Court filing
Response in Opposition by USA as to Eric Dean Sheppard — USA v. Sheppard (Dkt. 165, S.D. Fla.)
Filed December 22, 2023 in USA v. Sheppard; one of 253 filings from this case.
Record facts
| Court | U.S. District Court for the Southern District of Florida |
|---|---|
| Filed | 2023-12-22 |
U.S. District Court for the Southern District of Florida · No. 1:22-cr-20290-BB · Doc. 165 · 2023-12-22 · Docket on CourtListener
Full text
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 22-20290-CR-BLOOM(s)
UNITED STATES OF AMERICA
vs.
ERIC DEAN SHEPPARD,
Defendant.
__________________________________/
UNITED STATES’ RESPONSE IN OPPPOSITION TO
DEFENDANT’S MOTION FOR JUDGMENT OF ACQUITTAL
The United States of America, through the undersigned Assistant United States Attorney,
files this response to the defendant’s motion for judgment of acquittal, pursuant to Fed. R. Crim.
P. 29. The government’s evidence admitted in this trial is sufficient for a reasonable jury to find
the defendant guilty beyond a reasonable doubt as to each of the 14 counts of the Superseding
Indictment. Accordingly, the defendant’s motion should be denied.
BACKGROUND
The Superseding Indictment charges the defendant with devising and participating in a
scheme to defraud, by using materially false representations, in order to receive loan proceeds from
PayPal/ WebBank, ACAP-SME/ Northeast Bank, Cross River Bank, and the SBA, to which the
defendant and his companies were not entitled. The Superseding Indictment charges the defendant
with nine counts of wire fraud and five counts of aggravated identity theft, in violation of 18 U.S.C.
§§ 1343 and 1028A, relating to his PPP and EIDL applications on behalf of HM Management and
Development, LLC (“HM Management”), HM-UP Development Alafaya Trails, LLC (“Alafaya
Trails”), and HM Four, LLC (“HM Four”). A jury trial in this case began on November 27, 2023,
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and the government rested its case-in-chief on December 18, 2023.
The defendant has moved for judgment of acquittal as to wire fraud counts 4 through 9,
which are wire transmissions reflecting acts in execution of the defendant’s scheme to defraud as
it pertains to the Paycheck Protection Program (“PPP”). These` wire fraud counts involve false
documents submitted to the private lenders in this case (PayPal/WebBank, ACAP-SME/Northeast
Bank (“Northeast Bank”), and Cross River Bank (collectively the “lenders”), although the
evidence in this case is that the SBA was involved in both the PPP and the Economic Injury
Disaster Loan (“EIDL”) programs that were the targets of the defendant’s scheme to defraud. The
defendant argues that the government’s evidence fails to show that the defendant intended to
defraud or harm the lenders, as opposed to intending to deceive them or to deprive them of
information. The defendant also seeks a judgment of acquittal as to the five aggravated identity
theft counts on the basis that the evidence is insufficient under the Supreme Court’s decision in
Dubin v. United States, 599 U.S. 110 (2023). The defendant’s motion should be denied, as the
government’s evidence is sufficient for a reasonable jury to find the defendant guilty beyond a
reasonable doubt as to all of the wire fraud counts as well as the counts of aggravated identity theft.
LEGAL STANDARD
When deciding a motion for judgment of acquittal, the Court “should apply the same
standard used in reviewing the sufficiency of the evidence to sustain a conviction.” United States
v. Ward, 197 F.3d 1076, 1079 (11th Cir. 1999) (citing United States v. Sellers, 871 F.2d 1019, 1020
(11th Cir. 1989). “The district court must view the evidence in the light most favorable to the
government … resolve any conflicts in the evidence in favor of the government, … and must
accept all reasonable inferences that tend to support the government’s case.” Ward, 197 F.3d at
1079 (internal citations omitted). “’It is not necessary for the evidence to exclude every reasonable
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hypothesis of innocence or be wholly inconsistent with every conclusion except that of guilty,
provided a reasonable trier of fact could find that the evidence establishes guilt beyond a
reasonable doubt.’” Id. (quoting Sellers, 871 F.2d at 1021).
ANALYSIS
I.
The government presented sufficient evidence of the defendant’s scheme to
defraud the lenders and the SBA, his intent to defraud them, and that he caused
the wires set forth in Counts 1 through 9 to be transmitted in interstate commerce
as part of his scheme.
In order to convict the defendant of wire fraud, the government has to prove the following
elements:
(1) The defendant knowingly devised or participated in a scheme to defraud (to
obtain money or property) by using materially false representations;
(2) The defendant acted with the intent to defraud; and
(3) The defendant transmitted or caused to be transmitted by some wire
communication in interstate commerce to help carry out the scheme to defraud.
