Court filing
Transcript of Trial Day 6 as to Eric Dean Sheppard held on 12/5/2023 — USA v. Sheppard (Dkt. 312, S.D. Fla.)
Filed February 25, 2025 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 | 2025-02-25 |
U.S. District Court for the Southern District of Florida · No. 1:22-cr-20290-BB · Doc. 312 · 2025-02-25 · Docket on CourtListener
Full text
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF FLORIDA
MIAMI DIVISION
CASE NO. 1:22-cr-20290-BB-1
UNITED STATES OF AMERICA,
Plaintiff,
December 5, 2023
9:04 a.m.
vs.
ERIC DEAN SHEPPARD,
Defendant.
Pages 1 THROUGH 293
______________________________________________________________
TRANSCRIPT OF TRIAL DAY 6
BEFORE THE HONORABLE BETH BLOOM
UNITED STATES DISTRICT JUDGE
And a Jury of 12
Appearances:
FOR THE GOVERNMENT: UNITED STATES ATTORNEY'S OFFICE
AIMEE C. JIMENEZ, AUSA
ANA MARIA MARTINEZ, AUSA
99 Northeast 4th Street
Miami, Florida 33132
FOR THE DEFENDANT: SALE & WEINTRAUB, PA
JAYNE C. WEINTRAUB, ESQ.
2 South Biscayne Boulevard, 21st Floor
Miami, Florida 33131
NELSON MULLINS
JONATHAN ETRA, ESQ.
CHRISTOPHER C. CAVALLO, ESQ.
2 South Biscayne Boulevard, 21st Floor
Miami, Florida 33131
COURT REPORTER: Yvette Hernandez
U.S. District Court
400 North Miami Avenue, Room 10-2
Miami, Florida 33128
yvette_hernandez@flsd.uscourts.gov
ALSO PRESENT: Special Agent Sarah Halleran
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
I N D E X
Certificate..................................... 293
W I T N E S S
ON BEHALF OF THE GOVERNMENT:
PAGE
DAVID TOYE
CONTINUED DIRECT EXAMINATION BY MS. JIMENEZ
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CROSS-EXAMINATION BY MR. ETRA
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REDIRECT EXAMINATION BY MS. JIMENEZ
108
CARLOS GRANDA
DIRECT EXAMINATION BY MS. JIMENEZ
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CROSS-EXAMINATION BY MS. WEINTRAUB
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REDIRECT EXAMINATION BY MS. JIMENEZ
166
SPENCER LORD
DIRECT EXAMINATION BY MS. JIMENEZ
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CROSS-EXAMINATION BY MR. ETRA
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REDIRECT EXAMINATION BY MS. JIMENEZ
259
E X H I B I T S
GOVERNMENT'S EX. NO.: OFFERED ADMITTED
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173 173
21-1 through 21-3
173 173
22-1 through 22-7
173 173
10-1 through 10-12
174 174
DEFENDANT'S EX. NO.: OFFERED ADMITTED
N-10
159 160
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
(Call to order of the Court, 9:04 a.m.)
THE COURT: Good morning to everyone.
Let me acknowledge the presence of the Defendant.
Go ahead and have a seat.
All of our jurors are here. I just want to make sure
they're not in the restroom.
And do we have our -- do we have our witness present?
MS. JIMENEZ: Yes, Your Honor, we do.
THE COURT: All right. Are there any issues that we
need to address this morning?
MS. JIMENEZ: I don't believe so, Your Honor.
MR. ETRA: No, Your Honor.
THE COURT: On behalf of the Defendant -- okay.
MS. JIMENEZ: No, Your Honor.
THE COURT: All right. We just need the witness.
(Pause in proceedings.)
THE COURT: All right. Good morning, Mr. Toye.
All right. Today will be a full day. Obviously,
we'll take a one-hour recess for lunch with the appropriate
comfort breaks.
(Pause in proceedings.)
THE COURT: All right. My apologies. We are still
waiting for one juror.
(Pause in proceedings.)
COURT SECURITY OFFICER: All rise.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
(Before the Jury, 9:09 a.m.)
THE COURT: All right. It's great to see you, Ladies
and Gentlemen.
Please be seated, everyone.
And we will continue with the direct examination of
Mr. Toye.
Mr. Toye, let me remind you, you were previously
placed under oath.
Ms. Jimenez?
DIRECT EXAMINATION [CONTINUED]
BY MS. JIMENEZ:
Q.
Good morning, Mr. Toye.
A.
Morning.
MS. JIMENEZ: I'd love a little music for
intermission.
All right. If we can take a look at Exhibit 20-16,
please.
BY MS. JIMENEZ:
Q.
Mr. Toye, you remember we looked at this record yesterday;
is that right?
A.
Correct.
Q.
And what is this record?
A.
So this is a tracking history of documents uploaded to the
application platform by the borrower.
Q.
And does it also reflect information supplied through the
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
portal by the borrower?
A.
Correct. It shows an item-by-item timeline of when each
item -- of what each item is, and then also when each item was
uploaded to the portal.
Q.
The second item on this list, does that indicate that
information was provided to the portal on that date?
A.
Yes, it does.
Q.
All right.
MS. JIMENEZ: Could we take a look at Exhibit 20-12,
please, alongside this.
BY MS. JIMENEZ:
Q.
What is 20-12?
A.
20-12 is SBA Form 2483-SD. So this is the application form
for a second draw triple P loan.
MS. JIMENEZ: Can we go to the signature page.
All right. Stop here.
BY MS. JIMENEZ:
Q.
What is the date indicated on the DocuSign signature?
A.
The date listed is March 12th, 2021.
Q.
Does this document 2483 reflect --
MS. JIMENEZ: Can we go back to the first page for a
moment.
BY MS. JIMENEZ:
Q.
-- reflect the information that was supplied by the
applicant on March 11 of 2021?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Yes, it does.
Q.
Okay.
MS. JIMENEZ: I'm sorry. Let's go back down to that
signature block.
BY MS. JIMENEZ:
Q.
Okay. The signature block, it indicates -- who does the
signature block ask to have sign this document?
A.
So the -- the printed name is Eric Sheppard.
Q.
All right. But the -- well, let me ask you this:
Underneath the DocuSigned name, what does it indicate?
A.
It indicates: "Signature of authorized representative of
applicant."
Q.
And who is it that Northeast Bank wants to take
responsibility for the information provided and the documents
supplied with this loan application?
A.
The person who signed the application.
Q.
Their authorized representative; is that right?
A.
Yes. Correct.
Q.
All right.
MS. JIMENEZ: Can we go back to the -- well, let's go
to Page 6 of this document.
BY MS. JIMENEZ:
Q.
Okay. The first sentence of the third paragraph, what is
that? Can you read that.
A.
So: "For purposes of reporting NAICS code applicants must
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
match the business activity code provided on their IRS income
tax filings, if applicable."
Q.
All right.
MS. JIMENEZ: So I found it. Can we go back to the
first page, please.
BY MS. JIMENEZ:
Q.
All right. So the top right box provides the NAICS code,
and the instructions tell the applicant to draw that
information from where?
A.
Their business tax return.
Q.
All right.
MS. JIMENEZ: Can we go to Exhibit 19-2, please, the
PayPal, just alongside -- alongside 20-12.
This is from a PayPal record alongside 20-12.
BY MS. JIMENEZ:
Q.
All right. The 2483 Form submitted to Northeast Bank
indicates that the owner, Eric Sheppard, has what percentage
ownership of HM-UP Development Alafaya Trails?
A.
Our application shows 85 percent ownership by Eric
Sheppard.
Q.
All right. Can you read -- with respect to the document on
the left side, 19-2, left side of the document, halfway down
the page, does it indicate ownership percentage of the business
HM-UP Development Alafaya Trails?
A.
Yes. This ownership percentage is listed as 52 percent.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
All right.
MS. JIMENEZ: The document on the left side, 19-2,
could you go to the second page for a moment, please.
BY MS. JIMENEZ:
Q.
It indicates "Industry," and underneath it to the left
there's a number. Can you read that number?
A.
So the number listed is 531120.
Q.
Is that a different industry code that's reflect -- than
the one reflected on your application?
A.
It is. The one on our application is 236220.
Q.
And the one in the document on the left side, what does it
indicate that industry to be?
A.
That code is indicated as lessors of non-residential
buildings, except for mini-warehouses.
Q.
Lessors would be landlords of non-residential buildings?
A.
Correct. Yes.
Q.
Is that a category of business that is eligible for a PPP
loan?
A.
It is not.
Q.
Now, if Northeast Bank had reason to believe that the
information provided to the portal on March 11, 2021, that
supplied the information for this form reflected on document
20-12 -- if you had information -- if you had reason to believe
that the information provided, such as number of employees,
average monthly payroll, ownership amount, or ownership
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
percentage revenue decrease, business industry code -- if that
information was false, would Northeast Bank have funded this
loan?
A.
We would not have funded the loan.
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.
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's 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 for -- primarily for cash flow, to make sure that the
borrower could support the debt that they are requesting.
Q.
All right.
MS. JIMENEZ: Can we go to document 20-13, please.
BY MS. JIMENEZ:
Q.
What is this document?
A.
So this is SBA Form 2484-SD. This is basically the
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
lender's application for a triple P loan guarantee. So the SBA
required both a borrower application and a lender application.
And our lender application basically -- it's basically the same
information that's on the borrower application, just signed by
the bank.
Q.
So in addition to the 2483, this is the information that
you supplied to the SBA?
A.
Yes. Correct.
Q.
When you supply this information to the SBA, what is the
SBA supposed to do?
A.
The SBA would review it. And as long as it's complete and
accurate, they would issue the loan number.
Q.
And -- you had said: "Complete and accurate." The
accuracy of this information that you're supplying, what is it
based on?
A.
It's based on data input by the borrower.
Q.
What about the certifications on that form?
A.
Yes. And on the -- that we can take the borrower's
certifications and that all the information they provided as
true and accurate.
Q.
All right. And you are -- are you indicating to the SBA
that this applicant has a certain -- had a certain revenue
decrease in 2020 of at least 25 percent that qualified the
applicant for a second draw?
A.
Yes, we are, based on the information provided by the
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
borrower.
Q.
And that gross receipts or gross rents figure from 2020,
was that also reflected on the 2020 income tax return that was
supplied to you by the borrower?
A.
Yes, it was.
MS. JIMENEZ: If I could have a moment.
THE COURT: Certainly.
(Pause in proceedings.)
MS. JIMENEZ: Your Honor, I don't have any other
questions of the witness.
THE COURT: All right. Cross-examination.
(Pause in proceedings.)
MR. ETRA: May I proceed?
THE COURT: Yes. Of course.
CROSS-EXAMINATION
BY MR. ETRA:
Q.
Good morning, Mr. Toye. How are you?
A.
Good morning.
Q.
We have never met, correct?
A.
That is correct.
Q.
You have no personal -- you had no personal involvement in
the loan that you have been testifying about today, correct?
A.
No direct involvement in this loan.
Q.
You had no involvement in the loan, correct?
A.
I had no specific direct involvement in this particular
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
loan. I managed a group of people who were doing the work.
Q.
So you weren't the person who looked at the information
that came in, correct?
A.
When this loan was reviewed, I did not look at the
information.
Q.
You weren't the person who decided whether more information
was needed, correct?
A.
Yes.
Q.
And in terms of what the people -- and there are people at
the bank that were doing this, right?
A.
Yes.
Q.
It's just not you, correct?
A.
I was not the reviewer of this application.
Q.
And there were people at the bank that were making
decisions about what they can rely on and not rely on, right?
A.
Yes.
Q.
You testified on direct about what the bank relied on and
what the bank didn't rely on on this loan, correct?
MS. JIMENEZ: Objection. He did not say anything like
that.
THE COURT: Overruled. The witness can answer.
THE WITNESS: Can you repeat the question.
BY MR. ETRA:
Q.
You testified on direct about what the bank relied on or
didn't rely on for this loan, correct?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Yes.
Q.
And that was not based on any personal knowledge that you
have.
A.
I understand how the process worked and what the documents
were. These were very kind of cookie-cutter applications and
loans, so they were very similar based on what the business
type was. So I understand what the -- while I didn't directly
approve or review this loan when it was under review, I know
what to look for and what all the applications are and what all
the documents are.
Q.
But you don't know what the people working on the loan
looked at and relied upon when they were reviewing this
information back in 2021? Yes or no, please.
A.
Well, I think that -- we did show the underwriting template
yesterday, and you can see from that template what the person
that reviewed the loan did for work. So that would be the
template or kind of the source to go back to to see how they
reviewed -- what documents they looked at and how they reviewed
the loan.
Q.
And I understand what you're saying, and I agree that's
fair. You're able to look at documents and explain what you
see in the documents, correct?
A.
Yes.
Q.
In terms of what the people who are making the decisions or
analyzing this information -- how they were doing their jobs,
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
correct?
A.
Can you repeat the question?
Q.
Sure. You were able to look at the documents, for example,
the loan verifier document, and say: "Okay. I see what this
person was doing. I see what this loan officer was relying on
or not relying on," right?
A.
Yes. You could see what the -- whoever reviewed the
application, what their work was.
Q.
But your testimony about the bank policies are about what
the bank policies were supposed -- or how the officers were
supposed to act -- let me start again.
When you talk about the bank's procedures for a PPP
loan, you're describing what was supposed to happen with each
loan, correct?
A.
Yeah. We had a very standard checklist and process in that
spreadsheet that, you know, I think was very straightforward.
Q.
I'm going to ask the question and ask if you can answer yes
or no. When you testify about the policies and procedures at
the bank, you're testifying about what was supposed to happen;
is that correct?
A.
Yes.
Q.
Okay. And so you weren't personally involved in this loan,
correct?
A.
I did not underwrite this loan.
Q.
And you're able -- you can't say whether -- what policy --
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
you can't say what the people who did underwrite the loan --
what they actually did, except what you can see in the
documents. Is that fair?
MS. JIMENEZ: Objection.
THE COURT: Basis?
MS. JIMENEZ: (No verbal response.)
THE COURT: Overruled. Let's continue.
THE WITNESS: Can you repeat the question.
BY MR. ETRA:
Q.
Sure. When you talk about what happened with this loan,
all you could do is look at the Northeast or ACAP documents and
try and interpret them for us two and a half years later,
correct?
A.
Yes.
Q.
Okay. And you were not -- you're here for Northeast, not
for ACAP, correct?
A.
I work at Northeast Bank.
Q.
Okay. So you had no personal involvement with what was
going on at ACAP on this loan, correct?
A.
We worked hand in hand on this project, so there was
constant communication in between the teams.
