictment
acknowledges that if payroll costs or other allowable expenses are spent “within the designated
period of time” then the PPP loan is eligible for forgiveness. Thus, the Government acknowledges
that if Target Roofing spent $2,098,700.00, the amount of the loan proceeds, on allowable
expenses within the very last week of the designated period of time then the Company would
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qualify for forgiveness. Yet, the Government arrested Crowther and charged him with a federal
crime prior to the end of the designated period, effectively terminating his ability to fulfill the
requirements of the regulation if he had not already done so. This premature arrest legally
precludes the Government from arguing that Crowther intended to commit any crime during the
relevant time period.
The Government’s designation of the PPP funds within the Superseding Indictment also
indicate that the Government has a general misunderstanding of the regulations governing the PPP.
By ignoring the designated time period, the Government argues that the PPP loan proceeds (the
actual dollars disbursed) were specifically earmarked for allowable expenses. This theory is
absurd and goes against all basic general accounting principles. Money is fungible by nature, and
the assets of a corporation – whether held in one or dozens of bank accounts – are all part of the
company’s assets. The regulations governing the CARES Act make clear that a borrower must
spend the amount of the loan proceeds provided to the borrower on allowable expenses during the
designated time period in order to be forgiven – it does not require that the specific dollars
disbursed be utilized for the allowable expenses. The CARES Act regulations do not require the
borrower to open a separate bank account or segregate, in any way, the PPP loan proceeds. The
regulations do not prohibit commingling funds with other business assets or working capital.
There is no requirement for the borrower or the Lender to delineate between PPP funds and
operating capital for accounting purposes. There is no requirement that allowable expenses be
expended from a particular account or via a particular form of accounting. The Superseding
Indictment is the Government’s attempt to add stricter prohibitions and safeguards to the federal
regulations that simply do not exist within the letter of the law.
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It is also important to note that the Government’s statement of the regulations within the
Superseding Indictment is misleading, “PPP proceeds were required to be used for certain
permissible expenses, including payroll costs, mortgage interest, rent and utilities.” [D.E. 32, ¶8].
First, PPP proceeds were only required to be utilized for these specific allowable expenses if the
borrower was requesting forgiveness. Second, Section 1022(a) of the Act of the Final CARES Act
(HR 748) (the “CARES Act”) provides that the PPP Loan Program is an amendment of the Small
Business Act (“SBA”) 7(a) Loan program. With respect to use of loan proceeds, Section 1022(F)
states: “During the covered period, an eligible recipient may, in addition to allowable uses of the
loan made under this subsection . . .”, referring to the SBA Act’s subsection. Consequently, a
loan recipient’s use of PPP Loan proceeds is not limited to payroll costs, payment of interest on
mortgages, rents, and utilities. In fact, the Interim Rules published in the Federal Register state:
“While the Act provides that PPP loan proceeds may be used for the purposes listed above and for
other allowable uses described in section 7(a) of the Small Business Administration Act (15 U.S.C.
636(a)) the Administrator believes that finite appropriations and the structure of the Act warrant a
requirement that borrowers use a substantial portion of the loan proceeds for payroll costs,
consistent with Congress’ overarching goal of keeping workers paid and employed.” See Fed Reg
Vol. 85, No. 73 at Section III 2.
The PPP is an amendment to the SBA’s 7(a) loan program which provides for allowable
expenditures, as follows:
The Administration is empowered to the extent and in such amounts
as provided in advance in appropriation Acts to make loans for plant
acquisition, construction, conversion, or expansion, including the
acquisition of land, material, supplies, equipment, and working
capital, and to make loans to any qualified small business concern,
including those owned by qualified Indian tribes, for purposes of this
Act.

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SBA § 7, 15 USC 636 (emphasis added).