Eleventh Circuit Pattern Jury Instruction No. 052; see United States v. Machado, 886 F.3d 1070,
1082-83 (11th Cir. 2018). “’A scheme to defraud requires proof of material misrepresentation, or
the omission or concealment of a material fact calculated to deceive another out of money or
property.’” United States v. Maxwell, 579 F.3d 1282, 1299 (11th Cir. 2009). A defendant’s intent
to defraud requires that one “intend to use deception to cause some injury …” meaning “to obtain,
by deceptive means, something to which the defendant is not entitled.” United States v. Waters,
937 F.3d 1344, 1353 (11th Cir. 2019); Maxwell, 579 F.3d at 1301 (“An intent to defraud may be
found when the defendant believed that he could deceive the person to whom he made the material
misrepresentation out of money or property of some value.”). “A material misrepresentation is
one having a natural tendency to influence, or capable of influencing, the decision maker to whom
it is addressed.” United States v. Hasson, 333 F.3d 1264, 1271 (11th Cir. 2003); Maxwell, 579 F.3d
at 1299. “Because the issue is whether a statement has a tendency to influence or is capable of
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influencing a decision, and not whether the statement exerted actual influence, a false statement
can be material even if the decision maker did not actually rely on the statement.” United States
v. Neder, 197 F.3d 1122, 1128 (11th Cir. 1999). “’The focus of the language defining a scheme to
defraud is on the violator, not the victim.’” United States v. Svete, 556 F.3d 1157, 1165 (11th Cir.
2009) (quoting United States v. Drake, 932 F.2d 861, 864 (10th Cir. 1991)).
The government introduced evidence of the defendant’s scheme to defraud from the
testimony of an IRS expert, two SBA representatives, representatives of banks and loan processors,
a former 20-year employee and contractor of HM Management, the defendant’s long-time
accountant, and two of the defendant’s independent contractors. The documentary evidence
included the loan documents, IRS-filed tax returns of the defendant and his businesses, the
accountant’s copies of the tax returns, business records, bank records, phone and email subscriber
records, and Internet Protocol (“IP”) address records.
A.
Scheme to Defraud Pertaining to PPP Loans.
The evidence presented establishes that the defendant devised a scheme to defraud both the
lenders and the SBA in order to receive potentially forgivable or 1% interest loans from the
Paycheck Protection Program. The scheme involved the submission of false information,
supported by a significant number of false documents materially misrepresenting the fact that the
defendant paid no wages during the relevant time frame. The testimony by the SBA-PPP witness,
Althea Harris, as well as the testimony of the lenders, established that the PPP involved the private
lenders receiving and processing the loan applications and issuing PPP loans from bank funds, that
were made under SBA guidance and with an SBA guarantee. The defendant made a number of
material misrepresentations, such as the type of business/industry of the applicant, the ownership
interest of the owner or authorized representative submitting the application, the amount of gross
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rents, and most importantly by misrepresenting his businesses as businesses with employees and
payroll amounts that did not exist. The SBA and the lenders all testified that the PPP loan amount
was based on 2.5 times the business’ average monthly payroll, which would consist of wage and
benefit payments to their W-2 employees. If the applicant applied as a business with employees,
as was the case here, the loan amount would be zero if the applicant’s “payroll” consisted entirely
of payments to non-wage earners, such as independent contractors. As David Toye, Vice President
of Northeast Bank, testified,
Q: And regarding the average monthly payroll amount that is reflected on this
application document 20-12, if the information that you had received from the
borrower was one, that there were no net earnings paid to the partner and that the
figure reflects one hundred percent payments for instance, for independent
contractors, what would the loan amount be?
A: The loan amount would be zero dollars.
Tr. Day 6, pp 5-6; see Tr. Day 6, p. 60, Testimony of Spencer Lord, Cross River Bank (Q: What
would the loan amount be if the payroll information you were provided were for instance a bunch
of 1099s. What would the payroll amount be? A: Zero.”).
In this case, the defendant’s scheme to defraud and intent to defraud the lenders and the
SBA was clear from the information and the documents supporting the loan applications that have
been proven to be false. For instance, the evidence established that the defendant submitted “wage
reports” containing “withholdings” in place of documents reflecting payments to contractors or
suppliers. The defendant also submitted false IRS quarterly Forms 941, false IRS annual
unemployment Forms 940, false Florida Department of Revenue re-employment tax forms, and
false and forged partnership income tax returns with false entries for wages.
