Superseding Indictment as to Craig David Davis (1) count(s) 1s-5s — USA v. Davis (Dkt. 25, E.D. Va.)

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U.S. District Court for the Eastern District of Virginia · No. 1:24-cr-00040-PTG · Doc. 25 · 2024-05-16 · Docket on CourtListener

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IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF VIRGINIA
Alexandria Division
«
 filed
JNOPFXTott^T
may I 6 2024
UNITED STATES OF AMERICA,
V.
No. l:24-CR-40
Counts 1-5: 18 U.S.C. § 1343
(Wire fraud)
Forfeiture Notice
CRAIG DAVID DAVIS,
Defendant.
SUPERSEDING INDICTMENT
May 2024 Term - At Alexandria
THE GRAND JURY CHARGES THAT:
Introduction
At times material to this Indictment:
1. 
CRAIG DAVID DAVIS ("DAVIS") was the owner and operator of Bright
Vanguard, LLC ("BV") for which DAVIS filed a Certificate of Formation with the Secretary of
State of Texas in 2015. DAVIS described BV to others as a business that provided computer
software, hardware, and storage space to other businesses. BV's mailing address was in San
Antonio, Texas.
2. 
Bank-I, Bank-2, and Bank-3 were banks headquartered in the United States with
deposits insured by the Federal Deposit Insurance Corporation.
3. 
The Federal Reserve Bank of Boston ("FRBB") in Massachusetts was one of
twelve Federal Reserve Banks within the nationwide Federal Reserve System overseen by the
Federal Reserve Board ("FRB").
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4. 
The Department of the Treasury ("Treasury") was a department within the United
States Government headquartered in Washington, D.C.
5. 
The Small Business Administration ("SEA") was an agency within the United
States Government headquartered in Washington, D.C.
6. 
The Coronavirus Aid, Relief, and Economic Security ("CARES") Act was a
federal law enacted in March 2020 designed to provide emergency financial assistance to
Americans suffering the economic effects caused by the Covid-19 pandemic. One source of
relief provided by the CARES Act was the authorization of forgivable loans to small businesses
to help with payroll and other business expenses through the Payroll Protection Program ("PPP")
overseen by the SEA.
7. 
To obtain a PPP loan, a qualifying small 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 representative to acknowledge the program rules and make
certain affirmative certifications. The loan application required the business to state, among
other things, its monthly payroll expenses, and number of employees. These figures were used
to calculate the amount of money the business was eligible to receive under the PPP. In addition,
the applicants were required to provide documentation showing their payroll expenses. Lenders
relied on the accuracy of the information contained in the PPP applications and supporting
documents.
8. 
Small businesses applied for PPP loans with private lenders, including banks, that
had been approved to participate in the program by the SEA. When lenders decided that
applications were ready for approval, the lenders sent electronic communications to the SEA E-
Tran computer server in Sterling, Virginia, in the Eastern District of Virginia, containing data
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from and related to the applications, including the identities of the applicants and the amounts of
the proposed loans. The SBA E-Tran server processed the applications electronically. The SBA
also used the E-Tran server to send return communications to notify lenders that loans could be
funded as part of the PPP program. Specifically, the SBA used the E-Tran server to send an
SBA loan number for the lender to use when making the PPP loan. The lenders used their own
funds to make the PPP loans, but the loans were guaranteed 100 percent by the SBA.
9. 
The SBA required that PPP loan proceeds be used for certain expenses, including
payroll, rent, mortgage payments, and utility charges. A representative of a PPP loan recipient
could apply through its private lender for forgiveness of the principal and interest payments by
certifying that the business had used the loan proceeds as required during a specified time period
and that a specified percentage of the proceeds had been used for payroll.
10. 
The CARES Act also authorized the Main Street Lending Program ("MSLP").
The MSLP was an emergency lending program established by the FRB, with prior approval by
the Secretary of the Treasury, in accordance with section 13(3) of the Federal Reserve Act. The
MSLP was designed to support lending to small and medium-sized businesses that were in sound
financial condition before the onset of the Covid-19 pandemic. As part of the MSLP, the FRBB
established MS Facilities LLC ("MS Facilities"), a special-purpose vehicle that borrowed money
from the FRBB and used the funds to purchase 95 percent of the loans made by Private Lenders
(defined below) that conformed to the terms of the MSLP program. The FRBB was the
Managing Member of MS Facilities, and Treasury, which contributed capital to MS Facilities
using funds appropriated by the CARES Act, was the Preferred Equity Member.