Under the aforementioned authorities, Target Roofing’s wire transfer to S.A, a former co-
owner, in connection with a $722,474.00 promissory note [See D.E. 32, ¶2, pg. 9] is legally
permissible. The promissory note referred to in the Superseding Indictment was a conversion of
the company in the form of a recapitalization. As part of a conversion, any payments made under
the promissory note, while not forgivable under the PPP, are a perfectly legal use of funds under
the SBA’s 7(a) loan program and thus, under the PPP itself. Let’s assume arguendo that the SBA
deemed this transaction to be an unqualified expenditure pursuant to the PPP loan forgiveness
requirements. If the expenditure was not approved for forgiveness by the SBA, the amount of the
expenditure automatically defaults back to a low-interest loan. An expenditure that is not forgiven
is not illegal, it is simply paid back by the borrower in due course. Accordingly, Counts One
through Four of the Superseding Indictment should be dismissed in their entirety because it fails
to state an offense for which Crowther can be criminally prosecuted.
B.
Count One for Bank Fraud Must Be Dismissed Because the SBA is Not a “Financial
Institution”

The charge against Crowther for Bank Fraud (Count One) must be dismissed because the
Superseding Indictment wrongly alleges that the subject loan was funded by the Lender. The
Lender facilitated the loan; however, the PPP is a loan made with the authority and approval of the
SBA and the funds are 100% guaranteed by the SBA, not the Lender. See Fed Reg Vol. 85, No.
73. The SBA also approves forgiveness of the loan. Id. The Government acknowledges in the
Superseding Indictment that Crowther’s “materially false, fraudulent, and misleading
representation would and did cause the SBA to approve the PPP application and the SBA to issue
$2,098,700.00 in PPP Funds to the Lender which the Lender then deposited into an account under
the defendant’s control.” [D.E. 32, pg. 6, ¶11(e)] [emphasis added]. The SBA is not a financial
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institution within the definition of 18 U.S.C. § 20:
As used in this title, the term “financial institution” means--
(1) an insured depository institution (as defined in section 3(c)(2)
of the Federal Deposit Insurance Act [12 USCS § 1813(c)(2)]);
(2) a credit union with accounts insured by the National Credit
Union Share Insurance Fund;
(3) a Federal home loan bank or a member, as defined in section
2 of the Federal Home Loan Bank Act (12 U.S.C. 1422), of the
Federal home loan bank system;
(4) a System institution of the Farm Credit System, as defined in
section 5.35(3) of the Farm Credit Act of 1971 [12 USCS §
2271(3)];
(5) a small business investment company, as defined in section
103 of the Small Business Investment Act of 1958 (15 U.S.C.
662);
(6) a depository institution holding company (as defined in
section 3(w)(1) of the Federal Deposit Insurance Act [12 USCS
§ 1813(w)(1)];
(7) a Federal Reserve bank or a member bank of the Federal
Reserve System;
(8) an organization operating under section 25 or section 25(a)
[25A] of the Federal Reserve Act [12 USCS §§ 601 et seq.
or 611 et seq.];
(9) a branch or agency of a foreign bank (as such terms are
defined in paragraphs (1) and (3) of section 1(b) of the
International Banking Act of 1978 [12 USCS § 3101]); or
(10) a mortgage lending business (as defined in section 27 of this
title [18 USCS § 27]) or any person or entity that makes in whole
or in part a federally related mortgage loan as defined in section
3 of the Real Estate Settlement Procedures Act of 1974 [12 USCS
§ 2602].

Accordingly, Count One is legally deficient and must be dismissed because as a matter of
law the SBA clearly is not a “financial institution.” See, e.g., United States v. Martin, 803 F. 3d
581, 588 (11th Cir. 2015) (stating that in order to secure a conviction for bank fraud in violation
of 18 U.S.C. § 1344(2), the Government must “prove beyond a reasonable doubt that (1) a scheme
existed to obtain money or property in the custody of a federally insured financial institution by
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fraud; (2) she participated in the scheme by means of false pretenses, representations, or promises;
and (3) she acted knowingly”) (citing United States v. McCarrick, 294 F. 3d 1286, 1290 (11th Cir.
2002)).
C.
Count One (Bank Fraud) and Count Two (False Statement) Must Be Dismissed
Because the Indictment Fails to Properly State an Offense and Allege the Requisite
Intent