All of it was proven to be false. The testimony of the IRS expert witness, Philip Palmer,
the IRS filed tax returns, the absence of filed tax returns concerning wages, the absence of
payments to the IRS for employee or employer tax contributions, the accountant’s testimony and
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his copies of the income tax returns, as well as the Florida Department of Revenue’s records, were
unrefuted and showed that the businesses did not report or pay wages to anyone during the time
period of the PPP loan applications – 2019 and 2020. The defendant submitted false information
and documents for all of the PPP loan applications (1st and 2nd draw loan applications to PayPal
for Alafaya Trails, forgiveness application to PayPal, 2nd draw loan application to Northeast Bank
for Alafaya Trails, and 2 applications to Cross River Bank for HM Management) that support
made-up payroll figures with the intent to convince the lenders and the SBA to approve and fund
the loans.
Further evidence of the defendant’s knowledge of the scheme and his intent to defraud is
the absence of any information or documents in the loan files that would suggest the defendant
was mistaken or confused as to whether payments to independent contractors or suppliers may
qualify as payments to “employees” and thus, support his payroll figures. The testimony and
records from the lenders establish that they received no information or documents from the
defendant, such as Forms 1099 (non-employee compensation), to indicate that the “employees”
listed or the “payroll” figures provided on the loan applications reflected a genuine
misunderstanding that the defendant’s calculations were based on payments to independent
contractors.
Additional evidence of the defendant’s purposeful misrepresentations and his intent to
defraud is found in the changes he made to the false information he provided on the applications
in order to continually deceive the lenders and satisfy their concerns as he learned of them. One
example is the defendant’s change to the business code on the loan applications in order to get the
loans approved and funded. On March 6, 2021, PayPal denied the second draw loan application
from Alafaya Trails based, ironically, on something the defendant had reported truthfully, i.e., the
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business code from his business’s income tax return (as the instructions indicated) reporting that
the business was a lessor of commercial property, which was type of business that was ineligible
for PPP loans. On March 11, 2021, the defendant applied to Northeast Bank on behalf of the same
company, but this time he reported a business code that corresponded with construction of
commercial buildings. The defendant submitted the same false and forged tax return to Northeast
Bank that he had submitted to PayPal, except that the tax return now had the construction-related
business code hand-written on the tax return document.
Another example was the defendant’s manipulation of the number of employees he
reported to fit the situation. For instance, the testimony and records from PayPal and Cross River
Bank indicate that the defendant applied to both lenders on January 19, 2021, and provided them
false payroll figures and documents to correspond with 80 employees for Alafaya Trails, and 23
employees for HM Management, respectively. On January 24, 2021, the defendant uploaded a
hand-written application to PayPal indicating he had 74 employees, and then on February 23, 2021,
he uploaded another hand-written application to PayPal with the same payroll amounts, but listing
19 employees. The SBA and lender witnesses testified that the SBA put in place a moratorium in
February 2021 directing the lenders to process only applications from businesses with fewer than
20 employees. The unexplained reduction in the number of employees the defendant provided to
PayPal on February 23, 2021 (from 80, to 74, down to 19), also occurred when the defendant
submitted a second application for HM Management to Cross River Bank on March 12, 2021,
which reduced the number of employees to comport with the moratorium (from 23 down to 18).
B.
Scheme to Defraud Pertaining SBA EIDLs.
Brent Motes from the SBA testified that the Economic Injury Disaster Loans followed a
nationwide disaster declaration from the COVID-19 pandemic. The first offering of COVID-19
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EIDL loans was intended to provide businesses the minimum amount of funding to stay afloat. Tr.
Day 10, p. 112. Mr. Motes explained that businesses would receive six months of working capital
up to $150,000, to help cover fixed debts and obligations to operate the business, not to expand
the business. Tr. Day 10, pp. 113, 115. The applicant would provide information about their
economic injury by filling out gross rents and cost of goods sold, or if they were a landlord, they
would indicate the amount of rent lost during the disaster period. Tr. Day 10, p. 116. The
defendant executed a scheme to defraud the SBA in order to receive very favorable 30-year, below-
market interest loans. The defendant’s scheme involved submitting EIDL applications that
contained material misrepresentations regarding the business’s operations. The defendant chose
to apply for EIDLs for businesses that either existed only on paper as entities that held an
ownership interest in another business, or businesses that had no operations and/or no economic
injury to report truthfully on the application as gross revenues minus cost of goods sold, or lost
rents. Even as to the two businesses that had actual operations, Alafaya Trails and HM
Management, the defendant supplied Nationwide Lending Direct (“Nationwide”) false
information and a false and forged tax return for HM Management.
The defendant’s EIDL application for HM Four demonstrates his scheme to defraud and
intent to defraud the SBA’s EIDL program. The defendant applied for this loan on his own, not
through Nationwide, after he was approved and received the funds for the Alafaya Trails’ EIDL.