Q.
I'd like you to answer yes or no if you can. You had no
personal involvement in what ACAP was doing on this loan; is
that true?
A.
I don't know if I can answer that in a yes-or-no question
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
because it's not a yes-or-no question. But the bank and ACAP
worked hand in hand every single day on these loans, working
together trying to figure them out. So it's not a yes-or-no
question. It's a we worked together. So I wasn't in their
office. I was in the bank's office. But we worked hand in
hand talking to NEWITY or ACAP every day on how to
perform these loans and what the issues we saw in them were.
Q.
I'm talking about this loan. Okay?
A.
Okay.
Q.
Were you personally involved with working with ACAP on this
particular loan?
A.
I was not.
Q.
I've heard you mention the name Eric Sheppard many times in
your testimony. Correct?
A.
Yes.
Q.
Do you know Mr. Sheppard?
A.
I do not.
Q.
Did you ever meet Mr. Sheppard?
A.
I have not met him.
Q.
Did you ever speak to Mr. Sheppard?
A.
I have not spoken with him.
Q.
And based on the documents available to you at Northeast,
you have no information about whether Mr. Sheppard, for
example, filled out the online portal, correct?
A.
We have the information that was in the application.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
I'm going to ask it again and see if you can answer yes or
no. Based on the information that Northeast has -- well,
you -- let me start again.
You personally don't know whether Mr. Sheppard filled
out the online application in the portal, correct?
A.
I know what's in the application.
Q.
And if you can answer yes or no, please. You personally
don't know whether Mr. Sheppard filled out the online
application in the portal. Yes or no?
A.
I don't know -- I know what's in the application. I'm not
trying to be difficult, but I know that the application says
Eric Sheppard. So that's all that I know.
Q.
So you don't know whether he filled it out, right?
A.
I mean, we can accept the application and the
certifications in there that that's all accurate and true, and
that's what the name was on the application.
Q.
Does the online application say it's being filled out by
Mr. Sheppard?
A.
It was signed and dated and printed name with Eric
Sheppard.
Q.
Talking about the online portal application. It has the
name Eric Sheppard as owner, but it doesn't actually say it's
being filled out by Eric Sheppard, correct?
A.
It says that the authorized representative who's completing
the application is Eric Sheppard.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Could I get -- could I get a yes or no, please? The online
application for the portal, it says Eric Sheppard is the owner,
but it doesn't actually say that it's being filled out by Eric
Sheppard. Is that true or do you not know?
A.
I would assume based on the application that it was filled
out by Eric Sheppard.
Q.
So you don't know?
A.
I would assume based on the application that it was filled
out by Eric Sheppard. That's the only answer I can provide.
Q.
So you're here to assume --
MS. JIMENEZ: Objection. He's being argumentative.
The witness has answered the question multiple times.
THE COURT: Overruled.
BY MR. ETRA:
Q.
You know we're in a criminal trial, right?
A.
I understand.
Q.
You know this is important for Mr. Sheppard, right?
A.
I understand.
Q.
You're not coming here to assume what happened?
MS. JIMENEZ: Objection. Argumentative.
THE COURT: Sustained.
BY MR. ETRA:
Q.
Is your testimony based on assumptions?
A.
My testimony is based on the documents we provided.
Q.
And your assumptions about them?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
MS. JIMENEZ: Objection.
THE COURT: And the basis?
MS. JIMENEZ: It's argumentative.
THE COURT: Overruled at this point.
BY MR. ETRA:
Q.
Are you here to testify about assumptions in this criminal
trial? Yes or no?
A.
I'm here to testify based on the documents the bank
provided or received.
Q.
And do those documents say that Mr. Sheppard sat at the
portal and filled out the online application? Yes or no?
A.
The documents don't say that he sat at the portal, but they
do have his name on the application.
Q.
As an owner?
A.
And as the signer of the document.
Q.
On the online portal, there's no signer, correct? That
first day, the online application, there's no signer, correct?
A.
The portal would send someone a DocuSign based on the
information input into the --
Q.
We'll go document by document. Is it your testimony that
Mr. Sheppard uploaded all the information into the portal? Is
that your testimony?
A.
Yes.
Q.
And that's based on what?
A.
Based on -- I'm basing my information on the -- or my
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
testimony on what happened in the portal, by the -- we were
able to take the application that that's the person who
uploaded the information.
Q.
All right. We will go document by document, then.
MR. ETRA: Put up Exhibit 112, please, in evidence.
MR. CAVALLO: 112?
MR. ETRA: Sorry. 20-16.
BY MR. ETRA:
Q.
Okay. I call this a log. What do you call this document?
A.
I think a log is fine. It's a log of data that was
submitted to the online application portal.
Q.
Okay. Does it have a place to show where the -- there's an
online application that's filled out on March 11th. You
testified about, correct?
A.
Correct.
Q.
Is that shown on this log?
A.
The application?
Q.
Yeah, of March 11th, on the portal.
A.
So the application is not on this list. It would have been
sent via DocuSign.
Q.
We're talking about what happens on March 11th with the
first online application. Are you saying that's sent in
DocuSign?
A.
It was signed via DocuSign -- the application was signed
via DocuSign.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
When was it signed?
A.
I'd have to look at the application.
Q.
All right. Let's just focus on what's here, then. This
shows that certain things happened on March 11th, correct?
A.
Correct.
Q.
The driver's license was uploaded, correct?
A.
Correct.
Q.
The document that says: "Owner HM-UP Development Alafaya,
LLC Information PDF" was uploaded, correct?
A.
Correct.
Q.
The 940 was uploaded, correct?
A.
Correct.
Q.
The next document, which also has 940 and similar
documents, was also uploaded, correct?
A.
Correct.
Q.
And the 2020 tax return was uploaded, correct?
A.
Correct.
Q.
And it's all done around -- well, not completely all around
the same time, but all done on March 11th.
A.
Correct.
Q.
And you're testifying that Mr. Sheppard personally uploaded
these?
A.
Based -- I'm testifying based on the application we
received.
Q.
And when you say the application you received, you're
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
talking about the online portal or --
A.
I'm testifying based off the SBA Form 2483.
Q.
So when we get to that form, I want you to tell me where it
says that Mr. Sheppard uploaded these documents. Will you do
that when we get there?
A.
I will review the form when you put it up, yes.
Q.
Okay. Great.
And you don't have any IP address for what happened on
March 11th, correct?
A.
I do not have one.
Q.
And same thing for the -- well, I'm -- maybe I'm using
terms differently from you.
MR. ETRA: So let's just pull up Exhibit 22 -- 20-2.
Excuse me.
BY MR. ETRA:
Q.
What do you call this document?
A.
This would be -- we can call it the application portal.
Q.
Application portal. Okay. And this is filled out on the
portal on March 11th, 2021, correct?
A.
Correct.
Q.
And I think you testified that this was -- that you know
that Mr. Sheppard is the one who inputted this information. Is
that your testimony?
MS. JIMENEZ: Objection. Misstates the testimony.
THE COURT: Overruled.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
THE WITNESS: Can you repeat the question, please?
BY MR. ETRA:
Q.
Your testimony is that you, David Toye, know that
Mr. Sheppard sat at his computer and filled out this
information on March 11th. Is that your testimony?
A.
My testimony is all based on the 2483 that we received. So
I'm assuming based off that form that that was completed by the
person who signed and dated the application form.
Q.
So you're making an assumption?
A.
I'm making an assumption based on what's provided in the
form, the 2483 application.
Q.
Okay. Well, we'll get to the 2483 application.
Now I want to go through different parts of this
portal application. Let's start with -- by the way, does this
application -- this portal application say that it's being
filled out by a person? In other words, does whoever is
sitting at the computer say: "Oh. I'm filling it out, and my
name is Bob Smith or Eric Sheppard or David Toye"?
A.
The person whose name appears at the top of 2483 is
generally the person who is filling out the form.
Q.
I'm asking you if this --
A.
Yes. So the person who is filling out the online
application, their contact information is the one that's at the
top of the 2483.
Q.
Where does it show here -- where does it show in
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Northeast's system that the person filling out the online
application is told: "Who are you," and they put their name?
Show me where that is. We can go through. You want -- should
we thumb through this document for you?
A.
Sure.
Q.
So just tell us when you want us to turn the page.
A.
You can turn the page.
There should be -- thank you. If you look at a 2483,
there's contact information at the top of that form. And
that's the person -- so I don't know exactly what tab this is
on, but that's who was filling out this information in the
borrower portal -- or the application portal. Sorry.
Q.
Is there anything on this form that says -- is this -- this
document we're looking at, is this the way the portal -- the
questions appeared to the person filling it out?
A.
This is how it appeared to the lender. This is the
lender's portal.
Q.
Oh. Does it -- do you have for us -- did you produce to us
the prompts the way it appeared to the applicant when they
filled out the online application?
A.
I'd have to check and see what the documents we provided
were.
Q.
So you don't know whether the prompts that appear here
appeared that way when whoever filled this out filled it out on
March 11th?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
It was all the same questions. Like, the loan
eligibility -- these are all the same questions that the
borrower would see, and this is just us seeing what their
responses are.
Q.
But did it have the same explanations and comments about
how to answer the questions?
A.
It should. I believe all those different circle eyes
had -- you could hover over those and it would tell you -- if
you had any questions, it would give you kind of some
explanations.
Q.
Do you know that for a fact that what we're looking at here
by way of the questions was on the online application?
A.
Yes.
Q.
And that you hover over the circle eye and get information?
A.
Yes.
Q.
Well, this is a PDF. I can't hover over it. Do you know
what's behind the eye?
A.
Not off the top of my head.
Q.
All right. I still want to go through this. And please
tell me where it says that the person filling out the online
form -- online application is asked: "Tell me who you are."
So please, let's go through the whole thing at your pace.
A.
It's not on this screen.
MR. ETRA: Go to the next.
THE WITNESS: It's not on this screen.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
MR. ETRA: Next.
THE WITNESS: It's not on this screen.
MR. ETRA: Next.
THE WITNESS: Is there a contacts tab?
BY MR. ETRA:
Q.
I only have what -- the Government produced to us what I
assume that you produced to the Government. I only have this.
I don't have anything else for this document.
A.
If you scroll back up to the top.
(Pause in proceedings.)
THE WITNESS: So the best answer I have is at some
point in the borrower application portal they would ask for
contact information for who is filling out the application, and
you would see that contact information at the top of the 2483.
BY MR. ETRA:
Q.
So that is -- when you say -- I want to get the terms
straight -- we're using the word "application" differently for
different documents, right? You have a portal application
we're looking at, right?
A.
Correct.
Q.
And you have the 2483 with the DocuSign at the end of --
towards the end of the process, correct?
A.
Correct.
Q.
So at some point they ask for the contact information for
who is signing the 2483, correct?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
The top of the 2483 asks for the contact information for
who's filling out the document or who's filling out the
application.
Q.
Who's filling out the 2483, right?
A.
Yes. And the 2483 is based on the information provided in
the borrower -- the application portal.
Q.
Right. The point is that you have -- and you need the
contact information for the 2483 because you have to send the
DocuSign to that person, right?
A.
Yes.
Q.
But this is not a DocuSigned document, the online
application, right?
A.
The online portal is not a DocuSign.
Q.
Right. And it's certainly possible that the person who is
filling out the online portal is different from the person who
is given as the contact information and who DocuSigns the 2483.
Isn't that fair to say?
A.
It's possible that it's different.
Q.
That it's what?
A.
I said: "It's possible that it's different." But I would
assume that it's one person doing both.
Q.
Just because that's your assumption?
A.
Because that's how most people do these, yes.
Q.
Do you know that's how most people do these?
A.
I reviewed hundreds and hundreds of these files, and just
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
based on my experience the names always matched up.
Q.
And did you conclude that from reviewing this file, that
Mr. Sheppard did the online application, just like he
DocuSigned it? Is that part of your analysis?
A.
I just assumed, based on the name at the top of the
application, and the name on the top of the 2483, and the name
on the bottom of the 2483, that it was the same person.
Q.
Do you work with --
(Phone ringing.)
THE COURT: Thank you.
BY MR. ETRA:
Q.
Is part of your job to work with the Government when they
have a criminal investigation or prosecution?
A.
When these things arise, I will comply with their requests,
yes.
Q.
I'm asking -- asking about you personally, not the bank.
Are you personally involved as part of your job assisting the
Government when they contact the bank about government
investigations or criminal prosecutions?
A.
If someone at the bank asks me to assist, I will.
Q.
Have you assisted before this case?
A.
Yes.
Q.
Okay. And you're certainly assisting the Government now,
correct?
A.
We were subpoenaed. So we complied with the subpoena.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
And did you meet with the Government before you showed up
today?
A.
I think we had our regular trial prep sessions.
Q.
I'm not characterizing them, but you prepared with the
Government, right?
A.
We had -- yes -- regular, you know, trial prep sessions.
Q.
You didn't meet with us, right?
A.
I did not meet with you.
Q.
Did you conduct any kind of investigation to determine who
filled out this online application?
A.
We did not complete an investigation into who filled out
the application.
Q.
Okay. Let's look at the business --
MR. ETRA: Sorry. Let's go back to 20-2.
BY MR. ETRA:
Q.
I want to focus in on -- how many times did you meet with
the Government, whether in person or by Zoom or phone call?
A.
I think we maybe had maybe a handful of meetings.
Q.
Could you give a number for a handful? I don't want to --
that's kind of a vague term.
A.
I would say no more than five.
Q.
No more than five. Did you ever email with the Government?
A.
Yes.
Q.
Did you ever -- when you were meeting with the Government
did -- did that involve one of the FBI agents, for example,
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Special Agent Halleran?
A.
She was copied on the emails, yes.
Q.
And what about meetings with Special Agent Halleran
attending any of those meetings?
A.
She was on some of the calls, I believe. But I don't
remember exactly which calls she was on and which ones she was
not.
Q.
Do you know if any notes were taken during those meetings?
A.
I'm unsure.
Q.
Okay. Let's talk about...
(Pause in proceedings.)
MR. ETRA: I'll continue, Your Honor, if I may.
BY MR. ETRA:
Q.
It has -- the business legal name is HM-UP, right?
A.
The business legal name is HM-UP Development Alafaya
Trails, LLC.
Q.
And was that an LLC?
A.
That is what the name says.
Q.
And it has the phone number that ends in 5529 as a business
phone number, right?
A.
Yes. Correct. 1(305)582-5529.
Q.
And then it has an industry code. It says: "Industry",
parenthesis, "NAICS code," and it has that on the prompt,
right?
A.
That is correct.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
And then what's written here is the number that starts with
a two for construction. Can we say that?