Counts One and Count Two are also legally deficient and must be dismissed because the
Indictment improperly fails to allege the requisite intent and state a valid offense. The Indictment
does not properly allege (and the Government cannot prove) that Crowther knowingly intended to
defraud the PPP or knowingly misrepresented the use of the PPP funds at the time of the
application. According to the PPP regulations, Crowther has twenty-four weeks from the
disbursement of his loan to spend the amount of the loan proceeds on allowable expenses. The
Government arrested Crowther prior to the expiration of the designated time period and cannot
effectively terminate his ability to fulfill the regulatory requirements if the Government argues that
Crowther had not fulfilled those requirements prior to his arrest.
In United States v. McCarrick, 294 F. 3d 1286 (11th Cir. 2002), the Eleventh Circuit
reversed the defendant’s convictions for bank fraud, in violation of 18 U.S.C. § 1344, and making
a false statement to a government agency, in violation of 18 U.S.C. § 1001 on the basis that the
Government had failed to prove the necessary specific intent to defraud. In McCarrick, the
defendant obtained a SBA-guaranteed $49,000.00 loan. Id. at 1288. During the application
process, the defendant told the bank’s loan officer that the purpose of the loan was to expand the
defendant’s business into fleet maintenance and auto body work. Id. The Eleventh Circuit stated:
McCarrick stated on his loan application that he planned to use
$35,000 of the loan to lease a new building for his business and to
purchase five specific pieces of equipment: a spray paint booth, a
frame machine, a tire machine, and two lifts. The remaining
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$14,000 was to be used as working capital.

Id. (footnotes omitted).

After the SBA loan was approved, the financial institution cut various checks to the
defendant as per the stated purposes of the loan. Id. at 1289. When the defendant received the
bank’s check for $12,679.00, the spray paint booth had been ordered but not yet delivered. Id.
“McCarrick testified he deposited the check into Fleet’s account because the spray paint booth had
not yet arrived, and that he intended to use the money to pay for the booth as soon as it came.” Id.
The Eleventh Circuit observed that over the next month, the defendant’s business “experienced
serious financial difficulties, and he canceled the order . . . for the spray paint booth, using the
$12,679 to keep his business afloat.” Id.

The Eleventh Circuit stated:
The government's sole allegation of fraud in this case is that,
at the time McCarrick signed the loan documents, he had no
intention of buying the spray paint booth, as he represented.
Specifically, Count One charged that McCarrick committed bank
fraud by falsely promising, on his loan application, that he planned
to buy a spray paint booth, in order to defraud the government of $
12,679. Count Two charged McCarrick with making a false
statement to the SBA by acknowledging, on his "Settlement
Statement," that he planned to use the loan proceeds in accordance
with the terms of the loan authorization, even though he knew he
was not going to buy the spray paint booth. Thus, McCarrick's
convictions under both § 1344 and § 1001 depend on whether the
jury could infer, from the evidence adduced at trial, that McCarrick
did not intend to buy the spray paint booth at the time he signed the
loan documents.

Id. at 1290-91.

In holding that the evidence presented at trial was insufficient to demonstrate the
defendant’s specific intent to defraud, the Eleventh Circuit noted the complete lack of evidence
demonstrating events occurring before the defendant signed the loan documents. Id. at 1291.
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Instead, “[t]he evidence at trial consisted entirely of events that occurred subsequent to the signing
of the loan documents.” Id. The Eleventh Circuit determined that three (3) pieces of circumstantial
evidence regarding the defendant’s conduct subsequent to signing the loan documents – which was
the only evidence presented in the case- was insufficient to support a rational inference of the
requisite prior intent, beyond a reasonable doubt. Id. First, the court noted that the Government
failed to offer any explanation as evidence of checks written by the defendant that were returned
for non-sufficient funds would have made the defendant aware, when he signed the loan
documents, that he could not afford to purchase the spray paint booth. Id. at 1292. Second, “the
fact that McCarrick canceled the paint booth only four weeks after it was ordered . . . does not
provide a sufficient basis, on this record, for the inference that he did not intend to buy it in the
first place.” Id. With respect to the third piece of evidence, the Eleventh Circuit stated:
Nor does the fact that McCarrick and his girlfriend may have
improperly endorsed the $12,679 check for the spray paint booth
and deposited it into Fleet’s bank account, by itself, suffice to show
that McCarrick did not intend, at the time of the signing of the loan
documents, to use that money for its allotted purpose.