The tax returns in evidence show HM Four was 99% owner of Alafaya Trails in 2019 and 2020.
Alafaya Trail’s EIDL application reported falsely that the business was not owned by another
entity. The defendant submitted HM Four’s EIDL application under his wife’s name, Jennifer
Sheppard, as 80% owner – which HM Four’s tax returns show she was not – and reported $950,000
in gross revenues, $250,000 in cost of goods sold, and $450,000 in lost rents, for the 12 months
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ending January 31, 2020. HM Four’s tax returns reflect that it had no operations of its own, no
income of its own, no expenses of its own. As 99% owner of Alafaya Trails, it simply reported
99% of Alafaya Trails income/losses. As was the case with the PPP loan applications, the
defendant submitted false and forged documents to support the HM Four EIDL application.
The SBA notes in evidence indicate that the SBA requested “two items” from the applicant
to establish that the business had operations, or “proof of business” such as a utility bill, a business
cell phone, contracts, or leases. The evidence reflects that the defendant produced a false lease
agreement for Mattress One as the tenant and HM Four as the landlord.1 In addition, Mattress
One’s president, M.S., testified that the signature on the lease was not his, that he would not enter
into a new lease in 2020, and that the landlord was Alafaya Trails, not HM Four. Indeed, Alafaya
Trails, not HM Four, was the owner of the Shoppes at Alafaya, according to the deeds in evidence
and the testimony of J.G. The other tenants at the shopping center also had leases with Alafaya
Trails, not with HM Four (as shown on the other leases in evidence from Dick’s Sporting Goods
and Burlington Coat Factory). Furthermore, the original lease with Mattress One, which is in
evidence, was with Alafaya Trails, and all of the lease payments from Mattress One were made to
Alafaya Trails, and deposited in the Alafaya Trails account at Suntrust Bank, which is in evidence.
The SBA notes also indicate that as of October 29, 2020, the SBA wanted to confirm that
the bank account was associated with the business. After the defendant submitted a voided check
with no business name or personally identifiable information, the SBA requested a bank statement
as verification of the HM Four bank account. The defendant had just opened the HM Four account
on October 22, 2022, the same day that he submitted the on-line HM Four EIDL application. When
1 The defendant also submitted a “management” agreement from 2014 between HM Four and
HM Eight that the government also has reason to believe was falsified or altered before being
submitted to the SBA.
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the SBA requested the bank statement, the account had no funds in it. The defendant then decided
to submit a false and forged letter purportedly from the Suntrust Bank branch manager, H.B., to
satisfy the SBA’s request. Notably, the letter mentioned the defendant and his wife, Jennifer
Sheppard, as owners of HM Four, something H.B. testified he would not know unless she was a
signer on the account, which she was not. Ultimately, the SBA again requested a bank statement,
which caused the defendant to transfer $60,000 from the Alafaya Trails account into the HM Four
account and obtain a partial bank statement to provide the SBA. When the defendant, posing as
Jennifer Sheppard, emailed the SBA the bank statement, he stated, “I apologize, I misunderstood
you as I thought you wanted the bank to authenticate the bank account and company so they sent
a letter for that.” Govt Composite Exhibit 58, bate # 31132.
The SBA did not specifically request the Mattress One lease that the defendant provided,
or the bank letter that he produced, but these false and forged documents are nevertheless material.
They are the type of documents that have the capacity or natural tendency to influence a person’s
decision regarding the issue for which the documents were requested. Also, the documents were
important to the defendant’s scheme. The Mattress One lease and the banker’s letter are the
supporting documentation that the defendant himself elected to provide to carry out his scheme to
defraud the SBA.
The defendant’s EIDL application for HM Four was not just a case of double-dipping after
having received an EIDL for Alafaya Trails. The defendant made material lies on the application
regarding revenues and lost rents, and he supplied documents that were materially false and forged.
C.
The Defendant Transmitted or Caused to be Transmitted Interstate Wire
Communications.
The evidence presented also included email communication the defendant had directly with
the lenders for the PPP loans and the SBA for the EIDLs, as well as email and text message the
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defendant had with the loan broker from Nationwide Lending Direct regarding certain of the SBA
EIDL applications. The IP evidence from Breezeline demonstrates that all of the PPP loan
applications and the HM Four EIDL application were electronically submitted from the
defendant’s home. Even as to the EIDL applications that were submitted to the SBA through the
Nationwide portal, the defendant DocuSigned those loan agreements from his home. Furthermore,
his email and text communication with Nationwide’s loan broker, N.P., demonstrate that he
controlled and directed N.P.’s actions relating to the loan applications. All of the lenders and the
SBA’s servers were located outside of the State of Florida, thus satisfying the interstate nexus for
each of the nine wire transmission that are counts in the Superseding Indictment.
