Sealed Complaint as to Damaris Valerio (1). (spc) [2:23-mj-11198-AME] — USA v. Valerio (Dkt. 1, D.N.J. No. 2:23-mj-11198)

Record facts

U.S. District Court for the District of New Jersey · No. 3:25-cr-00414-RK · Doc. 1 · 2023-11-14 · Docket on CourtListener

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Case 3:25-cr-00414-RK Document1 Filed 11/14/23 Page 1 of 8 PagelD: 1

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

UNITED STATES OF AMERICA : Hon. André M. Espinosa

Vv. : Mag. No. 28- 11198
DAMARIS VALERIO a/k/a : CRIMINAL COMPLAINT
DAMARIS TINEO ABREU

I, Vlad Boscor, being duly sworn, state the following is true and correct to the
best of my knowledge and belief:

SEE ATTACHMENT A

I further state that I am a Special Agent with the Department of Homeland
Security Investigations, and that this Complaint is based on the following facts:

SEE ATTACHMENT B

continued on the attached pages and made a part hereof.

f lal bostor

Vlad Boscor, Special Agent
Homeland Security Investigations

Special Agent Vlad Boscor, attested to this Affidavit by telephone pursuant to
F.R.C.P. 4.1(B)(2)(A) on this 14 day of November, 2023.

AMM hy =

Hon. André M. Espinosa
United States Magistrate ; udge

Case 3:25-cr-00414-RK Document1 Filed 11/14/23 Page 2 of 8 PagelD: 2

ATTACHMENT A

COUNT ONE
(Wire Fraud)

From in or around March 2020 through in and around December 2021, in
Middlesex County, in the District of New Jersey and elsewhere, the defendant,

DAMARIS VALERIO a/k/a DAMARIS TINEO ABREU,

knowingly and intentionally devised and intended 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, for the purpose of
executing and attempting to execute such scheme and artifice, did transmit and cause
to be transmitted by means of wire communications in interstate and foreign
commerce, the following writing, sign, signal, picture, and sound:

Approx. Date Description of Wire

EIDL application for La Vogue House of Beauty
submitted from New Jersey via interstate wire to
servers located in Iowa, requesting approximately
$500,000 in EIDL funds and approximately $10,000
as an advance.

4/4/2020

In violation of Title 18, United States Code, Sections 1348 and 2.
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COUNT TWO
(Money Laundering)

On or about June 17, 2020, in the District of New Jersey and elsewhere, the
defendant,

DAMARIS VALERIO a/k/a DAMARIS TINEO ABREU,

did knowingly engage and attempt to engage in a monetary transaction by, through,
and to a financial institution, affecting interstate and foreign commerce, in criminally
derived property of a greater value than $10,000, that is, causing a check for
approximately $25,000 from a bank account ending in 2583 to be deposited into an
bank account ending in 9052, such property having been derived from a specified
unlawful activity, that is, wire fraud, in violation of Title 18, United States Code,
Section 1348.

In violation of Title 18, United States Code, Sections 1957 and 2.
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ATTACHMENT B

I, Vlad Boscor, am a Special Agent of the U.S. Department of Homeland
Security, Homeland Security Investigations. The information contained in the
complaint is based upon my personal knowledge, as well as information obtained from
other sources, including: (a) statements made or reported by various witnesses with
knowledge of relevant facts; (b) my review of publicly available information; and (c)
my review of evidence, including, business records, bank records, and other
documents. Because this complaint is being submitted for a limited purpose, I have
not set forth every fact that I know concerning this investigation. Where the contents
of documents and the actions and statements of others are reported, they are reported
in substance and in part, except where otherwise indicated. Where I assert that an
event took place on a particular date, I am asserting that it took place on or about the
date alleged.

Overview

Ls From in or around April 2020 through in or around December 2021, the
Defendant Damaris Valerio (““VALERIO”) participated in a fraudulent scheme to
receive approximately $694,212 in COVID-19 emergency relief funds, which included
loans and cash advances meant for distressed small businesses under the Economic
Injury Disaster Loan (““EIDL”) program and the Paycheck Protection Program
(“PPP”) and unemployment insurance benefits (“UIB”) meant for unemployed
workers. The Defendant submitted false and fraudulent loan applications on behalf
of her entities in which she inflated the number of employees, revenue, and payroll
expenses to obtain more relief funds than to which she was entitled. VALERIO also
applied for and received federal unemployment insurance benefits based on a false
and fraudulent UIB application. After receiving the EIDL, PPP, and UIB funds based
on her fraud, VALERIO diverted virtually all of the proceeds for her personal gain.