Id.

Likewise, the Superseding Indictment does not adequately allege Crowther’s specific
intent to defraud with respect to the PPP loan proceeds. The Government cannot prove that at the
time Crowther signed the PPP Application that he knowingly misrepresented that the “SBA loan
proceeds would only be used for business related purposes and certifying that the PPP funds would
be used to retain workers and maintain payroll or make mortgage [interest] payments, lease
payments, and utility payments on behalf of Target Roofing.” [D.E. 32, ¶2, pgs., 7-8] As stated in
the Government’s Superseding Indictment, “for certain permissible expenses, including payroll
costs, mortgage interest payments, rent and/or utilities, the interest and principal on the PPP loans
Case 2:20-cr-00114-JES-M_M Document 41 Filed 11/13/20 Page 18 of 24 PageID 152

was eligible for forgiveness if the business spent the loan proceeds on the expense items within a
designated period of time and used a certain portion of the loan towards payroll expenses.” [See
D.E. #32, §8, pgs. 3-4]. The Government cannot prove Crowther’s intent at the time he signed the
PPP loan application because they arrested and charged him with a federal crime prior to the
expiration of the time period by which he had to expend the amount of the loan proceeds on
allowable expenses.6
The Government’s premature arrest of Crowther renders its allegation of intent to defraud
impossible to prove. In United States v. Takhalov, 827 F. 3d 1307 (11th Cir. 2016), the Eleventh
Circuit stated:
For this reason, the law in the Eleventh Circuit makes clear
that a defendant "schemes to defraud" only if he schemes to
"depriv[e] [someone] of something of value by trick, deceit,
chicane, or overreaching." But if a defendant does not intend to
harm the victim—"to obtain, by deceptive means, something to
which [the defendant] is not entitled"—then he has not intended
to defraud the victim.

From that conclusion, a corollary follows: a schemer who
tricks someone to enter into a transaction has not "schemed to
defraud" so long as he does not intend to harm the person he intends
to trick. And this is so even if the transaction would not have
occurred but for the trick. For if there is no intent to harm, there
can only be a scheme to deceive, but not one to defraud.

Consider the following two scenarios. In the first, a man
wants to exchange a dollar into four quarters without going to the
bank. He calls his neighbor on his cell phone and says that his child
is very ill. His neighbor runs over, and when she arrives he asks her
to make change for him. She agrees; the quarters pass to the man;
the dollar passes to the woman; and they part ways. She later learns
that the child was just fine all along. The second scenario is identical
to the first, except that instead of giving the woman a true dollar, he
gives her a counterfeit one.

6 Again, for purposes of this Motion, we are not relying on the undisputed fact that Target Roofing paid its employees
well over the amount of the PPP loan proceeds during the designated time period, which clearly negates any criminal
intent, because this information is not found within the four corners of the Superseding Indictment.
Case 2:20-cr-00114-JES-M_M Document 41 Filed 11/13/20 Page 19 of 24 PageID 153

The first scenario is not wire fraud; the second one
is. Although the transaction would not have occurred but-for the lie
in the first scenario—the woman would have remained home except
for the phony sickness—the man nevertheless did not intend to
"depriv[e] [the woman] of something of value by trick, deceit, [and
so on]." But in the second scenario he did intend to do so.

Takhalov, 827 F. 3d at 1312-1313 (citing United States v. Bradley, 644 F. 3d 1213, 1240 (11th Cir.
2011) (emphasis added).