In sum, based on the evidence presented, a reasonable trier of fact can find that the evidence
establishes the defendant’s guilt beyond a reasonable doubt as to the nine wire fraud counts.
D.
Defendant’s argument that the government failed to prove a scheme to defraud
instead of merely proving a scheme to deceive lacks merit.
The defendant mischaracterizes the evidence in order to craft an argument that the facts
presented may amount to an intent to deceive the banks, but not an intent to cause harm, a
distinction made by the Eleventh Circuit in United States v. Takhalov, 827 F.3d 1307 (11th Cir.
2016). The Court in Takhalov explained that “if the 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.” Id. at 1313 (quoting United States v. Bradley, 644 F.3d 1213,
1240 (11th Cir. 2011)). The defendant argues that the false information given to the banks
prevented them from properly evaluating the application, and amounts to having the intent to
deceive, but that the defendant did not intend to cause harm, and did not cause financial harm to
the banks.
The defendant’s argument lacks merit. The defendant ignores much of the record to state
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that the government “claims the victims of Mr. Sheppard’s alleged fraud are the banks, not the
SBA.” Def. Mtn at p. 20. The SBA-PPP witness, Ms. Harris, as well as each of the lenders, all
testified about the coordination between the lenders and the SBA in approving and funding the
PPP loans. See, e.g., Testimony of David Toye, Northeast Bank, at Tr. Day 6, p. 7 (“The SBA
would review [the loan application information] and as long as it’s complete and accurate, they
would issue the loan number.”). The funding dollars were provided by the lenders on the front
end, and the SBA provided rules, guidance and a guarantee. For instance, the PayPal witness
testified about the first PPP loan to Alafaya Trails funded by WebBank, and the forgiveness of that
loan, which resulted in the SBA paying WebBank the amount of the loan, plus interest.
On this record, it is impossible to advance any credible argument that first of all, the
government claims that the lenders were the only victims of the fraud in the PPP context, and
second, that the evidence here demonstrates that the defendant’s scheme was only intended to
deceive, not to cause harm, i.e., to receive funds to which he was not entitled. Quite the contrary,
the sole purpose of the defendant’s scheme - the only purpose for submitting materially false
information and materially false documentation - was to convince the lenders and the SBA to
approve the loans and send him the money. The defendant wanted this easy money to which his
businesses were not entitled, and every action the defendant took in relation to this case was for
the specific purpose of getting that money.
II.
The Evidence of Aggravated Identity Theft Satisfies Dubin v. United States.
The offense of aggravated identity theft, pursuant to 18 U.S.C. §1028A, requires the
government to prove that (1) the defendant knowingly transferred, possessed, or used another
person’s means of identification; (2) without lawful authority; and (3) during and in relation to the
specified wire fraud counts alleged in the Superseding Indictment. See Eleventh Cir. Pattern Jury
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Instr. O40.3 (Mar. 2023). The evidence is sufficient for a jury to find the defendant guilty beyond
a reasonable doubt as to the five aggravated identity theft counts in the Superseding Indictment,
pursuant to the Supreme Court’s decision in Dubin v. United States, 599 U.S. 110 (2023).
A.
Pertinent Facts from the Trial.
As discussed above regarding the defendant’s scheme to defraud, N.C. did not authorize
the use of his name, signature, or PTIN on forged income tax returns that the defendant submitted
to the lenders to support the PPP loan applications. Additionally, M.S., the former president of
Mattress One testified that he did not sign or enter into a new lease with “HM Four” in 2020, and
H.B., the former Suntrust branch manager similarly testified that he did not sign the bank letter
that was attributed to him, and that his practice would have been to only mention the signer on the
account in the letter (and not include the name of the defendant’s wife).
The lenders testified at trial that they requested and required the applicant’s income tax
returns in 2021, per the SBA’s guidance. For instance, Ms. Hutchison from PayPal testified as
follows:
A: We required the 2020 tax return and the guidelines from the SBA indicated that
if it had not been filed yet that that [sic] they were to complete the tax return and
sign it and submit it to us. . . . It should be reflective of the business income wages
paid itself. It should be accurate. . . . .
Q: So you indicated that you required that the tax return be prepared and signed;
is that right?
A: That is correct.
. . .
Generally you have until April to file the tax return with the IRS but the SBA did
require that the tax return be submitted to collaborate the application in 2021. . . .
Q: And what did – what did you require that the tax return contain with respect to
the figures that are provided in the tax return?
A: They should be true and accurate per the business report.
Tr. Day 4, pp. 34, 37, 39.