A.
Yes. The industry code listed is 236220, commercial and
institutional building construction.
Q.
Now, I'm focusing on this online application. I promise
you we'll get to the 2483 later. Okay?
A.
Okay.
Q.
On this online application, where does it say that you have
to use the code that's on the tax return?
A.
The online application, I would imagine it would say it
when you're applying --
MR. ETRA: Objection. Move to strike.
THE COURT: And the basis?
MR. ETRA: He says: "I imagine."
THE COURT: All right. Why don't you re-ask the
question where the witness can testify based on his personal
knowledge.
BY MR. ETRA:
Q.
Do you know whether the online application says to whoever
is filling it out to use the code -- the industry code that's
on the tax return? Do you know, yes or no?
A.
Off the top of my head, I don't know.
Q.
Okay. I'm not asking you off the top of your head. I'm
asking you as a witness in a criminal trial. Do you know or do
you not know?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
I do not know if it specifically said that on the
application portal, but it does say that on the 2483.
Q.
We'll get to the 2483. Okay. So I'm focusing on the
application portal. Okay?
You testified that the program was not for passive
businesses; is that correct?
A.
That's correct.
Q.
It doesn't say that on the online portal, does it?
A.
It would say -- if you input your NAICS case code, that was
an ineligible industry, it would say that you're not eligible.
Q.
But just looking at the online portal where it asks you for
industry, there's nothing on the online portal that says: "Oh,
by the way, passive businesses aren't eligible," correct?
A.
Based on what's shown here, it doesn't say that.
Q.
And you also testified that it's not for a commercial
landlord to collect rent, right?
A.
Correct.
Q.
Didn't say that on the prompt on the online portal, did it?
A.
It would be the same thing here, where if you were to put
in that NAICS code in the portal, it would say you're not
eligible.
Q.
Right. But just looking at the prompt, the prompt doesn't
tell you, correct?
A.
This prompt does not say that.
Q.
Okay. You also said it's not available for risky
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
businesses. Did you say that?
A.
I said speculative businesses.
Q.
Speculative business. And where does it say that -- the
prompt doesn't tell you -- let me start again, please.
Where in the prompt -- isn't it true the prompt
doesn't say if you have a speculative business it doesn't apply
to you? Right?
A.
The prompt does not say that.
Q.
And there's no definition of speculative business in any of
these documents, correct?
A.
The SBA issued --
Q.
I'm asking you about these documents that were produced
that we've -- you've talked about in your direct. There's no
definition of speculative businesses in those documents,
correct?
A.
Yes.
Q.
Okay. All businesses are speculative to some extent,
right?
A.
I think the SBA has a specific definition of what a
speculative business is. And so it's -- you know, on a very
broad brush, everything's speculative.
Q.
Right. And it doesn't say any of that in the documents
that were produced by Northeast, correct?
A.
It doesn't say that this was a speculative business.
Q.
Do you have any reason to believe that construction was not
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
the main business activity of HM-UP in March of 2021?
A.
All I have to believe is what the borrower attested to and
certified in their 2483. So they said that was their NAICS
code, so that's what the bank believed.
Q.
You don't know what they were doing, right?
A.
I just know what's based on what they provided us.
Q.
Do you know whether HM-UP had a $21 million construction
loan during this time period?
A.
I wouldn't know that information.
Q.
You've been banking for quite some time, right?
A.
Yes.
Q.
And part of your banking involves non-government loans,
right?
A.
That's correct.
Q.
Have you dealt with construction loans?
A.
I have.
Q.
Do you recognize that a $21 million construction loan --
MS. JIMENEZ: Objection. Outside the scope.
THE COURT: Sustained.
BY MR. ETRA:
Q.
Do you know what the overall costs -- construction costs
were for the --
MS. JIMENEZ: Objection. Same objection.
THE COURT: Sustained.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
BY MR. ETRA:
Q.
Let's go to "business legal structure." Do you see that?
A.
Yes.
Q.
And what did the applicant fill out?
A.
"LLC."
Q.
Which is limited liability corporation -- or company, I
guess, right?
A.
Yes.
Q.
Okay. So here, the applicant is identifying itself as an
LLC, right?
A.
They have.
Q.
Not as a partnership, correct?
A.
Correct.
Q.
I'm just curious. There's an eye here next -- like, an eye
like in your head next to the next line. Do you know what that
is?
A.
I think if you press that button it would turn it -- it
would hide the EIN.
Q.
I see.
MR. ETRA: Let's go to "owner guarantee" --
"guarantor."
BY MR. ETRA:
Q.
Here they ask for the owner information for HM-UP, right?
A.
Correct.
Q.
And that's where Mr. Sheppard's name appears?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Correct.
Q.
This isn't asking who is filling out the application. It's
asking who the owner is.
A.
That is correct.
Q.
Okay.
MR. ETRA: Let's keep going.
Next page, please.
BY MR. ETRA:
Q.
Okay. The top part is the first round loan, right?
A.
That's correct.
MR. ETRA: And let's go further down to the bottom.
Let's go to "Number of Employees."
BY MR. ETRA:
Q.
It says: "How many employees does your business have?" Do
you see that?
A.
I do.
Q.
And the answer is 19?
A.
Correct. It says: "19 employees."
Q.
And at least here it doesn't necessarily -- it doesn't say:
"Don't include independent contractors," right?
A.
It doesn't say it on this prompt right now.
Q.
Okay. And when you testified about this on direct, I think
you said that on March 11th the ineligibility requirement was
to have less than 20 employees. Did you say that?
A.
Yes.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
And that was incorrect, wasn't it?
A.
There was an -- what was incorrect?
MR. ETRA: Let's go to Exhibit 19-19 from PayPal, at
Page 11501.
Let's blow that up.
It's not this one. Below that.
BY MR. ETRA:
Q.
Okay. So this is an email from the PayPal system that's
sent on March 2nd. Do you see that?
A.
I do.
Q.
Okay. And it's to the applicant. So we'll just say that's
HM-UP, because that's what the evidence shows, okay?
MS. JIMENEZ: Your Honor, objection. No personal
knowledge about this document.
THE COURT: Overruled.
BY MR. ETRA:
Q.
And what the email says from PayPal to HM-UP is: "We're
writing to provide you an update regarding your PPP loan
application." Do you see that?
A.
I do see that.
Q.
And then it says: "On February 24, 2021, the SBA
instituted a 14-day period ending on March 10th, 2021, during
which it will only accept applications from business owners
with fewer than 20 employees for review." Do you see that?
A.
I see that line.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Isn't it a fact that the period of time in which the SBA
was only accepting applications for businesses with fewer than
20 employees was the period that ended on March 10th, 2021?
A.
Based on this email.
Q.
Okay. And you have no reason to dispute what's in this
email, right?
A.
I don't have any reason to dispute it. I would -- I think
a better source document for this would be the SBA guidance on
this.
Q.
Well, how about you, sir? You came in here and testified
that on March 11th that there was an eligibility requirement of
fewer than 20 employees. Do you know that that's the case or
are you not sure exactly if that's the case?
A.
I know that -- so if this email is accurate, there was a
14-day window where they made it very clear to focus on small
businesses. So that was really apparent for lenders, and then
also was eye-opening for borrowers. The borrowers knew that
this was their window to get in -- for smaller borrowers.
So there was a window, and it was, you know,
publicized so that borrowers would know that they had kind of a
shot to get in, and we were trying to process them as fast as
we could.
Q.
Let me re-ask the question. When you testified that on
March 11th, when the online portal application came in, there
was an eligibility requirement that the company had to have
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
fewer than 20 employees, you were not really sure about that,
correct?
A.
I thought that that was when the window was open.
Q.
And now are you certain that that's when the window was
open?
A.
Well, this is an email, not an SBA guidance. So I would
defer to SBA guidance.
Q.
I don't want to argue with you. I just want to know where
you stand based on your knowledge, what you came to testify
about, and seeing this email. What is your testimony about
whether on March 11th there was an eligibility requirement of
having fewer than 20 employees? What is your testimony on
that?
A.
So the borrower would still be eligible. So I mean, they
still had an eligible number of employees, whether it be 20 or
less, or the larger guideline, which I think it was either 200
or 300. So they would have been eligible either way. There
was a short-term application portal for small borrowers, and
they took advantage of that. We tried to prioritize these.
Q.
Okay. Can I ask you not to speculate about who took
advantage of what and what you probably tried to do.
MS. JIMENEZ: Objection.
MR. ETRA: It's cross-examination.
MS. JIMENEZ: Commenting on the answer.
THE COURT: There's no need to give the witness
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
instruction. Let's ask the next question.
MR. ETRA: Let me try to wrap this up.
BY MR. ETRA:
Q.
There was a 14-day period where the SBA prioritized
companies with fewer than 20 employees, correct?
A.
That's correct.
Q.
And even when they prioritized employees with fewer than 20
employees, you could still be eligible with more employees,
right?
A.
You could be eligible, but you wouldn't receive a loan
number during that time frame.
Q.
And your testimony is that -- the 14-day period -- I just
want to know where you come out on this. Was that in effect on
March 11th or not?
A.
So based on this email, the 14-day period ended on
March 10th.
Q.
And do you have any reason to believe that's wrong?
A.
I just -- I would always go back to the SBA guidelines. I
just don't -- I don't know anything about this email. I've
never seen it before today.
Q.
Right. But you're here as a witness and I want to know
what you know. Do you know whether --
MS. JIMENEZ: Objection. He's been asked the same
question.
THE COURT: Overruled at this point.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
MS. JIMENEZ: Asked and answered.
BY MR. ETRA:
Q.
You're the witness. Maybe I'll find an SBA regulation this
morning, maybe I won't. I'm asking you: From your knowledge,
is it your testimony that the 14-day period was in effect on
March 11th? Is that your testimony? Yes or no?
A.
Based on this email, it wasn't.
MR. ETRA: Let's go back to the online portal
application, 20-2.
Let's go to the next page, please.
This has the revenue reduction, and we'll talk about
that more with the 2483.
Let's go to the next part of the document.
BY MR. ETRA:
Q.
Now, this is the total payroll as represented by whoever is
filling out the applicant -- and it's for the year 2020, right?
A.
That's correct.
Q.
And this includes, as indicated, not just the dollars of
payroll checks, say, but also benefits like insurance, right?
A.
Insurance for employees.
Q.
Right. Okay. The total amount is 712,310 on this
application, right?
A.
That's correct.
MR. ETRA: Let's go to the next page.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
BY MR. ETRA:
Q.
Now, here it says: "Number of employees as of February 15,
2020," right?
A.
That's correct.
Q.
Why is it asking how many as of February 15, 2020?
A.
That was the deadline set by the SBA for the program.
Q.
So when the -- when they asked how many employees earlier,
is that supposed to be also as of February 15th, 2020?
A.
Yes.
Q.
Oh, okay.
MR. ETRA: So let's -- so let's go back to that, then,
where it says: "Number of Employees" on the second page of the
document towards the bottom.
BY MR. ETRA:
Q.
Where it says: "How many employees does your business
have," you're saying the portal is telling the person to say --
to answer the question as of February 15th, 2020?
A.
On this particular question, it doesn't say that in the
document that's shown. I would assume, based off the little
eye bubble, the eye circle, that if you hovered over that it
would tell you that you had to -- that the date was as of
February 15th.
Q.
That's an assumption you're making?
A.
I'm assuming based on this document, yes.
Q.
And we're not able to see what's in the eye bubble here
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
today, right?
A.
That's correct.
Q.
All right.
MR. ETRA: Let's go to -- let's go where we left --
let's go to the third-to-last page, 11 -- sorry -- 242, PDF
242.
Sorry. Two more pages up. Keep going, please.
BY MR. ETRA:
Q.
Okay. It says: "Number of Employees," and then there's a
spot to say some of these employees are contractors/file Form
1099, right?
A.
It does say that.
Q.
Why does it say that?
A.
I think if you were to check that box, it would ask you a
different question.
Q.
Right. So let's focus on the big picture here. Under the
SBA rules, payments to 1099ed workers are not -- do not count
for payroll, right?
A.
For the triple P program, businesses with -- they were
allowed to apply for W-2 workers but were not allowed to apply
for 1099s. 1099s would apply by themselves.
Q.
Here -- this is an ACAP form or a Northeast form?
A.
This is the application portal.
Q.
Who put this together, ACAP or Northeast?
A.
It was a combined effort.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Okay. So here, between ACAP and Northeast, by March of
2021, realize that some people who were filling in number of
employees may think of independent contractors as employees,
right?
A.
I mean, I think this was a standard question so we could
try and filter out businesses that were -- that included 1099s.
Q.
Right. "Some of these employees are contractors/file Form
1099." That's what it says here, right?
A.
That's what this says.
Q.
Right. And technically an employee is a W-2, right?
A.
Yes.
Q.
But it says some employees may file 1099. You see how it's
written?
A.
I see how it's written.
Q.
And that's because ACAP or Northeast recognized certainly
by this date that the term "employees" can be confusing and
some people might think it includes 1099ed workers, right?
A.
Correct.
Q.
That's what you're specifically saying here: "Okay. If
you consider some of your employees" -- "if you have 1099ed
workers you consider your employees, you better check this
box," right?
A.
Correct.
Q.
Okay. That explanation is not in the 2484 -- 2483, is it?
A.
There is an explanation in the 2483 about independent
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
contractors, I believe.
Q.
But there's nowhere in the 2483 DocuSigned application
where it says: "Don't include 1099ed workers as employees,"
correct?
A.
I'd have to double-check the language.
Q.
We'll get there. We'll get there.
MR. ETRA: Okay. Let's go further down.
BY MR. ETRA:
Q.
You have "Average Monthly Payroll," right?
A.
Correct.
Q.
And some people could think of payroll as including money
spent on independent contractors, right?
A.
Some people may, but that formula does tell you to subtract
it out.
Q.
Exactly. By this time, Northeast or ACAP give a specific
formula that tells you to subtract -- says "minus," right?
"Minus payroll for 1099," right?
A.
Correct.
Q.
And that's written because some owners may consider payroll
to include 1099ed workers, right?
A.
Correct.
Q.
Because -- right. Okay. So that's here to make it clear
to whoever is filling out the online application don't include
payroll for 1099 in your average monthly payroll, right?
A.
Correct.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
But that is not -- that clarification is not in the 2483
application that is DocuSigned, correct?
A.
I'm sure we'll talk about that when we get to the 2483.
Q.
Any concern at your company that -- let me take a step
back.
You recognize small business owners may have more than
one person working there?
A.
What was the question?
Q.
Did Northeast understand that small business owners may
have more than one person working at a small business?