Crowther’s arrest and the Superseding Indictment clearly are premature; the Government
cannot prove or even allege that Crowther intended to deprive the Bank or the SBA of anything of
value. Crowther was arrested prior to Lenders receiving loan forgiveness applications and prior to
any loan payments being due pursuant to the terms of Target Roofing’s loan with the Lender. As
such, the Government does not (and cannot) allege any losses to either the Bank or the SBA. There
is no victim and the Superseding Indictment fails to allege any misappropriation of monies
received. Furthermore, the regulations governing the CARES Act allow twenty-four weeks for
the borrower to spend the amount of the loan proceeds on allowable expenses. The Government’s
arrest of Crowther prior to the expiration of that designated time period prevents the Government
from arguing that Crowther intentionally misrepresented that he would utilize the PPP funds for
business purposes.
A review of other indictments across the country in relation to PPP funds reveal blatant
fraud in the applications for PPP funds: the creation of shell companies, misrepresentation by the
Company of the number of employees or fake employees, or failure to utilize the funds to pay
employees - none of those facts are alleged within the Superseding Indictment. We have yet to
find a criminal PPP fraud case where the government relies on the misrepresentation that the
company will only utilize the PPP loan proceeds for business purposes but arrests the owner of the
business prior to the designated time period in which he has to spend those funds. We have also
Case 2:20-cr-00114-JES-M_M Document 41 Filed 11/13/20 Page 20 of 24 PageID 154

not seen any indictments for the owners of legitimate businesses who actually paid employees the
amount equivalent (or higher) in payroll costs. Accordingly, Count One and Count Two of the
Superseding Indictment must be dismissed because the Government failed to allege the requisite
intent and state an offense for which Crowther can be prosecuted.
D.
Money Laundering Counts (Counts Three and Four) Must be Dismissed for Failure
to State an Offense because No Specified Unlawful Activity Exists

Money laundering pursuant to 18 USC §1957 requires a monetary transaction in criminally
derived property of a value greater than $10,000 that is derived from specified unlawful activity.
If Counts One and Two fail pursuant to any of the above arguments, Counts Three and Four must
also fail as there would be no specified unlawful activity as the basis for the charge.
Assuming arguendo that a specified unlawful activity can be established at trial, Count Three
still fails to state an offense for which Crowther can be prosecuted. As stated above, the payment
to SA via the Stock Redemption Stock Agreement is an allowable expense pursuant to Section
7(a) of the Small Business Act. 15 U.S.C. 636(a). In the event that the SBA found that this was
not an authorized expense for forgiveness, the unqualified expense would simply default back to
a low-interest loan. The remedy would be that Crowther must pay back the loan pursuant to the
terms established by the SBA. This same argument is also applicable to Count Four. For these
reasons, Counts Three and Four must fail.
E.
Bill of Particulars
In the alternative, we respectfully request the Court order the Government to file a bill of
particulars that adequately apprises Crowther of the scope of the Government’s allegations and
allows Crowther to prepare his defense and avoid unfair and prejudicial surprise at trial. The
Government’s own statement of the regulations within the Superseding Indictment belies its theory
Case 2:20-cr-00114-JES-M_M Document 41 Filed 11/13/20 Page 21 of 24 PageID 155

of prosecution. “PPP loan proceeds were required to be used for certain permissible expenses7,
including payroll costs, mortgage interest payments, rent and/or utilities, the interest and principal
on the PPP loans was eligible for forgiveness if the business spent the loan proceeds on the expense
items within a designated period of time and used a certain portion of the loan towards payroll
expenses.” [See D.E. #32, §8, pgs. 3-4]. In this paragraph, the Government concedes that if payroll
costs or other allowable expenses are spent “within the designated period of time” then the PPP
loan is eligible for forgiveness. This statement acknowledges that if Target Roofing spent
$2,098,700.00, the amount of the loan proceeds, on allowable expenses within the very last week
of the designated period of time then the Company would qualify for forgiveness. Yet, the
Government arrested Crowther and charged him with a federal crime prior to the end of the
designated period. Thus, we are left wondering what federal regulation the Government is
accusing Crowther of violating. A bill of particulars could shed some light on the apparent conflict
within the Government’s own Superseding Indictment.
V.
CONCLUSION