Mr. Toye, Vice President of Northeast Bank, explained that, as to the income tax return,
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“[t]hat was one of SBA’s requirements or rules was that if you haven’t filed it yet to sign the
document showing that you’re certifying that this is accurate and true.” Tr. Day 5, p. 103.
Regarding the false entries and the forgery on the tax return, Mr. Toye stated:
Q: If you had information that that 1065 tax return was falsified as to the business
code and the wages, and the gross rents and that the tax preparer name was forged
on that document, would it have affected the decision that you made with respect
to this loan?
A: Yes. Definitely.
Q: What would it have done?
A: We wouldn’t have funded the loan.
Tr. Day 5, p. 108.
Mr. Toye explained the importance of the tax return to a bank’s loan decision in the context
of a standard commercial loan:
Q: With respect to a standard or regular commercial loan, would Northeast Bank
– well, commercial loan where the applicant is a business, would the bank want to
review the business’ income tax return?
A: Yes, we would.
Q: Why would you want to review it?
A: For a regular loan, we would review business tax returns – primarily for cash
flow to make sure that the borrower could support the debt that they are requesting.
Tr. Day 6, p. 6.
Mr. Spencer Lord, Cross River Bank, stated that Cross River Bank requested “filed tax
forms, identification and voided check.” As for the types of tax forms, Mr. Lord said, “it depended
on the type of business.” In this case, what was provided was “a 1065 and a 940.” Tr. Day 6, p.
59.
For three of the four PPP loan applications that the defendant submitted to lenders in 2021,
he provided false and forged 2020 1065 income tax returns: to PayPal for Alafaya Trails on
February 26, 2021 (as well as a forged 2019 tax return), to Northeast Bank for Alafaya Trails on
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March 11, 2021, and to Cross River Bank for HM Management on March 12, 2021.2
In addition, the evidence included the testimony that N.C. had prepared the defendant’s
and all of his companies’ tax returns essentially for the entire time the defendant has been in
business, 20-25 years. The defendant executed IRS Forms 4506-T for Alafaya Trails, HM Four,
and his personal tax returns for tax years – 2015-2017 - which witness J.G. testified he submitted
to the SBA in late March 2020 on behalf of the defendant, together with an HM Four loan
application. Thus, the defendant was aware that the SBA might have access to his earlier years’
tax returns, all of which show that N.C. was the preparer on the defendant’s business and personal
tax returns.
Regarding the EIDL application for HM Four, the SBA file for HM Four indicates that the
defendant submitted the forged documents at issue – the Mattress One lease and the banker’s letter
-- in response to the SBA loan officer’s request that HM Four provide documentary evidence of
its business operations, and verification of the HM Four bank account. Mr. Motes testified that
the SBA would have reviewed all of the documentation provided in its totality.
B.
The evidence in this case supporting the Aggravated ID Theft counts satisfies Dubin.
The defendant has extracted terms from the Dubin decision, such as “crux of the
criminality,” and “key mover,” and has severed them from the factual context in which the
Supreme Court expressed those terms. In Dubin, the Supreme Court reversed the Fifth Circuit’s
decision upholding an aggravated identity theft conviction that involved the use of a Medicaid
patient’s number on an inflated claim for reimbursement for psychological services. Id. at 115-
2 The defendant also submitted a January application to Cross River Bank for HM Management.
He produced to them, not the full 1065 partnership return, but only the K-1 attachment for tax year
2019. Mr. Lord from Cross River Bank testified that this loan application timed out and was never
processed by Cross River Bank because their system alerted that it required their manual review.
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17. The psychological services were performed on the Medicaid patient whose number was used
on the claim; however, the claim was false because the qualifications of the psychologist
performing the services were misrepresented in order to justify an upcharge, and not because of
anything having to do with the use of the Medicaid patient’s identity. Id. at 115. The Supreme
Court in Dubin held that the words “use” and “in relation to” in Section 1028A should not be
construed so that the statute would “apply automatically any time a name or other means of
identification happens to be part of the payment or billing method used in the commission of a
long list of predicate offenses.” Id. at 117. Instead, “using a means of identification in relation to
a predicate offense requires ‘a genuine nexus to the predicate offense.’” Id.
The Supreme Court further stated:
On this reading, the means of identification is at the crux of what makes the
predicate offense criminal, rather than merely an ancillary feature of a payment
method. When the underlying crime involves fraud or deceit, as many of § 1028A’s
predicates do, this entails using a means of identification specifically in a fraudulent
or deceitful manner.
Id. After referring to the dictionary definition of “identity theft,” the Supreme Court went on to
state that,
These definitions refer to offenses built around what the defendant does with the
means of identification in particular. In other words, the means of identification
specifically is a key mover in the criminality. This central role played by the means
of identification, which serves to designate a specific person’s identity, explains
why we say that the “identity” itself has been stolen.