A.
Yes.
Q.
Did Northeast understand that small business owners may
have people doing payroll or back-office work?
A.
Yes.
Q.
Or may be a mid-level executive that helped out on things,
right?
A.
Sure.
Q.
What steps did Northeast take to make sure that the person
filling out the online portal application was the same person
filling out the 2483?
A.
The bank wasn't responsible for that. That was outside of
our purview. The application -- it was all on the
certifications.
Q.
Fair. So Northeast didn't know whether the same person
filling out the online -- whether the person filling out the
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
online portal with these explanations was the same person who
was DocuSigning the 2483? Northeast did not know that,
correct?
A.
Correct.
MR. ETRA: Let's go back to the I-12 -- sorry --
20-16, the log.
BY MR. ETRA:
Q.
All right. So I want to go through the documents that were
uploaded on March 11th. Okay?
A.
Okay.
Q.
That's why I'm showing this to you. We can go back to it
later, if you want. The first one is the driver's license.
That's 20-6.
MR. ETRA: Pull that up, please.
BY MR. ETRA:
Q.
What IP address was this uploaded from?
A.
I don't know if we have that record.
Q.
What human being uploaded it?
A.
We don't specifically know. We just know who completed the
2483.
Q.
So you don't know, correct?
A.
I know who completed the 2483.
MR. ETRA: Let's go to the next document. Oh. Sorry.
This is a document that I think was not put in evidence by the
Government, but it's from the production. We have it as K-9.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
It's the Sunbiz records.
MS. JIMENEZ: It's in evidence.
THE COURT: All right. In evidence as what exhibit?
MS. JIMENEZ: It should be Composite -- it's part of
the Composite 20 or 20-1.
THE COURT: All right.
(Pause in proceedings.)
MR. ETRA: May I proceed?
THE COURT: Of course.
MR. ETRA: I'm sorry. I was waiting.
BY MR. ETRA:
Q.
Sir, do you have the document on the screen?
A.
I do.
Q.
Okay. And do you recognize it to be a -- take a step
back -- let me take a step back.
From your experience, do you know that companies --
that companies get organized under state law? Right?
A.
Correct.
Q.
And if you want to find out some information -- and people
who start a company have to file documents with the Secretary
of State of each state. You know that from your experience,
right?
A.
Yes.
Q.
Do you understand that this is a printout from the Florida
version of that process called Sunbiz?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Yes.
Q.
Okay. And what this says is -- you recognize this comes
from a State website, right?
A.
Correct.
Q.
Okay. And this was uploaded -- this is one of the
documents that was uploaded on March 11th, correct?
A.
Yes.
Q.
Okay. And it indicates that the entity name is HM-UP
Development Alafaya Trails, LLC, right?
A.
Yes.
Q.
Okay. And it indicates that the -- and the top line
indicates that it's a foreign limited liability company
reinstatement.
MR. ETRA: Okay. Fair enough.
Let's continue.
Let's go to the next document that was uploaded, which
is Exhibit 20-8.
MR. CAVALLO: 20-8?
MR. ETRA: Yeah.
BY MR. ETRA:
Q.
Was this document, the 940 for the year 2020 -- was this
uploaded also on March 11th?
A.
Yes.
Q.
And do you know -- you don't know what role --
MR. ETRA: And let's go to the second page with the
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
signature.
BY MR. ETRA:
Q.
You didn't watch this document being signed, right?
A.
I did not watch this document being signed.
Q.
So you don't know if, in fact, it was signed by Mr. Eric
Sheppard, right?
A.
Correct.
Q.
And if it was signed by him, you don't know what
information he was given about it, correct?
A.
I only know what it says on this document.
Q.
Right. And you know sometimes small business owners, or
large business owners, rely on back-office and payroll people
for those kind of functions, right?
MS. JIMENEZ: Objection. Calls for speculation. The
witness doesn't know.
THE COURT: Sustained.
BY MR. ETRA:
Q.
Isn't it a fact that Mr. Sheppard did not upload this
document on March 11th?
A.
I -- we just know that it was uploaded, and we know who
signed and dated the 2483.
Q.
And you know who signed and dated the 2483. Is that what
you said?
A.
That's what I said.
Q.
Okay. Nothing else?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Correct.
Q.
Okay.
MR. ETRA: Let's go to the next -- let's go to -- 20-9
I think is the next document.
BY MR. ETRA:
Q.
This is the document on the log that has the funny name on
it that just has "311" on it, right?
A.
This is the IRS Form 941 for 2020.
Q.
Okay. But this was --
MR. ETRA: Let's go back to the log for the moment.
BY MR. ETRA:
Q.
You see the fourth line has --
A.
Correct.
Q.
It's got a date essentially of March 11th, and got some
other code on it. Do you see that?
A.
I see that.
MR. ETRA: Let's go now back to 20-9.
BY MR. ETRA:
Q.
Exhibit 20-9 is that entry there, correct?
A.
Correct.
Q.
Okay. That's all I wanted to know.
MR. ETRA: We can put the log down.
And going to the signature line.
BY MR. ETRA:
Q.
Okay. Same question. You don't know who signed it or
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
under what circumstances, correct?
A.
I did not witness the signature. All I know is what's on
this document.
Q.
Okay.
MR. ETRA: And let me just go back to the first page
of this document.
BY MR. ETRA:
Q.
This is supposed to be a 941 for 2020, correct?
A.
Correct.
Q.
It's a quarterly form, right?
A.
Correct.
Q.
And you only got one quarterly form, right?
A.
Wasn't there -- do we have all four?
Q.
So --
A.
We got the 940. So that would cover all four quarters
anyway.
Q.
Right. So the 940, that covers -- 940 is an annual form,
right?
A.
Correct.
Q.
And what's what you relied on to verify the payroll amount,
right?
A.
Yes. We relied on the 940.
Q.
Right. That's all I wanted to show. So the 941 -- and the
records show there was only one quarterly report filed. Do you
know that?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
I just know what's in this document.
Q.
Okay. It doesn't seem to serve a purpose to file just one
quarterly report, right, in the context of the PPP loan?
A.
Well, I don't -- I would assume that the 940 would add up
to whatever you report on the four 941s.
Q.
Right. But here the evidence is only one quarterly report
was put in for the first quarter of 2020, which I'm showing
that to you.
A.
Okay.
Q.
If they disagree, they can ask you on redirect. Okay?
A.
Okay.
Q.
If that's true, what I'm saying, based on the evidence, the
quarterly report here doesn't really serve any purpose because
it only covers one quarter, right?
A.
That's correct. If we had a 940, we would just look at the
940. It's better to look at one document than four.
Q.
And you did have a 940, and that's what you relied on for
payroll, right?
A.
Correct.
Q.
Okay. And this is supposed to cover the first three months
of 2020, right?
A.
That's what this document says.
Q.
And you know from your experience in this world that if it
covers the first three months it can only be executed after the
three-month period is over, correct?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
That would make sense.
Q.
Okay. Let's look at the signature block. What's the date
that this is supposedly signed?
A.
March 17, 2020.
Q.
That doesn't really comport with common sense, right?
A.
I guess the only explanation would be that if they didn't
have it or had all their payroll by that period. But you would
expect it to be after March 31st.
Q.
Right. You would expect it to be after. Right? It's odd.
Could we call it that?
A.
Sure.
Q.
Okay. And then the next page has the RT-6, correct?
MR. CAVALLO: That's at 20-10.
BY MR. ETRA:
Q.
All right. So Exhibit 20-10 is the RT-6. That was also
submitted on March 11th, correct?
A.
Correct.
Q.
Okay. And there's no signature here, right?
A.
I do not see a signature.
MR. ETRA: Let's go to the tax returns.
BY MR. ETRA:
Q.
This was also submitted -- uploaded to the portal on
March 11th, 2021, correct?
A.
Correct.
Q.
And Mr. Sheppard did not upload this document, correct?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
We know who signed the -- who signed the 2483.
Q.
Right. So you don't know who uploaded this document?
A.
Correct.
Q.
Okay. Fair enough.
And generally tax returns for entities are due -- at
least the earliest date is March 15 of the following year,
correct?
A.
Yes. That would be the initial way you could file. But
most businesses -- yeah. If someone's going to file, like that
would be the earliest, right.
Q.
Right.
A.
Or they might file for an extension.
Q.
Right. But oftentimes companies get extensions and it gets
filed later, right?
A.
Correct. Yes.
Q.
Okay. Here the dates that are supposedly of those supposed
signatures are on February of 2021 for a 2020 return. Do you
see that?
A.
I see that. Yes.
Q.
Also a little odd, right, to have signatures that early?
A.
It is. I believe there was a reg that said if you don't
have your tax return yet, you can fill it out and sign it. And
so the tax returns are apples to apples, right? So it's easier
to review a tax return. So people might have filled out a tax
return, and provided that and signed it as their kind of
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
reporting of their financial results.
Q.
Let me take a step back. You talked about -- you said that
for Northeast if a tax return was going to be submitted it had
to be signed, correct?
A.
Yes. That's what the SBA regulation said.
Q.
Signed by the borrower, correct?
A.
Yes. Signed by -- yes.
Q.
Sorry. Signed by the taxpayer.
A.
Sure.
Q.
There's no requirement at Northeast for any information
from a tax preparer in order to accept a tax return, correct?
A.
I think the only -- it was just that it needed to be
signed.
Q.
Signed -- I want to make sure I understand what you're
saying. The only thing it had to be signed, you mean --
A.
By the borrower.
Q.
By the borrower -- the taxpayer, right?
A.
Correct.
Q.
It doesn't have to be signed by a tax preparer, correct?
A.
Correct.
Q.
Doesn't have to be prepared by a tax preparer?
A.
Correct.
Q.
And it doesn't -- and even if it was prepared by a tax
preparer, it could be a copy. It doesn't have to have his name
on it -- or her name on it, correct?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Correct.
Q.
Okay. There's nothing about any tax preparer information
that was necessary or important for the approval process of the
PPP loan, correct?
A.
The specific tax return?
Q.
Let me -- I'm sorry. I don't want to cut you off. Are you
asking me?
A.
Can you clarify or re-ask the question?
Q.
Sure. You've been answering about what the policy was at
Northeast about tax returns, correct?
A.
Correct.
Q.
So let's stick to policy. Okay?
A.
Okay.
Q.
There was no policy to require tax preparer information on
a tax return, correct?
A.
Correct.
Q.
And there are several reasons for that, right?
A.
Sure. They may not have filed it. The borrower may have
self-prepared. There's all kinds of -- yeah.
Q.
Or it could be a copy and it doesn't have the preparer's
name on it, correct?
A.
Sure.
Q.
Okay. I mean, you recognized you weren't getting
originals. You're not the IRS. You get copies, right?
A.
Yes.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Okay. I want to dig into the issue of tax returns that you
talked about and whether these were part of the approval
process or not, leaving aside the tax preparer information,
okay?
Is there any document in this file that indicates that
this tax return, this 2020 purported tax return -- that this
was relevant or used in the approval process?
A.
So for loans under $150,000, the borrower wasn't required
to provide their tax return or their revenue analysis up front,
but they could provide it.
Q.
Is that your answer? I don't know if you were done.
A.
Yes. That's my answer.
Q.
I'm going to ask the same question again. There's nothing
in the documentation provided by Northeast or from ACAP that
you have in your files that indicate that this tax return was
relied upon in the approval process; is that correct?
A.
That's correct.
Q.
You personally weren't involved in this approval process,
correct?
A.
I did not approve this loan.
Q.
All you have is the documents to determine what was relied
upon, correct?
A.
Yes.
Q.
And they don't say that they relied upon the tax return,
correct?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
They don't say they relied upon the business tax return.
Q.
Let's talk about the year-to-year comparison that we've
talked about on and off of revenue -- revenue -- loss of
revenue year to year. Right?
A.
Okay.
Q.
Okay. I think your testimony when you looked at the
documents is that, certainly by this period, if the loan is for
$150,000 or less, the borrower does not have to substantiate
the loss in revenue, correct?
A.
Correct. They put it on the application, the 2483, and
we're allowed to rely on that certification and that
information.
Q.
Right. So the bank did not require that HM-UP substantiate
the loss in revenue between 2019 and 2020, correct?
A.
Correct. For that loan size, they weren't required to
provide documentation.
Q.
So the bank did not require the submission of tax returns,
2019 versus 2020, in order to substantiate? The bank did not
require that, right?
A.
We didn't require it up front. But yes --
Q.
I want to know what "up front". Let's talk about up front.
A.
Up front, when you apply, versus forgiveness. So I think
for loans under 150,000 you could supply that information any
time up to forgiveness.
Q.
HM-UP did not apply for forgiveness for this loan, correct?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
That's correct.
Q.
You're here to testify about what happened for the approval
of the actual loan, not forgiveness, right?
A.
Correct.
Q.
And for the approval of the loan, Northeast did not require
any business tax returns to substantiate the loss in revenue,
correct?
A.
That's correct.
Q.
In fact, you didn't even have the 2019 tax returns to be
able to compare to anything, right?
A.
That's correct.
Q.
I want to talk about this business about partnerships and
LLCs, and see if I can go in the deep end of the ocean with
you.
MR. ETRA: Let's look at the 2483 application
DocuSigned, the final version. That should be Exhibit 20-14.
Let's go to Page 31390.
BY MR. ETRA:
Q.
Do you recognize the page in front of you? I'm happy to
show you, sir, any pages if you would like.
A.
Yes. I recognize it.
Q.
Okay. Great. And you were asked about the -- some of the
text on this page in direct, correct?
A.
Correct.
Q.
All right. Let's focus on the term "For purposes" -- the
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
paragraph "For purposes of calculating Average Monthly
Payroll."
So the paragraph -- the sentence we're going to get to
about partnerships is about calculating the average monthly
payroll, right?
A.
Correct.
Q.
Okay. And you could use 2019 or 2020, right?
A.
Correct.
Q.
And this is for the second round, correct?
A.
Yes.
Q.
So there's some double counting that's built into the
system potentially, correct?
A.
(No verbal response.)
Q.
Let me rephrase that. Even under the PPP rules, you can
get a first round loan for -- based on 2019 payroll data?
A.
Yes.
Q.
And a second round loan based on the same 2019 payroll
data, correct?
A.
Correct.
Q.
That's what I meant by double counting.
A.
Okay. Yes. That's true.
Q.
But you were right not to answer it the way I asked.
MR. ETRA: All right. Now, let's go to the middle of
the paragraph, where it says: "For farmers and ranchers."
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
BY MR. ETRA:
Q.
Starting here --
MR. ETRA: Well, actually, we should go to the
previous sentence: "For new businesses."