Based on the foregoing, the Counts One through Four of the Superseding Indictment should
be dismissed in their entirety. The Indictment misstates the CARES Act and the SBA Loan
Program, fundamentally misinterprets the intent of the legislation passed to protect employees and
fails to state an offense for which Crowther can be prosecuted. Moreover, Count One must be
dismissed because the SBA is not a “financial institution” within the meaning of 18 U.S.C. § 20;
accordingly, the charge of Bank Fraud on the facts alleged is legally deficient. With respect to
Count One and Count Two, the Superseding Indictment also fails to state an offense and allege the

7 ¶8 Misstates the regulations. The PPP loan proceeds were required to be used for certain permissible expenses to
qualify for forgiveness. There were many other permissible expenses as defined by the SBA that may not qualify for
forgiveness but were, by no means, illegal. The remedy for an unqualified expense was a default to the loan terms
between the Lender and the borrower.
Case 2:20-cr-00114-JES-M_M Document 41 Filed 11/13/20 Page 22 of 24 PageID 156

requisite intent, which mandates dismissal of those counts. In addition to the failure to allege an
intent to defraud, the Government cannot allege a loss to any person or entity named within the
Indictment. Dismissal of Count One or Count Two for any of the above-referenced arguments
would negate the necessary specified unlawful activity and would require dismissal of both Counts
Three and Four. Moreover, both Count Three and Count Four should be dismissed because the
remedy for an unqualified expense under the PPP is that those amounts simply remain a loan
outstanding, not a crime. Quite frankly, the Indictment is premature and not ripe for prosecution;
it fails to state any offense for which Crowther can be prosecuted.

Accordingly, Defendant, Casey David Crowther respectfully requests that this Court
dismiss the Indictment in its entirety for failure to state an offense, along with such other and
further relief this Court deems just and proper. In the alternative, Crowther respectfully requests
that the Court order the Government to file a bill of particulars specifying which federal regulation
governing the CARES Act Crowther is alleged to have violated.

Certification
Pursuant to the Court’s Pretrial Criminal Scheduling Order [D.E. 20], the undersigned certifies the
following:
i. The undersigned has conferred with opposing counsel regarding this Motion to Dismiss
Counts One through Four of the Superseding Indictment;

ii. Counsel has not resolved the motion by agreement; and
iii. the motion concerns a matter not covered by the Court’s Scheduling Order.

Case 2:20-cr-00114-JES-M_M Document 41 Filed 11/13/20 Page 23 of 24 PageID 157

Respectfully Submitted,
/s/ Nicole H. Waid____
Nicole H. Waid, Esq.

FISHERBROYLES, LLP

2390 Tamiami Trail North

Suite 100

Naples, Florida 34103

Florida Bar # 0121720

Phone: (202) 906-9572

Fax: (239) 236-1360
Email: nicole.waid@fisherbroyles.com

/s/ Brian E. Dickerson
Brian E. Dickerson, Esq.

FISHERBROYLES, LLP

2390 Tamiami Trail North

Suite 100

Naples, Florida 34103

Florida Bar # 106615

Phone: (202) 570-0248

Fax: (239) 236-1360
Email: brian.dickerson@fisherbroyles.com

CERTIFICATE OF SERVICE

I, Nicole H. Waid and Brian E. Dickerson, attorneys for Casey David Crowther, do hereby
certify that we have, this day, November 13, 2020, filed the foregoing with the Clerk of Court via
the CM/ECF system, which has caused a true and correct copy to be served on all counsel of
record.

/s/ Nicole H. Waid

/s/ Brian E. Dickerson
Nicole H. Waid, Esq.
Brian E. Dickerson, Esq.

Case 2:20-cr-00114-JES-M_M Document 41 Filed 11/13/20 Page 24 of 24 PageID 158

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Motion to Dismiss Counts One through Four of the Superseding Indictment — USA v. Crowther (Dkt. 41, M.D. Fla. No. 2:20-mj-01094, docketed in No. 2:20-cr-00114)

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