Background

The EIDL Program

2, The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was
a federal law enacted in or around March 2020 designed to provide emergency
financial assistance to millions of Americans suffering economic effects caused by the
COVID-19 pandemic. One source of relief provided by the CARES Act was the
authorization of the Economic Injury Disaster Loan (““EIDL”) program. EIDL was a
Small Business Administration (“SBA”) program that provided low-interest financing
to small businesses, renters, and homeowners in regions affected by declared
disasters.

3. In order to obtain an EIDL, a qualifying business was required to submit
an application to the SBA and provide information about its operations, such as the
Case 3:25-cr-00414-RK Document1 Filed 11/14/23 Page 5of8 PagelD: 5

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
EIDLs for COVID-19 relief, the 12-month period constituted the 12 months preceding
January 31, 2020. In addition, the business entity must have existed in an
operational condition on February 1, 2020.

4, The amount of the EIDL was determined based, in part, on the
information the applicant provided regarding the revenue, employees, and cost of
goods of the company. The SBA directly issued any funds disbursed under an EIDL
to the applicant company. A company was permitted to use EIDL funds for payroll
expenses, sick leave, production costs, and business obligations, such as debts, rent,
and mortgage payments.

5. . EIDL applications were received in cloud-based platforms. The location
of the server through which the EIDL application was submitted was based on the
date the application was processed by SBA and the application number. During the
period relevant to this Information, all EIDL applications and supporting documents
were received in a cloud-based platform through SBA servers in Des Moines, Iowa.

The PPP

6. Another source of relief provided by the CARES Act was the
authorization of billions of dollars in forgivable loans to small businesses for job
retention and certain other expenses, through the PPP.

Ts To obtain a PPP loan, a qualifying business had to submit a PPP loan
application signed by an authorized representative of the business. The applicant of
a PPP loan was required 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 applicant had to state, among other things, its average 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,
businesses applying for a PPP loan had to provide documentation showing their
payroll expenses.

8. A PPP loan application had to be processed by a participating financial
institution (the lender). If the PPP loan application was approved, the lender funded
the PPP loan using its own monies, which were 100% guaranteed by the SBA. Data
from the 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.
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9. PPP loan proceeds could only be used by the business for certain
permissible expenses, including 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 used 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.

Federal UIBs

10. The CARES Act also created a new temporary federal unemployment
insurance program called Pandemic Unemployment Assistance (“PUA”). PUA
provides UIBs for individuals who are not eligible for other types of unemployment
(e.g., self-employed individuals, independent contractors, or gig economy workers).
The CARES Act also created a new temporary federal program called Federal
Pandemic Unemployment Assistance (“FPUA”) that provided an additional weekly
benefit to those eligible for PUA and regular UIBs.

11. Applicants were required to complete an application and verify the
applicant’s employment status, among other things, prior to receiving benefits. The
applicant could also direct the applicable department of labor to send any of the
approved benefits to either a specific bank account or a debit card.

12. The state workforce agency (“SWA”) was responsible for distributing
funds provided through the PUA and FPUC programs. These funds were received by
the SWA from the United States Department of the Treasury (“Treasury”). When an
SWA approved a UIB application, the SWA caused money to be transferred to the
applicant. Here, the SWA was the New Jersey Department of Labor (““NJDOL?”).

Individuals and Entities

18.  Atall times relevant to this Criminal Complaint:

a. VALERIO resided in Perth Amboy, New Jersey. VALERIO was
also known as Damaris Tineo Abreu.

bi VALERIO fraudulently applied for and received EIDL and PPP
loans though La Vogue House of Beauty, LLC (“La Vogue”), located in Perth Amboy,
New Jersey. VALERIO was the owner and operator of La Vogue, which maintained
a bank account at Bank-1 (“Account 25838”), a financial institution headquartered in
San Francisco, California. VALERIO was the sole signatory on the account.