BY MR. ETRA:
Q.
So here, the SBA is providing specific rules for certain
types of businesses, right?
A.
Yes.
Q.
In other words, the first part of the paragraph is
generally how to calculate average monthly payroll, and then
they've got specific rules for specific businesses. Do you see
that?
A.
Yes.
Q.
So the first one is for businesses without 12 months of
payroll, right?
A.
Correct.
Q.
And then the next sentence is: "For farmers and ranchers,"
right?
A.
Correct.
Q.
And the next sentence is: "For applicants that file IRS
Form 1040, Schedule C," correct?
A.
Correct.
Q.
That's like a self-employed person, right?
A.
Yes. Sole prop.
Q.
The last sentence is the one that we've talked about on
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
direct and I want to focus on, which is: "For applicants that
are partnerships." Do you see that?
A.
Yes.
Q.
Now, your testimony is that this applies -- this applied to
the HM-UP loan. Is that your testimony?
A.
So my testimony was that the tax return was for a
partnership. So it was a partnership tax return.
Q.
Is your testimony that this sentence applied to the HM-UP
loan? Yes or no?
A.
So I would assume based off of the tax return that they
would have claimed this as a partnership versus an LLC.
Q.
When you said: "They would have claimed this as," what
does that mean?
A.
So I always think the tax return should match the
application. So if I was a borrower filling this out, I would
make sure that my tax return matched the application.
Q.
We agree that the applicant identified itself as an LLC,
correct?
A.
Correct.
Q.
We agree it provided Sunbiz records about being an LLC,
correct?
A.
Yes.
Q.
Okay. So you would assume -- are you saying that you would
assume a borrower, if they filed a 1065, should have
self-identified as a partnership? Is that your testimony?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Yes. Because if you were a partnership, then you would
have extra items that you could include in your calculation.
Q.
Oh. It would be helpful. Okay.
MR. ETRA: Let's go to the first page of the --
BY MR. ETRA:
Q.
Actually, before we leave this, even for partnerships,
they're not saying -- this isn't saying you need the entire tax
return, right?
A.
So you wouldn't -- you wouldn't use -- it doesn't say that.
It says the K-1s, and then you would go to kind of your other
payroll documentations. The tax returns were primarily for
revenue declines.
Q.
So even if the company had self-identified as a
partnership, the only thing you would need is the K-1 portion
of a tax return, correct?
A.
Correct. To calculate payroll costs, average payroll
costs.
Q.
And the K-1 portion of the tax return, which, believe it or
not, this jury has seen many examples of, doesn't have a place
for the tax preparer on it, correct?
A.
I'd have to look at it, but I don't think there's a
signature on the K-1.
THE COURT: Mr. Etra, let me know when it might be a
good time to give the jurors a break.
MR. ETRA: Maybe three questions.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
THE COURT: All right.
BY MR. ETRA:
Q.
And certainly there's no --
MR. ETRA: Your Honor, we could just pick up after
this. I don't --
THE COURT: All right. Ladies and Gentlemen, let's
take a 10-minute recess.
COURT SECURITY OFFICER: All rise.
(Jury not present, 10:32 a.m.)
THE COURT: Okay. We're on a 10-minute recess.
(Recess from 10:32 a.m. to 10:44 a.m.)
THE COURT: All right. Welcome back.
Are we ready to continue?
MR. ETRA: Yes, Your Honor.
MS. JIMENEZ: Yes, Your Honor.
THE COURT: See if they are ready.
Thank you.
COURT SECURITY OFFICER: Remain standing for the jury,
please.
(Before the Jury, 10:45 a.m.)
THE COURT: All right. Welcome back, Ladies and
Gentlemen.
Please be seated, everyone.
And we'll continue with the cross-examination.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
MR. ETRA: Put the application back up where we left
off.
BY MR. ETRA:
Q.
Mr. Toye, we're putting the instructions on average monthly
payroll back up where we left off. Do you see that?
A.
I see it.
Q.
And again, it says: "For applicants that are
partnerships," right?
A.
Correct.
MR. ETRA: Let's go to the first page of the 2483 for
this document.
BY MR. ETRA:
Q.
On the very top upper left-hand corner, which item -- which
item is checked? Is it "LLC" or "partnership"?
A.
The borrower checked "LLC."
Q.
Actually, not only -- actually, this -- this 2483 Form was
filled in -- logistically physically filled in by ACAP or
Northeast; isn't that right?
A.
It was filled in via answers the borrower put into the
application portal.
Q.
Right. Okay. But this document was generated by some
combination of ACAP and Northeast, based on information
provided in the portal, right?
A.
Based on information provided by the borrower.
Q.
And it shows that the company was an LLC, not a
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
partnership, right?
A.
That's what this document says.
Q.
And that's why that sentence doesn't apply, correct?
A.
Yes. So if the borrower were to identify it as an LLC, we
would treat them as an LLC.
Q.
And further, we can go to the verifier document, which is
20-3.
MR. ETRA: We need the Excel version.
(Pause in proceedings.)
BY MR. ETRA:
Q.
Do you recognize the document part of the screen?
A.
I recognize this Excel spreadsheet, yes.
Q.
And this is a spreadsheet that's maintained by ACAP or
Northeast or both?
A.
It was the joint effort between ACAP and Northeast Bank.
Q.
Okay. And this is sort of keeping track of the diligence
and checking the boxes?
A.
Yeah. This is how the -- how -- ACAP and the bank
completed our review of each application using this
spreadsheet.
Q.
So if we want to know how, in fact, ACAP and the bank
treated this application, and what they relied on in the
analysis, this is a good place to look, right?
A.
Correct.
Q.
Okay. And what is listed for business legal structure?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
So it's listed as an LLC.
Q.
Right. Okay. And that is how it was -- that's how ACAP
and Northeast -- that's how their records showed -- your
records -- sorry. Let me start again.
And therefore, in all the records of Northeast and
ACAP, HM-UP is an LLC, not a partnership, correct?
A.
So this is all based off of information pulled from the
portal. So if it was put in as an LLC, it was treated as an
LLC throughout the process.
Q.
Fair enough. Fair enough. And if we go to the -- there
are a bunch of tabs -- there's some tabs at the bottom. Do you
see that?
A.
I see that.
Q.
And the prosecutor showed you the Partnership tab. Let's
click -- do you remember doing that with the prosecutor?
A.
I remember.
Q.
When you press on the Partnership tab, what do you see in
the top right-hand corner?
A.
It says: "You are in the wrong tab."
Q.
What does that mean?
A.
That means that you should not be working on this tab.
Q.
And if we just go down a little further, the prosecutor
nevertheless went over this tab with you, correct?
A.
They did.
Q.
If we go down a little further, under "Calculator
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Underwriter," on the fourth line it says: "Enter amount from
2019 or 2020 K-1," and it's got more words in there. Do you
see that?
A.
I see that.
Q.
That actually wasn't done by ACAP or Northeast because it
wasn't treated -- the company wasn't treated as a partnership,
correct?
A.
That's correct. We relied on what the borrower put into
the application for their business structure, and we underwrote
it based on that.
Q.
Okay. And then at the very bottom of this page -- let's
see what it says at the very, very bottom -- it says: "Loan
review fail." Do you see that?
A.
Yep.
Q.
And why does it say: "Loan review fail"?
A.
Because you're in the wrong tab. So all the questions
would have to be checked yes for it to pass.
Q.
And it says: "Action. Wrong tab. Return to verifier,"
right?
A.
Correct.
MR. ETRA: So let's return to the verifier page. Now
let's go to the Corporation tab at the bottom.
Let's go to the very top.
BY MR. ETRA:
Q.
What does it say there?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
It says: "You are in the correct tab."
MR. ETRA: And let's go to the very, very bottom of
it.
BY MR. ETRA:
Q.
What does it say about loan review?
A.
It says the action was to approve the loan.
Q.
And -- very good. And it passed the loan review, right?
A.
Correct.
Q.
This shows that in reality ACAP and Northeast treated this
as an LLC, correct?
A.
We treated it based on how the borrower classified it in
the application, yes.
Q.
As an LLC, right?
A.
As an LLC.
Q.
Fair enough. And there's nothing in this tab -- I can go
through it with you -- which analyzes or considers any part of
the 1065 Form, correct?
A.
Correct. Our job was to do a good-faith review in a
reasonable amount of time. And one of the prongs on that was
basically just to confirm the loan amount. So the borrower
asked for one loan amount. They gave us a 940. We plugged
that information in, it confirmed the loan amount, and so
that's what we did.
Q.
And like you said, the loan amount was based on payroll.
And payroll you verified based on the 940 Form, correct?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Yes. We verified payroll based on the 940.
MR. ETRA: Let's go to the main page of this Excel
spreadsheet, please.
BY MR. ETRA:
Q.
If we go a little further down on this page, there's a line
that says: "For LLCs only, select document provided by
applicant." Do you see that?
A.
Yes.
MR. ETRA: And let's click -- let's click the arrow
there.
BY MR. ETRA:
Q.
And this shows the kind of documents that potentially a
borrower who is an LLC could provide, right?
A.
Yes. I think this drop-down -- if I'm -- depending on --
this was like -- so you were to put in a special -- it would
tell you what tab to use. So these are all the different types
of payroll-supporting documentation --
Q.
Okay.
MR. ETRA: All right. Let's go to...
(Pause in proceedings.)
BY MR. ETRA:
Q.
Showing you Exhibit 20-5 -- 20-5. Do you recall going over
this with the prosecutor on your direct?
A.
Yes. This is a listing of all the documents that were
uploaded to the application portal by the borrower for the bank
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
or the lender to review.
Q.
Well, hang on a second.
MR. ETRA: Don't move anymore, please.
BY MR. ETRA:
Q.
Just reading what this document says, it says: "Optional
based on your eligibility amount of 148,000." Do you see that?
A.
It does say: "Optional based on" -- yes.
Q.
And it says -- but you recommend providing the documents
for faster processing, right?
A.
That's what this says.
Q.
Okay. And if you go further down to the bottom, one option
that's optional is the 2019 tax returns, right?
A.
Correct.
Q.
Optional, not required?
A.
Correct.
Q.
But this form here -- it says that, in fact, the 2020 were
provided, right?
A.
Correct.
Q.
But in terms of the template from ACAP and Northeast, the
list of optional documents only included one type of
business -- one kind of business return, and that was 2019,
right?
A.
So I think those items that you showed in the drop-down
were specific to verifying payroll.
Q.
Right. So -- fair enough. Let's move past that.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
This page, the part in the dark bold lettering is from
the portal, right?
A.
That's correct.
Q.
And the part in the lighter lettering just shows what
documents were submitted, correct?
A.
Correct.
Q.
So with respect to tax returns that were even optional to
consider, the portal showed that the only kind of tax return
that was even considered optional was a 2019 tax return, right?
A.
That's what this shows.
Q.
It doesn't show even a suggestion of an optional for 2020
returns, right?
A.
Correct.
MR. ETRA: Take that down.
BY MR. ETRA:
Q.
I want to go through the emails that you went through.
MR. ETRA: Go to the email that's at -- the last
email, which is the earliest in time email.
BY MR. ETRA:
Q.
Okay. Do you see that, sir?
A.
I do.
Q.
Now, we talked about the -- the actual application -- the
2483 that was operative was on -- was dated March 17th,
correct?
A.
So yes, there was two 2483s that were signed and dated.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
But the one that counted, from your perspective, was the
March 17. That's the one that was the operative one, right?
A.
Yes.
Q.
Okay. But there was also one on March 12, right?
A.
Correct.
Q.
And I believe -- I didn't read the transcript, but I
believe your testimony was you did an earlier version to -- so
that the borrower can have an extra chance to review the
information and make sure the information in the application
was correct. That was your testimony?
A.
It was.
Q.
That is not what this -- that is not what ACAP told the
applicant, correct?
A.
(No verbal response.)
Q.
Let's go through it. This is a March 12 email from Bria
Boyd. Do you know which company she works for?
A.
She works for ACAP.
Q.
Okay. To Eric Sheppard at his Gmail email. Do you see
that?
A.
Yes.
Q.
And the second paragraph says: "I have just sent you the
SBA PPP loan application form for eSignature. Please note we
are requesting your eSignature at this stage as a test to walk
through the eSignature process and ensure we have the correct
email on file." Do you see that?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
I see that.
Q.
In fact, that was -- and that was what ACAP told
Mr. Sheppard at that email address, correct?
A.
That's what this email says, yes.
Q.
That it's just to make sure you know how to use the
DocuSign, right?
A.
That's what it says.
Q.
Nothing here says: "Oh, please take a look at the
information now. We want to make sure we're accurate. Doesn't
say that in this email," does it?
A.
It doesn't say that in this email.
Q.
Doesn't say that in any other email, correct?
A.
Correct. If I was signing a document I would make sure
that the information was accurate, though, before I signed it.
Q.
Thank you for that.
He's literally being told: "Just to check the
DocuSign," correct?
A.
It says: "Test to walk through the eSignature process and
make sure we have the correct email address on file."
Q.
And it's the day after the information is first uploaded,
correct?
A.
Correct.
Q.
It's not saying: "This is going to be your final
information," correct?
A.
Correct.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
MR. ETRA: Let's go to the next -- and -- okay. Let's
go to the next email on the way up.
BY MR. ETRA:
Q.
Okay. Now Ms. Boyd writes to Mr. Sheppard on a different
issue. Do you see that?
A.
I do.
Q.
Okay. And what she writes is -- this is on March 12th at
1:47 p.m. Do you see that?
A.
Yes.
Q.
Just curious. You're on the East Coast. We're on the East
Coast here. Is it your understanding these are East Coast
times or do you not know?
A.
I'm not sure. They could be Central. ACAP is based in
Chicago.
Q.
It says: "We are reviewing your PPP loan application and
noted the routing number and/or account number you provided
with your application does not agree to the fields in the
canceled check image." Did I read that correct?
A.
You did.
Q.
Correctly.
Now, what that means is that, by this point, someone
had uploaded an account number into -- a bank account number
into the portal, right?
A.
That's correct.
Q.
And someone had provided some kind of a canceled check,
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
correct?
A.
Correct.
Q.
And whoever was doing that didn't actually get the account
number correct, right? It didn't match the canceled check.
A.
Correct.
Q.
And was that done on March 12th?
A.
The review?
Q.
No. The uploading of the wrong check.
A.
I'd have to double-check with the track, the log, but I
would assume that it was done on the 12th.
Q.
Okay. And let's just finish up these emails quickly.
MR. ETRA: Go to the next email.
BY MR. ETRA:
Q.