11. 
MSLP applicants, through their representatives, applied for their loans with
private lenders, such as banks ("Private Lenders"), that had been approved by the FRBB for
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making MSLP loans. The borrowers had to meet the eligibility requirements set by the MSLP
and certify that they would abide by the terms of the program. MSLP borrowers also had to
meet any additional eligibility requirements set by the Private Lenders and agree to comply with
any additional terms set by the Private Lenders. The MSLP and Private Lenders required
applicants to submit accurate financial information to support their applications. The MSLP and
Private Lenders also required that the loan proceeds be used for business expenses, and Private
Lenders often required more specific representations by the representatives of the businesses.
Private Lenders relied on the accuracy of the information contained in the loan applications and
supporting documents.
12. 
When one of the Private Lenders decided that an applicant met the requirements
of the MSLP and the Private Lender, the Private Lender sent MS Facilities information about the
borrower and the requested loan amount. After MS Facilities had approved the loan, MS
Facilities sent the Private Lender a commitment letter stating, among other things, that MS
Facilities would purchase 95 percent of the loan. The Private Lenders kept five percent of the
loans and were responsible for servicing the loans. The MSLP deferred interest payments until
the second year of each loan, the first repayment of principal until the third year of each loan,
and the final repayment of principal until the fifth year of each loan. All MSLP loans were made
between July 2020 and January 2021 and were not forgivable.
13. 
The Economic Injury Disaster Loan Program ("EIDL") was another SBA
program that provided low-interest financing to small businesses, renters, and homeowners in
regions affected by declared disasters.
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14. 
The CARES Act authorized the SBA to provide EIDL loans of up to $2 million
to eligible small businesses experiencing substantial financial disruption due to the Covid-19
pandemic.
15. 
To obtain an EIDL loan, a qualifying business was required to submit an
application to the SBA and provide information about the business's 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. In the case of EIDL loans for
Covid-19 relief, the 12-month period preceding the disaster was the period from January 31,
2019, to January 31,2020. The applicant was also required to certify that all of the information
in the application was true and correct to the best of the applicant's knowledge.
16. 
EIDL loan applications were submitted directly to the SBA and processed by
the agency with support from a government contractor. The amount of the loan, if the
application was approved, was determined based, in part, on the information provided by the
applicant about employment, revenue, and cost of goods sold. Any funds issued under an
EIDL loan were issued directly by the SBA.
17. 
EIDL loan funds could be used for payroll expenses, sick leave, production
costs, and business obligations, such as debts, rent, and mortgage payments. If the applicant
also obtained a loan under the PPP, the EIDL loan funds could not be used for the same
purpose as the PPP loan funds.
18. 
The SBA used the FMS computer servers in Sterling, Virginia, in the Eastern
District of Virginia, to receive repayments for EIDL loans.
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Counts 1-5
(Wire fraud)
19. 
Paragraphs 1 through 18 of the Superseding Indictment are re-alleged and
incorporated by reference as though fully set forth herein.
20. 
Beginning in or around April 2020, and continuing through at least in or around
June 2021, in the Eastern District of Virginia and elsewhere, the defendant,
CRAIG DAVID DAVIS,
did knowingly devise and intend to devise a scheme and artifice to defraud and to obtain money
and property by means of materially false and fraudulent pretenses, representations, and
promises and, knowingly transmitted and caused to be transmitted by means of wire and radio
communications in interstate commerce certain writings, signs, signals, pictures, and sounds for
the purpose of executing such scheme and artifice.
Purpose and Obiects of the Scheme and Artifice
21. 
It was a purpose and object of the scheme and artifice to defraud for DAVIS to
unlawfully enrich himself by, among other things: (a) submitting and causing the submission of
false and fraudulent PPP and MSLP loan applications to banks and financial institutions; (b)
obtaining money or property—^that is, PPP and MSLP loan proceeds—of those same banks and
financial institutions; (c) falsely promising to use the loan proceeds on permitted business
expenses under the PPP and MSLP; and (d) concealing and causing the concealment of the
scheme.
Wavs. Manner and Means of the Scheme and Artifice
PPP ApDlication to Bank-1
22. 