Id. at 122-23. Finally, the Court analyzed “uses” of another person’s means of identification “in
relation to” predicate offenses involving “fraud or deceit crimes,” and stated that:
with fraud or deceit crimes like the one in this case [health care fraud], the means
of identification specifically must be used in a manner that is fraudulent or
deceptive. Such fraud or deceit going to identity can often be succinctly
summarized as going to “who” is involved.
Id. at 131-32.
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Dubin requires, in fraud cases, a showing that there was fraud or deceit “about identity.”
See Dubin, 599 U.S. at 126. In other words, the means of identification must have been used to
misrepresent, in some way, “who” was involved. Id. at 132. And so, by misrepresenting to the
lenders that his accountant was involved, and by misrepresenting to the SBA that his banker and
Mattress One’s president were involved, the defendant used their means of identification in
relation to his fraud.
The Eleventh Circuit’s opinion in United States v. Gladden, 78 F.4th 1232, 1244 (11th Cir.
2023) helps illustrate the point. There, the Court held that defendant Gladden’s aggravated identity
theft conviction—for having his employee, Whitten, go to a doctor to get an unneeded prescription
in her daughter’s name—must be vacated because his “use of Whitten’s daughter’s identifying
information was merely ancillary to the deception.” Gladden, 78 F.4th at 1248. The deception at
the heart of their conduct, the Court noted, “was obtaining the medically unnecessary
prescriptions.” Id. at 1248-49. But the prescriptions themselves were signed by a “buddy” doctor
and were written to real people, like Whitten’s daughter, so there were not any misrepresentations
about identity. Id.
The Court intimated that its holding might have been different, however, had Gladden
“forge[d] the name of the prescribing doctor on the prescription” or “misrepresent[ed] who would
be receiving the filled prescription.” Id. at 1249. In those circumstances, the deception at the heart
of his conduct not only would involve obtaining medically unnecessary prescriptions, but also
misrepresenting who was writing or receiving the prescriptions.
In other words, fraud schemes might involve misrepresentations about who, what, when,
where, why, and how. Co-defendant Linton, for example, misrepresented for what reason
medications were being prescribed (i.e., they were medically unnecessary) and also by whom the
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prescriptions were authorized (by, among other ways, changing signed prescriptions to add
additional expensive medication). Her use of the doctor’s means of identification was fraudulent
because she falsely represented that he had authorized additional prescriptions. That her fraud
involved other misrepresentations does not mean her misrepresentation about identity was
ancillary to the fraud. “Linton’s use of Dr. Almirol’s identity was central to the deception: she
used his ‘means of identification itself to defraud or deceive.’” Id. at 1245-46.
In this case, contrasted with Dubin, the means of identification of the three persons listed
in the aggravated identity theft counts -- the accountant (N.C.), the Mattress One president (M.S.),
and the Suntrust branch manager (H.B.) -- were stolen and used in the commission of the
underlying scheme to defraud. The victims’ identities were used without their knowledge or
consent in a manner that was deceitful: the submission to the lenders and the SBA of false
documents with the victims’ purported signatures that the defendant himself (or someone at his
direction) prepared to substantiate the false information the defendant provided about his
businesses.
The defendant argues that neither the lenders nor the SBA required the tax returns to be
signed by an accountant. Similarly with respect to the HM Four EIDL application, the defendant
argues that the SBA did not require the specific documents that the defendant produced. This is
true. However, the focus of the inquiry here should be the defendant’s criminality – his scheme to
defraud – not the victims.
The defendant’s business tax returns contained multiple schedules and reported more than
a million dollars in annual revenues or rents. They presented a complex financial picture that one
would certainly not expect to be prepared by the individual taxpayer using TurboTax, for instance.
The defendant, in carrying out his scheme to defraud, elected to include the accountant’s name,
Case 1:22-cr-20290-BB Document 165 Entered on FLSD Docket 12/22/2023 Page 18 of 22
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his signature, his firm’s name, and his Preparer Tax Identification Number (“PTIN”) to lend
credibility and legitimacy to the tax returns containing materially false information about, for
instance, salaries and wages, which was supposed to be true and accurate. In addition, it is
reasonable to infer that the defendant believed the SBA had, or could acquire, his prior years’ tax
returns (based on the Forms 4506-T he had submitted) and see that N.C.’s name was on the returns
as his preparer. Thus, including N.C.’s name, signature, PTIN, and firm information was important
to the defendant’s scheme, not just to lend legitimacy to the tax returns, but also to avoid raising
suspicion with the lenders or the SBA.