And there's a second email from Ms. Boyd before there's a
response from the Eric Sheppard Gmail account, right?
A.
Yes.
Q.
Just to follow up because there's no response, correct?
A.
Correct.
Q.
Okay. And then from the Eric Sheppard email account, it
says: "Okay. I'll provide the bank statement and voided check
to the portal," correct?
A.
Correct.
Q.
You testified that the importance of the bank statement and
voided check was to show that it's a legitimate company. Did
you testify to something along those lines on direct?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
I testified that we used that information to know where we
were sending the money.
Q.
Okay. Was part of the issue to -- do you know what KYC is
in your field?
A.
I do.
Q.
What is KYC?
A.
Know Your Customer.
Q.
Was part of the reason to get a bank statement and voided
check to make sure -- as a way of -- it's like a verification
it's a real company because you have to be a real company to
get a bank account?
A.
That's correct.
Q.
Okay.
MR. ETRA: All right. Let's go to the next email up.
BY MR. ETRA:
Q.
And then on March 13 is when your -- ACAP writes that they
basically opened up access to the portal for the new
information, right?
A.
Yes.
Q.
Okay. Let's go now to the log. We can try to figure out
what happened on what day.
So this shows that on March 12th there was one or more
voided checks submitted and a SunTrust statement from
November-December of 2020; is that right?
A.
Correct.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
And presumably that was the information that didn't match,
right?
A.
Correct.
Q.
Okay. By the way, I've not seen in your production the
bank statement from November -- November and December 2020. Do
you know if you have that in your files?
A.
I believe we provided everything that we had.
Q.
Okay. All right. And then what happens on March 14th?
A.
So on March 14th, three items were uploaded, two voided
checks and a February 2020 bank statement.
Q.
Okay.
MR. ETRA: Let's put up Exhibit 20-7.
BY MR. ETRA:
Q.
And is this the bank statement that was provided on the
14th?
A.
Yes.
Q.
And this is an account statement for an account ending in
the last four digits 5973 for HM-UP, right?
A.
That's correct.
Q.
And if we just go a little further -- go a little further
to the document, the statement period is February of 2020,
right?
A.
That's correct.
Q.
And the main -- in reality, you needed to have a bank
account to send the money to, right?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
That's correct.
Q.
So you're looking for an account that's -- basically that
the borrower designates to receive the money?
A.
Yes.
Q.
Okay. And here you see that this account had been opened
for at least a year before the application, right?
A.
That's true. It also served as a indication that the
business -- the borrower was in business prior to the deadline.
So...
Q.
Right. Killed two birds with one stone. It was okay to
send PPP money to an existing operating account, right?
A.
Yes.
Q.
There was no requirement to send it to a segregated account
where it would stay far away and uncontaminated by other money.
Do you agree with me?
A.
I agree that you could send it to whatever account the
borrower -- or a business bank account. Right.
Q.
Right. And here, Northeast/ACAP understood that the
money -- PPP money was being sent to an ongoing business
account, right?
A.
Yes.
Q.
Okay. Which gets commingled with other money, right?
A.
Yes.
Q.
And that's okay from the perspective of Northeast and ACAP,
right?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Correct.
Q.
You talked on your direct about the need to know why --
well, let me start again.
You talked on direct about the relevance of
information about affiliates, right?
A.
Yes.
Q.
And I think you said one of the concerns was there was a
maximum amount that you could lend to a group of affiliated
companies, right?
A.
Yeah. Based on their corporate umbrella, there was a
maximum loan amount.
Q.
And you said that was about $2 million, right?
A.
I believe so, yes.
Q.
So if you're under $2 million, the PPP program permitted
affiliates to each apply for their own loan, correct?
A.
Yes.
Q.
Another reason you wanted to know about affiliates is
because if you add up all the whole corporate structure you
want to make sure you don't go over the maximum number of
employees, right?
A.
Yes.
Q.
And that's 300 or 500, depending on the time period,
correct?
A.
Correct.
Q.
Okay. Now I want to go a little more carefully through the
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
2438 application that got DocuSigned -- the operative one,
okay?
A.
Okay.
MR. ETRA: So let's go to 20-14.
BY MR. ETRA:
Q.
Okay. Now, let's start with the NAICS code. It's here as
236220, right?
A.
Correct.
Q.
And I want to go back to the instructions -- let me start
again and say: When we talked about this with the online
portal application, I think you said that the 2483 gives
instructions to use the tax returns. Do you recall saying
that?
A.
Yes.
Q.
Okay. Not a memory test, but you do recall?
A.
I recall.
Q.
Okay. No problem.
MR. ETRA: All right. Let's go to the part of the
returns that talk about -- excuse me -- part of the form that
gives instruction on the NAICS code, which is Bates 31391.
Next one.
Okay. So it's the third paragraph, first sentence.
BY MR. ETRA:
Q.
This is the part of the 2483 you're referring to, right,
sir?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Correct.
Q.
And it says: "For purposes of recording NAICS code,
applicants must match the business activity code provided on
their IRS income tax filings, if applicable," correct?
A.
Correct.
Q.
So it doesn't say you have to provide the activity code on
the IRS income tax filings necessarily. Only if applicable,
correct?
A.
Correct.
Q.
And that's because at any given point in time -- at the
time of the application, the applicant's primary activity might
be different than what was listed in their prior tax return,
correct?
A.
Can you repeat the question?
Q.
You know, I'm not going to ask -- I'll just withdraw and
leave it at that.
A.
Okay.
Q.
By the way, there's only so many places where there's a
place to DocuSign this application, correct?
A.
You DocuSign -- you initial the certifications and you
DocuSign at the end.
Q.
Do you DocuSign the instructions on NAICS code?
A.
So I think those instructions are covered in one of the
other certifications above.
Q.
Well, why don't you first answer my question. Do you
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
DocuSign this part where it talks about the NAICS code?
A.
No. You're not required to DocuSign this part.
Q.
Okay.
MR. ETRA: Let's go back to the beginning of the
application and go through it.
BY MR. ETRA:
Q.
Is there a place to DocuSign anything on the first page?
A.
There is not.
Q.
What steps did ACAP or Northeast take to make sure the
person DocuSigning it would be directed to other parts of the
application?
A.
The borrower had to fill out -- the way the online portal
was structured is you had to answer all the questions first,
before you could get the DocuSign sent to you.
Q.
You had to answer what questions?
A.
All the questions on the application.
Q.
Do you mean the online portal application?
A.
The online portal application was where these answers were
pulled from. So the borrower was answering these questions via
the online portal, and it was being populated onto the 2483.
Q.
And we have already established the person answering the
online portal application could be different from the person
doing the DocuSign, correct?
A.
Correct.
Q.
Okay.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
MR. ETRA: Let's go to the next page.
BY MR. ETRA:
Q.
I'm going to focus on where it has a DocuSign. Only two
questions on this page, right?
A.
Correct.
Q.
Whether the applicant or anyone who owned 20 percent or
more of the equity is in jail or has other serious criminal
problems, right?
A.
Correct.
Q.
And the next one is whether the applicant or an owner has
had other -- other serious problems, shall we say, correct?
A.
Correct.
Q.
Okay.
MR. ETRA: Let's go to the next page.
BY MR. ETRA:
Q.
There's -- on the top portion here, there are
certifications, right?
A.
That's correct.
Q.
But there's no place to DocuSign, correct?
A.
Not in this specific section.
Q.
Okay.
A.
But it does say above it: "By signing below, you make the
following representations, authorizations, and certifications."
Q.
Right. But if you're following the DocuSign --
MR. ETRA: Let's go to the second half of the page --
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
BY MR. ETRA:
Q.
-- you end up in the middle of the page, right?
A.
Yes.
Q.
You don't end up at the top part?
A.
So if you were DocuSigning, it would -- this is where you
would input your initials.
Q.
This is where you would be directed by the DocuSign
function, correct?
A.
Correct.
Q.
And let's talk about what you see here. On the top line it
says: "The authorized representative of the applicant must
certify in good faith to all of the below by initialing next to
each one." Do you see that?
A.
Yes.
Q.
So the operative duty is good faith, right?
A.
Yes.
Q.
Okay.
MR. ETRA: Let's go to the first certification.
BY MR. ETRA:
Q.
"The applicant was in operation on February 15, 2020, has
not permanently closed, and was either" -- excuse me -- "and
was either an eligible self-employed individual, independent
contractor, or sole proprietorship with no employees" --
stopping there -- "or had employees for whom it paid salaries
and payroll taxes, or it paid independent contractors, as
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
reported on Form 1099-MISC." Do you see that?
A.
Uh-huh.
Q.
That was the very first certification that gets initialed
by the applicant, correct?
A.
That's correct.
Q.
And it specifically talks about having 1099ed workers,
correct?
A.
It says that in this certification.
Q.
And certainly in this certification it doesn't say not to
include payments to 1099ed workers as payroll?
A.
Correct.
Q.
Certainly it doesn't say: "Don't treat your" -- strike
that.
(Pause in proceedings.)
BY MR. ETRA:
Q.
And this certification doesn't say you only exclude W-2
workers, correct?
A.
It doesn't say "W-2 workers" in here.
MR. ETRA: Go to Exhibit L-11. That's our document.
(Pause in proceedings.)
MR. ETRA: Your Honor, this is not in evidence. I
just want to show it to the witness.
THE COURT: All right. Just to the witness.
What is the -- just for identification purposes, what
is the number?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
MR. ETRA: L-11.
THE COURT: Thank you.
MS. MARTINEZ: Can you just go back to the first page
for a second.
Okay. I just wanted to see the date.
MR. ETRA: May I proceed?
THE COURT: You may.
BY MR. ETRA:
Q.
Do you recognize this document?
A.
It looks like an SBA PowerPoint Deck.
Q.
Well, it looks like instructions to lenders. Do you see
that it appears to be that?
A.
Correct.
Q.
Did the SBA provide written guidance to lenders from time
to time for the PPP program?
A.
Yes. Quite frequently.
Q.
Were there a lot of updates to the program?
A.
There were.
Q.
Were there about 32 interim final rules over time?
A.
Sounds directionally right.
Q.
Okay. It kept changing and it was confusing, right?
A.
It definitely kept changing.
Q.
Okay. And do you recognize this particular document?
A.
Not the cover page but maybe the contents of it.
Q.
All right.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
MR. ETRA: Let's go to Page 30 of that document.
BY MR. ETRA:
Q.
And I will show you more if you want to see more, of
course. But I want to focus on where it talks about -- this
page talks about verifying loan applicant and underwriting
criteria. Do you see that?
A.
Okay.
Q.
And I want to direct you to the second bullet. Do you now
recognize this document as being instructions from the SBA to
lenders such as Northeast?
A.
Yes.
Q.
Okay.
MR. ETRA: Your Honor, we offer L-11.
MS. JIMENEZ: I object. First of all, I haven't
reviewed it. Secondly, the witness has identified a sentence
in a multipage document.
THE COURT: The objection is sustained.
BY MR. ETRA:
Q.
Do you recognize the document in general?
A.
In -- this looks like a PowerPoint deck that kind of goes
through some of the rules of the program. It was also from
April of 2020. So you know...
Q.
I recognize this is only a certain date, but could I go
through more of the document with you and you could tell me if
you recognize it?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
(No verbal response.)
Q.
Sure. Why don't we start at the beginning and scroll
through.
MS. JIMENEZ: I object, Your Honor. If he has a
question for the witness, the witness could answer. I mean, it
is --
THE COURT: The objection is sustained. The witness
says: "It looks like it," and it's insufficient.
Let's continue.
BY MR. ETRA:
Q.
Do you now recognize the document?
A.
This looks like a PowerPoint that the SBA put out. They
put out a lot of different guidance, and some of it -- most of
it was in the form of like narrative memos or procedure
updates. I'm not -- I don't know if I've actually seen this
specific PowerPoint deck. It looks like this is a deck that
pulls information from those procedural notices.
Q.
So you're not necessarily familiar with all of the SBA
guidance to lenders, correct?
A.
I'm familiar with the SBA guidance to directors -- to
banks -- to lenders. But this specific document is a
PowerPoint deck. That covers a lot of stuff in here. I mean,
the first thing was to become an SBA lender and how to create
an SBA account, which we already had. So...
Q.
Let's focus on where I left off before on the second
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
bullet. Do you see how that second bullet is different from
the first certification we looked at?
A.
So I think the key I did hear right is that this is as of
April 2020, so first draw loans. This is specific to first
draw loans. And the 2483 that we were looking at was for
second draw loans.
Q.
The certification we were looking at talked about companies
that paid employees, paid payroll taxes or filed -- independent
contractors that filed 1099s, right?
A.
Yes. In the 2483.
Q.
Right. But this instruction to the borrower -- to the
lender didn't have that language about 1099ed workers, right?
A.
It does not say 1099ed workers in this statement.
Q.
Otherwise, it's essentially the same thing as the
certification that the borrower sees, correct?
A.
It's a very high-level statement that just says confirm
they paid salaries and payroll taxes to -- or that they had
paid them around February 15th.
MR. ETRA: Let's put this document down. Let's go
back to the application.
BY MR. ETRA:
Q.
Isn't it true that the SBA was telling borrowers --
MR. ETRA: Let's go back to the first certification.
BY MR. ETRA:
Q.
This first certification -- isn't it true that at some
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
point the SBA was telling the lenders to confirm that the
borrowers were in existence on February 15th, 2020, and had
employees who paid salaries and payroll taxes? Correct?
A.
Correct.
Q.
That's what we just saw on the document, right?
A.
Yes.
Q.
And it didn't have -- or told the lenders -- it didn't have
the part about: "Or paid independent contractors," correct?
A.
It didn't have the 1099 language in there.
Q.
But here the application that the borrower sees where they
are DocuSigning, the first one, also talks about 1099ed
workers, right?
A.
This statement talks about 1099ed workers.
Q.
Okay.
MR. ETRA: Let's go to the next certification that's
initialed.
MR. CAVALLO: For the jury?
BY MR. ETRA:
Q.
It says: "Current economic uncertainty makes this loan
request necessary to support the ongoing operations of the
applicant," correct?
A.
Correct.
Q.
There's no --
MR. CAVALLO: It's not up for the jury.
MR. ETRA: Oh. Sorry. Let's put this on the -- Your
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Honor, may we publish this? We're back on evidence.
THE COURT: This is in evidence.
MR. CAVALLO: It was not on there for when you just
did the 1099.
BY MR. ETRA:
Q.
There's no explanation given in the 2483 for what level of
economic uncertainty -- what level of necessity is needed by
economic uncertainty, right?
A.
I mean, there's no additional definition or explanation.
That's just the only certification, yes.