Between on or about April 1, 2020, and on or about April 21, 2020, DAVIS
submitted an application for a PPP loan for $341,300 to Bank-1 for BV, which DAVIS knew
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included false information, including false employee payroll information, a false Social Security
number ("SSN") for himself, a false Employee Identification number ("BIN"), false IRS Forms
941, and false attestations.
23. 
On or about April 22, 2020, Bank-1 approved BV's PPP loan application and
disbursed approximately $341,300 to BV.
24. 
On or about September 16, 2021, DAVIS applied to have the PPP loan from
Bank-1 to BV forgiven. In his application, DAVIS falsely attested, among other things, that the
information in the application, including information related to BV's employees, was true and
accurate. Bank-1 denied the application.
25. 
It was further part of the scheme that DAVIS concealed and caused to be
concealed the fraudulent nature of the PPP application.
PPP ADDlications to Bank-2
26. 
Between on or about April 27, 2020, and on or about April 29, 2020, DAVIS
submitted an application for a PPP loan for $354,000 to Bank-2 for BV, which DAVIS knew
included false information and documents, such as a false name, false employee payroll
information, a false SSN for himself, false IRS Forms 941, and false attestations.
27. 
On or about April 29, 2020, Bank-2 approved the BV's PPP loan application, and
on or about May 1,2020, Bank-2 disbursed approximately $354,000 to BV.
28. 
On or about February 25, 2021, DAVIS sent a preliminary application to Bank-2
to obtain a second-draw PPP loan. In support, DAVIS provided false IRS Forms 941 for 2020, a
false profit and loss statement for BV, and a false SSN for himself. Bank-2 denied the
application.
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29. 
It was further part of the scheme that DAVIS concealed and caused to be
concealed the fraudulent nature of the PPP applications.
MSLP APDlication to Bank-3
30. 
In and around 2020, DAVIS engaged a firm that helped clients obtain financing
for their businesses. DAVIS worked with a representative of that firm, C.G., purportedly to
assist DAVIS in obtaining a loan for BV to expand BV's operations. DAVIS provided C.G.,
both directly and indirectly, with information and documents purporting to show BV's financial
condition, such as federal tax returns for BV for 2018 and 2019.
31. 
On or about July 3, 2020, on behalf of DAVIS and BV, C.G. contacted a
representative of Bank-3, B.M., by email to indicate DAVIS's and BV's interest in obtaining a
loan.
32. 
On or about July 7, 2020, on behalf of DAVIS and BV, C.G. communicated with
B.M. by email to confirm that DAVIS and BV were interested in obtaining an MSLP loan for
BV from Bank-3. In that same email, C.G. provided B.M. with documents that falsely
represented BV's financial condition. These documents were supplied to C.G. by DAVIS and
included, among other items, false tax returns and false financial statements for BV. Several of
these documents contained false SSNs for DAVIS and false EINs for BV.
33. 
Beginning in or around July 2020, and continuing through in or around December
2020, C.G. sent B.M. additional materials by email, which he had received from DAVIS, in
support of BV's MSLP loan application, including a false SSN and falsified personal tax returns.
34. 
On or about November 13, 2020, C.G. forwarded to B.M. emails from DAVIS
relating to the purported nature of B.V.'s business, its financial condition, and its plans for how it
8
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would use the MSLP money.
35. 
On or about December 3, 2020, DAVIS, on behalf of BY, signed a loan
agreement with Bank-3 for a $10 million MSLP loan, a security agreement pledging BV's assets
as collateral for the loan, a promissory note promising to repay the MSLP loan, and a personal
guarantee for the repayment of the loan. In those documents, DAVIS falsely represented that all
the financial information that had been delivered to Bank-3 on his behalf was accurate in all
material aspects and that there were no other liens in favor of other creditors previously placed
on any of the BV collateral. DAVIS also agreed that he had fully disclosed BV's current
indebtedness, which included an EIDL loan he obtained on behalf of BV in and around June
2020. DAVIS also agreed to provide Bank-3 with financial statements for BV for 2020 within
120 days of December 31, 2020. DAVIS and Bank-3 also agreed that approximately $1,500,000
of the loan proceeds would be withheld for future disbursement upon the earlier of BV's
satisfaction of the conditions of release or the maturity of the loan agreement.
36. 