The same analysis applies to the Mattress One lease and the banker’s letter. Focusing on
the defendant’s scheme to defraud, these were the documents the defendant chose to submit to the
SBA to address its concerns. They demonstrate the defendant’s efforts to convince the SBA of
information that was false, mainly that: (1) HM Four had operations, and that (2) the business
bank account, which he had just opened and was its sole signer, was active and had the involvement
of his wife, the purported 80% owner of HM Four. The Mattress One president’s signature and
the banker’s signature were an important and necessary part of the false representations of those
documents.
The case of United States v. Fullerton, 2023 WL 6150782 (W.D. Tx. Sept. 20, 2023) is
factually very similar. In that case, the defendant “engaged in a fraudulent scheme with other
conspirators to apply for and receive Payroll Protection Program (PPP) loans during the COVID-
19 pandemic.” Id. at *1. In short, the defendant “used fraudulent documents to support the loan
applications, including fraudulent lists of employees and fraudulent tax documents.” Id. In one
instance, he created fake tax records to attach to the fraudulent loan applications he submitted and
forged the signature of a CPA to indicate it had been prepared by a tax preparer. Id.
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The district court found this allegation survived Dubin because the defendant used the
name and signature of a certified public accountant on fake tax records “to lend credibility to
fraudulent loan applications.” Id. at *4. That action, the court found, “legitimized the loan
applications and increased the likelihood that they would be approved by the appropriate financial
institutions.” In other words, the court held, he used the identity “in a manner that is fraudulent
and deceptive.” “[I]t is hard to identify a clearer allegation of identity theft.” Id.
The case of United States v. Daniels, 2023 WL 4532675 (M.D. Fla. July 13, 2023) is also
instructive. In that case, the defendant was convicted of wire fraud and aggravated identity theft
charges based on his role in a scheme “to clear the titles of vehicles of liens from financial
institutions and other lienholders” by, among other ways, “claiming false and fraudulent towing
and storage liens on the vehicles.” Id. at *1. In one instance, for example, the defendant “created
false and fraudulent paperwork” for a 2015 Ford Focus sedan “as purported proof of a towing and
storage lien.” Id. at *3. The paperwork claimed $1,100 in towing and storage fees to a fake towing
and storage company and resulted in the tax collector’s office providing clear title to the vehicle.
Among other paperwork, the defendant included a towing and storage receipt with a forged
signature for J.E., who was deceased at the time his signature was forged.” Id. The court found
that the defendant’s conduct fell “squarely within the classic variety of identity theft left untouched
by Dubin.” Id. at *4. The defendant’s “use of J.E.’s identifying information,” the court explained,
“was itself fraudulent or deceptive because it involved forging J.E.’s signature on a tow slip he
had not reviewed to fool the tax collector's office.”
Similarly here, the defendant’s use of the others’ identifying information was fraudulent
and deceptive because it involved forging signatures on important documents in order to further
the defendant’s scheme, that is, to fool the lenders and the SBA into providing PPP and EIDL
Case 1:22-cr-20290-BB Document 165 Entered on FLSD Docket 12/22/2023 Page 20 of 22
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loans. In other words, the defendant’s conduct fell squarely within “’the classic variety of identity
theft left untouched by Dubin.’” United States v. Eric Dean Sheppard, 2023 WL 7157874, at *5
(SDFL Oct. 31, 2023) (quoting Gladden, 78 F.4th at 1246).
The broader point here is that a reasonable jury could find, from the evidence, that the
defendant’s forgeries had a genuine nexus to his fraud scheme—he used the forged signatures to
try to deceive the lenders and the SBA into giving him loans he knew he was not entitled to. Or
in a more traditional sense, he stole the identifying information of other persons for fraudulent
purposes. See Dubin, 599 U.S. at 122 (citing Black’s Law Dictionary 894 (11th ed. 2019) (defining
“identity theft”)). That it’s just one of many misrepresentations is beside the point.
Conclusion
For the reasons set forth above, the government respectfully requests that the defendant’s
motion for judgment of acquittal as to Counts 4 through 14 of the Superseding Indictment be
denied.
Respectfully submitted,
MARKENZY LAPOINTE
UNITED STATES ATTORNEY
By: s/Aimee C. Jimenez
Aimee C. Jimenez
Assistant United States Attorney
Court No. A5500795
99 N.E. 4th Street
Miami, Florida 33132-2111
Tel: (305) 961-9028
Fax: (305) 530-7976
Email: aimee.jimenez@usdoj.gov
Case 1:22-cr-20290-BB Document 165 Entered on FLSD Docket 12/22/2023 Page 21 of 22
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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on December 22, 2023, I electronically filed the foregoing
document with the Clerk of the Court using CM/ECF.
s/Aimee Jimenez
Aimee C. Jimenez
Assistant United States Attorney
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