Q.
This is COVID. Almost every business had economic
uncertainty, right?
A.
Sure.
MR. ETRA: Let's go to the next line.
BY MR. ETRA:
Q.
This talks about the loss in revenue, that you don't need
to document it until you -- unless and until you seek
forgiveness for loans that are 150 or less, right?
A.
Correct.
MR. ETRA: Let's drop down to the fifth -- keep going.
This one.
BY MR. ETRA:
Q.
This says: "The funds will be used to retain workers and
maintain payroll," right?
A.
That's what the certification says.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
And workers is not limited -- doesn't say: "W-2
employees," right?
A.
This certification does not define workers or payroll.
Q.
And ACAP, as we saw -- slash Northeast recognized the word
"payroll" might be ambiguous. That's why, in their online
portal, they explained payroll doesn't -- to minus payroll paid
to 1099ed workers, right?
A.
Yes. We provided a formula to --
Q.
Right.
A.
Yes.
Q.
You guys did that on your online application, right?
A.
Yes.
Q.
But that's not here in the certification signed by whoever
is certifying this document, right?
A.
It does not say anything about W-2 or 1099s in this
specific certification.
Q.
And I think you said in your direct that -- something like
this. I may have it wrong -- the point of the program was to
pay payroll. Did you say something like that in your direct?
A.
It's the Paycheck Protection Program. So yes, it was used
to make payroll and for employees.
Q.
But you could use all the money for purposes other than
payroll, correct?
A.
You could use the -- there were other acceptable or
approvable expenses.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
You weren't required to pay the payroll, right?
A.
There was a -- I think there was a percentage -- I think
like 60 percent of the funds. I'm -- that had to be used for
payroll.
Q.
If you wanted forgiveness?
A.
For -- to be eligible for forgiveness.
Q.
Right. Okay.
MR. ETRA: Let's go to the second-to-last
certification.
BY MR. ETRA:
Q.
Here it says: "I further certify that the information
provided in this application and the information provided in
all supporting documents and forms is true and accurate in all
material respects," correct?
A.
Correct.
Q.
That goes under the heading of "In Good Faith," right?
A.
Yes.
Q.
Okay. And the next sentence says: "I understand that
knowingly making a false statement is punishable by a crime."
Do you see that?
A.
That's what this certification says.
Q.
So just to be clear -- I don't know if you said it before
but I want to be clear. We now have the 2483. Is there any
part of the 2483 that tells the borrower in plain terms not to
include 1099ed workers in their payroll calculation?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
So in the certification it does not say that. I think
there's some additional language or instructions below that it
may be in there. But I believe this was a pretty widely known
or distributed rule that 1099ed workers were supposed to apply
on their own. That's how we purposely did this, so we could
identify -- if there were 1099s, we'd recommend that they apply
on their own.
MR. ETRA: Okay. I move to strike the last part of
his answer as non-responsive.
THE COURT: Overruled. That motion is denied.
BY MR. ETRA:
Q.
You believed that what was widely known?
A.
That 1099ed workers applied for their own triple P loan.
Q.
Where does it say -- I understand that 1099ed workers could
apply on their own. I'm not arguing with you about that.
Where does it say that the company that pays them can't apply
using those payments?
A.
It doesn't say it in these certifications.
Q.
Where in the 2483 does it say it -- or does it say in the
2483?
A.
We would have to look at those instructions.
Q.
Let's go look.
A.
If there was instructions, there was also additional
guidance from the SBA on how to calculate your triple P loan.
Q.
Why don't we look? Let's just look and we --
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
MR. ETRA: Go to the next page, please.
THE WITNESS: Yeah. So there's that -- well...
BY MR. ETRA:
Q.
Okay. First paragraph under "Instructions," do you see
that?
A.
Yeah.
Q.
Let's make it a little larger so you can see it. Nothing
in there says you don't pay -- that payroll costs don't include
payments to 1099ed workers, correct?
A.
Let's -- "And for an independent contractor or sole
proprietor wage" -- I was just looking for independent
contractor to try and see what it says.
Okay. I think that's just specific to kind of setting
you up for how you would calculate it. So if you were an
independent contractor, this is what you would do.
(Pause in proceedings.)
MS. JIMENEZ: Objection, Your Honor. This is
unnecessary.
MR. ETRA: I'm waiting for him to answer.
THE COURT: Yeah. Let's -- hold on. Give the witness
an opportunity.
THE WITNESS: So the last line looks like this is the
applicable line to this. It doesn't specifically say 1099, but
what it does say: "Plus any eligible payroll costs for
employees." So I think that's where you would kind of tag that
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
this is specific for W-2 and not 1099s.
BY MR. ETRA:
Q.
Because it says "payroll," right?
A.
It says: "Plus eligible payroll costs for employees."
Q.
And you know from the portal application that the word
"payroll" is not clear that it doesn't include 1099ed workers.
That's why you add language about that in your portal
application, correct?
A.
Yeah. So we gave a prompt to let them know how to
calculate it.
MR. ETRA: Could we go to the ELMO, please.
(Pause in proceedings.)
MS. JIMENEZ: Objection. Is this evidence?
MR. ETRA: It's O-1 in evidence.
THE COURT: O-1 in evidence?
MR. ETRA: Letter O-1.
BY MR. ETRA:
Q.
Do you see -- this is from the regulations. Do you
recognize the regulation here?
A.
I do. Is there a date or a number on it?
Q.
It's the first -- I'm going to represent it's the first
interim final rule. If it's not the first, it's one of the
first.
A.
Okay.
Q.
Do you see it says: "Payroll costs consist of compensation
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
to employees" there? Right?
A.
Yes.
Q.
And it talks about payroll costs or payroll taxes, whatever
it is you said before. Do you see that?
A.
Yes.
Q.
And then later the regulations say: "Question: Do
independent contractors count as employees for purposes of PPP
loan calculations?"
Answer: "No. Independent contractors have the
ability to apply for a PPP loan on their own, so they do not
count for purposes of a borrower's PPP loan calculation."
Do you see that there?
A.
I see that.
Q.
And you're probably familiar with this regulation, correct?
A.
Correct.
Q.
You didn't need me to show it to you probably if I just
asked you about it, right?
A.
Correct.
Q.
Okay. That language there is not anywhere in the 2483
application, correct?
A.
Specifically, no.
Q.
Let's continue and talk about the loan agreement, which is
part of 20-14.
MR. ETRA: We're going to go back to the screen --
computers. We're at the very first page of the document.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Well...
BY MR. ETRA:
Q.
This is an SBA form of a -- sorry -- is this a note or a
loan agreement?
A.
Promissory note.
Q.
Okay. And this is the promissory note that was provided by
Northeast for the borrower, correct?
A.
Correct.
Q.
And it's an SBA form?
A.
Correct.
Q.
Okay. And by the way, the terms of all these PPP loans are
the same, regardless of other characteristics, correct?
A.
Generally. I think there was -- some of the early ones
have slightly different terms, but directionally they all have
the same terms.
Q.
Right. In other words, you're either eligible or not. And
if you're eligible, you get the same terms?
A.
It's cookie-cutter. Yes.
Q.
Okay. Great. And if you go to the second page, Section C,
it says: "Use of Proceeds. Borrower shall use the proceeds of
this loan only for eligible expenses under the terms of the
PPP." Do you see that?
A.
Yes.
Q.
That includes any of the eligible expenses. It could be a
mortgage or utility, whatever was included at the time that was
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
allowed, right?
A.
Correct.
Q.
So even though the 2483 application may have checked off
some uses, in the end of the day, according to the note, you
could use it for any of those purposes, right?
A.
That's correct.
Q.
And the certification said the same thing, correct?
A.
Correct.
Q.
Okay. And if we go to the next page for default: "An area
of default" -- "An item of default" -- or let me start again.
"Default." It says: "Borrower is in default under
this note if borrower does not make a payment due under this
note" with the parentheses about forgiven. And then it says:
"Or if borrower" -- and look at C -- "does not disclose, or
anyone on their behalf does not disclose, any material fact to
lender or SBA." Do you see that?
A.
Yes.
Q.
And D: "Makes" -- or "Anyone acting on their behalf makes
a materially false or misleading representation to the lender
or the SBA," correct?
A.
Correct.
Q.
Northeast did not default this loan, correct?
A.
Yeah. This loan -- NEWITY or ACAP owns the loan now and
they do the servicing.
Q.
And ACAP had not defaulted this loan, correct?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Not to my knowledge.
Q.
It's still going forward and the borrower is still making
payments, correct?
A.
I'm not -- I don't know if they are making payments or not.
Q.
It hasn't been defaulted?
A.
Not to my knowledge.
Q.
We'll get to the payments.
MR. ETRA: Could we put up for the witness only --
Your Honor, I'm showing the witness O-2, which is our exhibit
number, but it's part of the production which is in evidence
collectively, correct?
MS. JIMENEZ: Yes.
THE COURT: So the parties agree O-2 is in evidence?
MR. ETRA: I'm going to have to use the ELMO.
THE COURT: Is that correct, Ms. Jimenez?
MS. JIMENEZ: Yes. I believe it is.
THE COURT: All right.
MR. ETRA: May I proceed with the ELMO?
THE COURT: All right. I have O-1, but if the
Government has O-2 --
MS. JIMENEZ: My objection is that this is outside the
scope of direct.
THE COURT: Let me see what you're showing the witness
and not shown to the jury.
MS. MARTINEZ: Now it's shown to the jury.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
MR. ETRA: Sorry. Apologize.
THE COURT: Not to the jury.
MR. ETRA: Should I put it on now?
Your Honor, should I put it on now?
THE COURT: Yes.
All right. With the caveat that this is in evidence,
and the understanding that O-2 is in evidence, you may
continue. The objection is overruled at this point.
MR. ETRA: Can I publish it to the jury?
THE COURT: If it's in evidence, you may.
BY MR. ETRA:
Q.
Okay. Do you recognize this document?
A.
This document looks like an account history summary of the
triple P loan.
Q.
Of a triple P loan. That's PPP. And do you see that's the
loan for HM-UP?
A.
Correct.
Q.
And in fact, your bank provided this to the Government in
response to a subpoena, correct?
A.
Either the bank or ACAP.
Q.
Okay. And does it show, in fact, that payments -- at least
for the time it was printed, payments were being made on this
loan?
A.
Yes. It shows payments being made.
MR. ETRA: We can get off the ELMO.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Let's go back to the 20-14 document.
Let's go to Page 031794.
MR. CAVALLO: Jonathan, that Bates doesn't...
(Pause in proceedings.)
BY MR. ETRA:
Q.
Showing you the part of 20-14 that shows the DocuSigning.
Do you see that?
A.
I see it.
Q.
Okay. Can you tell from this whether there was -- it says:
"Security," under "Signer Events," "Security level email
account authentication, none." Do you see that?
A.
Yes.
Q.
Do you know what that means?
A.
I'm not sure. I'm not a DocuSign --
Q.
Do you know if there was any testing -- like sometimes for
DocuSigning they ask you: "Is one of these cars yours," or
something like that. Do you know if they had that, if that was
done for this loan?
A.
I'm not sure.
Q.
But this does show that the papers to DocuSign were sent to
the Eric Sheppard email account on March 17th, correct?
A.
Correct.
Q.
And it was not viewed for the first time until March 25th.
Do you see that?
A.
Yes.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
And then it was DocuSigned, correct?
A.
Correct.
Q.
Is that typical to have such a long delay between sending
the 2483 and note the time that the borrower actually opens the
email to DocuSign it?
A.
I think that all borrowers have different things going on,
especially small business owners. Some small business owners
are, you know, busy doing their business and they may not have
time to -- you know, may be delayed to sign and review the
document.
Q.
We talked about the uses of the loan for proper proceeds,
correct -- you have to use it for the right purposes, right?
A.
That's correct.
Q.
What you really mean is the amount of the loan has to be
used for those purposes, correct?
A.
Yes.
Q.
Because commingling and fungible -- money is fungible, that
kind of thing, right?
A.
You have to be able -- for forgiveness, you have to be able
to prove that you had expenses that -- for those eligible
categories that equal the loan amount.
Q.
Right. And that doesn't involve the tracing of like
electronic serial numbers from Northeast to payroll, correct?
A.
I don't believe so.
Q.
Right. And even without forgiveness, you just have to use
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
it for proper purposes. But you have to use the amount of the
loan for proper purposes. You don't have to trace the
electronic serial numbers, right?
A.
Correct. I think you just have to show receipts that you
had eligible expenses and you paid for them.
Q.
You testified a little about -- on direct, about the
difference between a PPP loan and a regular loan. Do you
recall doing that?
A.
Yes.
Q.
And for example, I think you testified I think yesterday
that due diligence and a normal loan could be something like
two weeks. Did you say that?
A.
Yes.
Q.
Could be longer, depending --
A.
Could be longer.
Q.
And it could involve a lot of back-and-forth and
professionals, right?
A.
Yes. It's a process.
Q.
It's a process. It's a give-and-take. That did not happen
with respect -- that wasn't the way the PPP loan program was
set up, right?
A.
That's correct.
Q.
Essentially, it's supposed to be done quickly, right?
A.
Yes.
Q.
And you're basically checking the boxes, right?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Right. We're doing a good-faith review in a reasonable
amount of time.
Q.
Right. And checking that they meet certain criteria and
then get it out, right?
A.
Correct.
Q.
And in a typical loan, part of the due diligence is to do a
credit analysis, right?
A.
In a regular commercial loan, yes.
Q.
And that's because the bank has money that it has to decide
how it wants to deploy, and they want to make sure it's not too
risky, right?
A.
Correct.
Q.
Or if it's risky, they may want to have certain
protections, like collateral, personal guarantee, or a higher
interest rate to protect yourself, right?
A.
Yes.
Q.
It's all part of the credit review process, right?
A.
Correct.
Q.
That is not what took place for the PPP loan, right?
A.
That's not how the program was set up.
Q.
Right. It's not set up that way because you're either
eligible -- and then you get the same terms for everyone,
correct?
A.
Everyone got the same terms, yes.
Q.
Right. Because it wasn't a concern for the bank's credit.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
It's a different concern, right?
A.
Yeah. Everyone got the same terms.
Q.
Right.
MR. ETRA: Could I have a moment to confer with
counsel?
THE COURT: Certainly.
(Pause in proceedings.)
THE COURT: Any further cross-examination?
MS. WEINTRAUB: Judge, could we just have one minute?
(Pause in proceedings.)
MR. ETRA: No further questions, Your Honor.
THE COURT: All right. Any redirect?
MS. JIMENEZ: Yes.