On or about December 8, 2020, Bank-3 disbursed approximately $7,547,241.55 to
BV. Also, on or about December 8, 2020, Bank-3 transferred approximately $752,758 of the
MSLP loan proceeds to pay off two of BV's loans that DAVIS disclosed to Bank-3 within BV's
MSLP loan application. Specifically, Bank-3 transferred approximately $600,000 to pay off one
of BV's existing private loans and approximately $152,758.55 to pay off BV's EIDL loan.
37. 
On or about March 1, 2021, DAVIS provided Bank-3 with a false financial audit
report for BV for 2020 and on or about June 30, 2021, DAVIS provided to Bank-3 a false
financial audit report for BV for 2020.
38. 
On or about June 30, 2021, DAVIS provided to Bank-3 a second false financial
audit report for BV for 2020.
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39. 
It was further part of the scheme that DAVIS concealed and caused to be
concealed the fraudulent nature of the MSLP application.
Executions of the Scheme and Artifice
40. 
On or about the dates listed below, for the purpose of executing the above-
described scheme, in the Eastern District of Virginia and elsewhere, CRAIG DAVID DAVIS
transmitted and caused to be transmitted by means of wire communication in interstate and
foreign commerce, any writings, signs, signals, pictures, and sounds, as described below, each
count being a separate offense:
Count
Approx. Date
Lender
Type of Communication
1
April 21,2020
Bank-1
Electronic transmission by Bank-1 of an
application for a PPP loan on behalf of
BV for $341,300 to SBA's E-Tran
server, located within the Eastern District
of Virginia
2
April 21, 2020
Bank-1
Electronic assignment by SBA via the E-
Tran server, located within the Eastern
District of Virginia, of a SBA loan
number to the PPP loan application
Bank-1 submitted on behalf of BV for
$341,300
3
April 27, 2020
Bank-2
Electronic transmission by Bank-2 of an
application for a PPP loan on behalf of
BV for $354,000 to SBA's E-Tran
server, located within the Eastern District
of Virginia
4
April 27, 2020
Bank-2
Electronic assignment by SBA via the E-
Tran server, located within the Eastern
District of Virginia, of a SBA loan
number to the PPP loan application
Bank-2 submitted on behalf of BV for
$354,000
10
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5
December 8,2020
Bank-3
Electronic disbursement by Bank-3 of
$152,758.55, on behalf of BV, to the
SBA's FMS server, located within the
Eastem District of Virginia, to pay BV's
EIDL loan
(In violation of 18 U.S.C. § 1343).
FORFEITURE NOTICE
There is probable cause that the property described in this forfeiture notice is subject to
forfeiture pursuant to the statutes described herein.
1. 
Pursuant to Federal Rule of Criminal Procedure 32.2(a), the defendant is hereby
notified that, if convicted of any of the violations of 18 U.S.C. § 1343 alleged in Counts 1
through 5 of this superseding indictment, he shall forfeit to the United States, pursuant to 18
U.S.C. § 981(a)(1)(C) and 28 U.S.C. § 2461(c), his interest in any property, real or personal,
which constitutes or is derived from proceeds traceable to the violations of 18 U.S.C. § 1343.
The property subject to forfeiture under Counts 1 through 4 includes, but is not limited to, a sum
of money equal to at least $9,195,300 in United States currency, representing the amount of
proceeds obtained by the defendant as a result of the offenses.
2. 
Pursuant to 21 U.S.C. § 853(p), as incorporated by 28 U.S.C. § 2461(c), the
defendant shall forfeit substitute property, up to the value of $9,195,300 if, by any act or
omission of the defendant, the property directly derived from the charged violations cannot be
located upon the exercise of due diligence; has been transferred, 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 difficulty.
(All in accordance with § 18 U.S.C. § 981(a)(1)(C); 28 U.S.C. § 2461(c)); and Federal Rule of
Criminal Procedure 32.2(a)).
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A TRiffi§li30t to the E-Gomnrncn, .
Original of this page h^
FOREPERSON
Jessica D. Aber
United States Attorney
Kathleen Robeson
Assistant United States Attorney
2100 Jamieson Avenue
Alexandria, Virginia 22314
Phone; 703-299-3827
Email: Kathleen.Robeson@usdoi.gov
David A. Peters
Trial Attorney
Department of Justice, Fraud Section, Market Integrity and Major Frauds Unit
1400 New York Ave., Washington, D.C. 20005
Phone: 202-616-5420
Email: David.Peters2@usdoj.gov
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