G. Lender-1 was a financial institution headquartered in San
Francisco, California.

The Scheme to Defraud

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14. From in or around March 2020 through in or around December 2021,
VALERIO submitted, or caused to be submitted, at least two fraudulent loan
applications on behalf of La Vogue to obtain funds through the EIDL program and
PPP, resulting in approximately $632,292 in disbursed funds. Each application listed
VALERIO as the owner and included her contact and personal identifying
information. The fraudulently obtained funds were disbursed into Account 2583,
which VALERIO controlled. The PPP application was prepared and submitted by
VALERIO while residing in New Jersey, to Lender-1.

15. Onor about April 4, 2020, VALERIO submitted an EIDL application to
the SBA on behalf of La Vogue (the “EIDL Application”). VALERIO prepared and
submitted the EIDL Application via the SBA’s online portal to SBA servers located
in or around Des Moines, Iowa. VALERIO listed herself as sole owner and signed the

EIDL Application. She also listed an email address and phone number subscribed to
her.

16. VALERIO listed 15 employees, approximately $100,000 in cost of goods
sold, and approximately $760,000 in annual gross revenues from on or about January
31, 2019 to on or about January 31, 2020. According to records from the New Jersey -
Department of Labor (““NJDOL”) and the Social Security Administration (“SSA”), La
Vogue had only 5 employees in 2019, and only 7 employees in 2020. Further,
VALERIO reported receiving approximately $22,000 in both 2019 and 2020 in |
personal wages from La Vogue. Further, La Vogue bank records during the relevant
time period do not support the gross revenues listed in the EIDL Application. For |
instance, on or about January 31, 2020, Account 2583 had a balance of approximately ©
$393.38 and no fund influx during the relevant timeframe that would support the |
purported revenue listed on the EIDL Application.

17. VALERIO’s fraudulent EIDL Application caused the SBA to transfer a
total of approximately $510,000, including an advance and loan, into Account 2583
from on or about April 27, 2020 through on or about December 27, 2021.

18. On or about April 15, 2020, VALERIO submitted a PPP application to
Lender-1 on behalf of La Vogue (the “PPP Application”). VALERIO listed herself as
sole owner and signed the PPP Application. She also listed an email address and
phone number subscribed to her. As part of the PPP Application, VALERIO certified
that all proceeds would be used for specified business-related purposes.

19. The PPP Application stated that La Vogue’s monthly payroll was |
approximately $48,917 and that La Vogue had 15 employees. According to records
from the NJDOL and SSA, La Vogue had only 7 employees in 2020 with
approximately $4,955.84 per month in wages and approximately $59,470.11 in
annual wages, including approximately $22,000 in annual wages to VALERIO.
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20. Asaresult of VALERIO’s fraudulent PPP Application, on or about May
8, 2020, Lender-1 transferred approximately $122,292 to Account 2583.

21. Based on a review of Account 2583 records, between on or about April
27, 2020 to on or about December 27, 2021, VALERIO received a total of
approximately $632,292 in fraudulent PPP and EIDL funds. Records demonstrate
that she used virtually all of the fraudulently obtained funds for personal expenses.
For instance, VALERIO diverted virtually all of the fraudulent proceeds to personal
accounts or made personal transactions directly from Account 2583, including
transferring thousands of dollars to her relative, paying off her home mortgage,
financing multiple vehicles, transferring funds to a cryptocurrency account, and
funding renovations on an unrelated real estate property that she later sold for profit.

22. For instance, on or about June 17, 2020, VALERIO. transferred
approximately $25,000 from Account 2583 to a personal bank account at Bank-1 for

which VALERIO’s relative was the primary signatory and VALERIO was the .

secondary signatory.

23. According to records from the NJDOL, VALERIO submitted a claim for
unemployment insurance benefits on or about March 29, 2020. In the application
VALERIO noted she was self-employed and the owner La Vogue and the application
claimed, among other things, that: she was no longer employed during the relevant
period; that her last reported date of employment during the reporting period was
on March 16, 2020; and that the reason for her unemployment was because her
“business closed.” She continued to certify her unemployment insurance benefits
until in or around August 2021.

24. While VALERIO reported she was unemployed and that her business
had closed, during the same time period, La Vogue received over $600,000 in PPP

and EIDL funds and VALERIO received income from La Vogue, including a total of /

_ $22,000 in the third and fourth quarters of 2020 and $38,000 in 2021.

25. In total from in or around April 4, 2020, through in or around August
21, 2021, VALERIO received a total of approximately $61,920 in fraudulent UIBs.
During that same approximate timeframe, La Vogue received a total of
approximately $632,292 in fraudulent EIDL and PPP funds.

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