MS. WEINTRAUB: Ms. Jimenez, can you just wait one
second?
(Pause in proceedings.)
MS. WEINTRAUB: Thank you, Your Honor. I apologize.
THE COURT: All right. Let's continue with the
redirect.
REDIRECT EXAMINATION
BY MS. JIMENEZ:
Q.
All right. Mr. Toye, you were asked about the 2483, the
SBA form, having a signature for the owner or authorized
representative. Do you recall that?
A.
Yes.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
MS. JIMENEZ: Can we pull up 20-12, please.
BY MS. JIMENEZ:
Q.
Does the authorized representative of the business -- does
the authorized representative of the business -- does it need
to be the owner?
A.
It doesn't have to be the owner.
Q.
Could the authorized representative be someone who works
for the owner?
A.
That's correct.
Q.
Could the authorized representative be someone whom the
owner trusts to fill out, to answer the questions, and submit
the documents, and provide the information?
A.
Sure.
Q.
In this case, who was the authorized representative?
A.
So per this document, the signer was Eric Sheppard.
Q.
The signer was Eric Sheppard. Was there any document that
you reviewed in connection with this loan where there was
someone besides Eric Sheppard indicated as the signer?
A.
There was not.
Q.
Apart from the tax return that had two signers -- do you
recall that, Mr. Neal Cupersmith?
A.
Correct. Yes. That's correct.
Q.
Aside from that document, was there any information that
you received about anyone, either another owner or another
authorized representative besides Eric Sheppard?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
No. The only name that we saw was Eric Sheppard.
MS. JIMENEZ: Can we go to 20-16 for a moment.
BY MS. JIMENEZ:
Q.
You were asked some questions about this document. Is it
the case that for the instances in which the IP, Internet
Protocol, address was captured -- was that in connection with
the DocuSigning?
A.
Yes.
Q.
Aside from the IP address, did you have information from
the records you received or the information that was provided
about the person who was providing that information?
A.
(No verbal response.)
Q.
Well, let me ask you this: Were you provided an email
address in connection with this application?
A.
Yes, we were.
Q.
Was it eric.sheppard10@gmail.com?
A.
Yes.
Q.
Were you provided a phone number with this application?
A.
We were.
MS. JIMENEZ: Can you go to 20-12, please.
BY MS. JIMENEZ:
Q.
Let me ask you: With respect to the email address, in the
records that you reviewed, was there ever another email address
that communicated with ACAP SME and then indirectly to you, to
Northeast Bank?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Not that I saw.
Q.
Were the documents -- the DocuSigned documents that went
back to the applicant, did they go to that email address
eric.sheppard10@gmail.com?
A.
Yes. That's the email address they were sent to.
Q.
The email we reviewed here in court, were they all between
ACAP SME and eric.sheppard10@gmail.com?
A.
Correct.
Q.
There was a phone number provided with the business as a
contact number; is that right?
A.
That's correct.
Q.
And that's the number -- is that the number listed here,
(305)582-5529?
A.
That's correct.
Q.
At any point during this process, based on the records that
you reviewed, was there another phone number provided for ACAP
to contact someone else besides this phone number?
A.
Not that I'm aware of.
MS. JIMENEZ: Can we look at 20-16 again, please.
BY MS. JIMENEZ:
Q.
Looking at the items that were provided on March 11 -- and
we spent some time on Item 2 here, which is the information --
the questions answered in the portal, is that right, on
March 11?
A.
Correct.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
All right. Was there also on that same day a driver's
license provided?
A.
Yes.
Q.
Mr. Toye, based on your own personal experience, do you
normally carry your driver's license or does someone else?
MR. ETRA: Objection.
THE COURT: Basis?
MR. ETRA: Irrelevant.
THE COURT: Sustained.
BY MS. JIMENEZ:
Q.
The driver's license that was provided here, did it
indicate to whom it belonged?
A.
It was a driver's license for Eric Sheppard.
(Pause in proceedings.)
BY MS. JIMENEZ:
Q.
You were asked a lot of questions about W-2 versus
independent contractors. Let me ask you: With respect to the
SBA regulations, guidelines, directives, did they ever change
on the issue of what constitutes payroll in terms of whether
payments to 1099ed workers could be included? Was that
eligibility -- or that requirement regarding payroll, did that
ever change?
A.
Not to my knowledge.
Q.
Was there a requirement that the applicant had to be in
business as of a specific point in time?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
There was.
Q.
What was that point in time?
A.
February 15th, 2020.
Q.
All right.
MS. JIMENEZ: Can we take a look at that 2483 again --
20-12.
Go to the next page.
All right. Keep going, please.
BY MS. JIMENEZ:
Q.
All right. The first initialed certification that you were
asked questions about, the applicant was in operation on
February 15, 2020, and was either an eligible self-employed
individual, independent contractor, or sole proprietorship with
no employees, or had employees for whom it paid salaries and
payroll taxes or paid independent contractors. Can a business
have both wage employees and individuals to whom it pays as
independent contractors?
A.
Yes.
Q.
Was the import of this statement the fact that the business
had to be in operation as of February 15th, 2020?
MR. ETRA: Objection. Personal knowledge of the
import of the SBA rule.
THE COURT: Sustained.
BY MS. JIMENEZ:
Q.
What was your understanding, based on your experience with
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
the PPP program, as to what was the thrust of this statement or
this certification?
MR. ETRA: Objection. Relevance.
THE COURT: Overruled.
THE WITNESS: It's that first sentence, that you were
in operation as of February 15th, 2020.
MS. JIMENEZ: Let's go to 20-2.
Go down, please.
BY MS. JIMENEZ:
Q.
Now, this loan application was in what time frame?
A.
This was in March 2021.
Q.
All right.
MS. JIMENEZ: Let's go down, please.
Okay. Stop.
BY MS. JIMENEZ:
Q.
The three boxes here -- now, what was this -- this document
20-2 that we're looking at?
A.
This is the -- the application portal.
Q.
And the records that you have indicated that this -- these
questions were answered approximately March 11, 2021?
A.
Correct.
Q.
All right. Now, in your portal it indicated -- the
applicant indicated how many employees?
A.
They indicated 19 employees.
Q.
Did they also indicate that some of the employees were
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
1099ed contractors, if they were confused about that?
A.
They did not check this box.
Q.
Did you, in the records that you reviewed in connection
with this application, receive a single 1099 document?
A.
We did not receive a 1099 document.
Q.
Did you receive any information that was provided through
ACAP -- any information that the payroll that was provided --
the payroll figures was based on a single payment to a single
1099ed contractor?
A.
We did not.
Q.
Did you receive a Form 940 with this application as a
supporting document?
A.
Yes. We received a Form 940.
Q.
Based on your familiarity with that document, is that a
document that is generated for someone who's being paid as an
independent contractor?
A.
No. 940 reports W-2 wages.
Q.
You received the first-quarter 941 IRS Form as well; is
that right?
A.
That's correct.
Q.
Based on your understanding of that type of record, is that
a record that's generated with respect to a payment to a 1099ed
worker?
A.
No. It's a payment to W-2 employees.
Q.
Were you provided any IRS records to indicate to you that
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
there were payments to 1099ed workers?
A.
We were not.
Q.
You were asked questions about the SBA moratorium, the
two-week period during which you could only process
applications for businesses with fewer than 20 employees; is
that right?
A.
Correct.
Q.
Do you recall whether that moratorium was extended beyond
March 10th?
A.
Not off the top of my head.
Q.
Was it the case that in that time frame, at least through
March 10th, you were and had to be focused on processing
applications for businesses with fewer than 20 employees?
A.
Yeah. That's correct. So we could only get SBA loan
numbers for businesses with that number of employees. So we
were trying to actively find those loans in our portal and push
them through, push them forward.
Q.
Here in 20-2 --
MS. JIMENEZ: If you can go up, please.
Go up some more.
Okay. Stop. Stop.
BY MS. JIMENEZ:
Q.
-- there's a question about the number of employees the
business had. Do you see that?
A.
Yes.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
And there was a little eye circle?
A.
Correct.
Q.
Did the applicant have the option to check information as
to what the -- what that meant, what that question was geared
toward?
A.
Yes. If you had a question, you could hover over that
circle and it would provide you further guidance.
Q.
Do you remember what that guidance was?
A.
I would assume that it says --
MR. ETRA: Objection, Your Honor.
THE COURT: Sustained.
BY MS. JIMENEZ:
Q.
Do you recall generally what that information was?
A.
Probably indicating --
MR. ETRA: Objection.
THE COURT: Sustained.
THE WITNESS: Indicating --
BY MS. JIMENEZ:
Q.
If you recall --
THE COURT: The objection is sustained.
BY MS. JIMENEZ:
Q.
If you recall generally what that information was.
A.
Indicating what date the employees would have been as of.
Q.
As of the date?
A.
As of the date, yeah.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
And that's as of February 15th, 2020, or some other date?
A.
February 15th, 2020. How many employees did you have as of
February 2020.
MS. JIMENEZ: If we can go down.
If we can go down, please.
If we can go down some more, please.
Okay. Go down.
BY MS. JIMENEZ:
Q.
Okay. Here, the average monthly payroll figure.
A.
Yes.
(Pause in proceedings.)
BY MS. JIMENEZ:
Q.
You were shown on, I believe --
MS. JIMENEZ: Was it the template that had a Form 941
with the drop-down menu? Was that the template that you showed
the witness?
MR. ETRA: The verifier.
MS. JIMENEZ: It was the verifier?
MR. ETRA: The Excel verifier, I think, if that's what
you are asking, if I'm understanding your question.
MS. JIMENEZ: Can we pull up Document 20-8 and 20-9,
please, side by side.
BY MS. JIMENEZ:
Q.
Are these -- these are the records that you received, the
Form 940 and the first quarter 941 --
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
MS. JIMENEZ: Could we go down to the signature page
for both of these, please.
BY MS. JIMENEZ:
Q.
You were asked a question whether you witnessed -- actually
witnessed the signature. Do you remember that question?
A.
Yes.
Q.
Is it reasonable for the bank to receive these documents
believing that the signer indicated was actually the signer of
the document?
MR. ETRA: Objection.
THE COURT: Basis?
MR. ETRA: I -- I don't know how we could say what's
reasonable for the bank to expect.
THE COURT: Objection, legal basis.
The objection is overruled. You may continue.
BY MS. JIMENEZ:
Q.
Go ahead. Please answer.
A.
Can you repeat the question?
Q.
Yes. Was it reasonable for the bank -- upon receiving
these documents, that the signer indicated on the document was
the signer of the document?
A.
Yes. That's reasonable.
Q.
Did you require that the individual submitting signed IRS
tax records sign them in the presence of the bank?
A.
We did not require that.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Do these records that are signed -- do they indicate above
the signature that they are signed under penalty of perjury?
A.
They do say that.
Q.
Do they indicate that they're signed under penalty of
perjury and that they are being signed to the best of their
knowledge and belief and are true and correct and complete?
A.
Yes.
MS. JIMENEZ: Could we go to 20-16 again, please.
BY MS. JIMENEZ:
Q.
All right. You see that it indicates when the tax
return -- and that's the income tax return -- was uploaded?
A.
Yes.
Q.
That was March 11, 2021; is that right?
A.
That's correct.
Q.
And then, was it the following day, March 12th, 2021, that
a DocuSigned version of the 2483 went back to the applicant to
their email address?
A.
Yes.
Q.
And on that next day, on that document we've seen, the
DocuSigned 2483 -- multiple times -- did that capture an IP
address the following day?
A.
Yes.
Q.
The -- with respect to the gross revenue reduction, that
was a requirement for a second draw loan; is that right?
A.
Yes. Correct.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Okay. The comparison that was on the 2483 --
MS. JIMENEZ: If we could show 20-12 again, please.
BY MS. JIMENEZ:
Q.
The comparison that was on the 2483, it was an annual
comparison; is that right?
A.
That's correct.
Q.
Was a tax return, or tax returns, required to prove up the
annual comparison either at this point in time or at some point
in time --
MR. ETRA: Objection, Your Honor.
MS. JIMENEZ: Let me finish my question, please.
BY MS. JIMENEZ:
Q.
-- before you -- or at the time that you submit your
forgiveness application?
MR. ETRA: Objection. Multiple -- this should be
broken down separately.
THE COURT: Sustained.
BY MS. JIMENEZ:
Q.
Was there a tax -- an income tax return, or income tax
returns, required to substantiate the revenue decrease?
A.
Yes.
Q.
And could that be provided at this point or some time
later?
A.
Yes. It could be provided at application or -- as long as
it was provided before forgiveness.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Was there, in fact, an income tax return provided to you?
A.
There was.
MS. JIMENEZ: And we'll talk about the fact that it
was a partnership return in a moment. But can we turn to 20 --
20-20, please. If we go to 20-20, Page 9.
BY MS. JIMENEZ:
Q.
All right. Now, it indicated gross rents, right?
A.
It indicates gross rents of -- yeah -- $1,047,603.
Q.
That is a tax return for 2020; is that right?
A.
Correct.
Q.
And you were asked the question whether there was nothing
to compare it to if you provided a tax return. Was there
information provided on the application about the gross rents
or gross revenues for 2019?
A.
There was.
MS. JIMENEZ: Could we go to 20-12 again, please.
BY MS. JIMENEZ:
Q.
So is that information provided on the application as well?
A.
Yes. That information is provided on the 2483.
Q.
So this provides you both figures; is that right?
A.
That's right.
Q.
Is it reasonable to think that at the time of -- of a
forgiveness application for this applicant that a 2019 tax
return would also be requested?
MR. ETRA: Objection. Irrelevant.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
THE COURT: Sustained.
BY MS. JIMENEZ:
Q.
Okay. On the income tax return, that was actually a
partnership return; is that right?
A.
Correct.
Q.
Do you know whether a corporation can be both -- well, can
a corporation, if it has two or more members, be a
partnership -- or let me rephrase that question.
A corporation -- and specifically a limited liability
company -- if it has two or more members, isn't it, in fact, a
partnership?
A.
So --
MR. ETRA: Leading.
THE COURT: Sustained. Rephrase.
BY MS. JIMENEZ:
Q.
Is it a partnership if an LLC has two or more members?
A.
It can be a partnership.
Q.
Now, on this 2483 -- which, by the way, was it submitted to
the applicant more than once to DocuSign?
A.
Yes. It was submitted twice.
Q.
The very top box --
MS. JIMENEZ: If we can go in there, please.
BY MS. JIMENEZ:
Q.
You can check just one; is that right?
A.
That's correct.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
And if you're an independent contractor, you check a
different box than "LLC"; is that right?
A.
Correct. You'd check "Independent Contractor."
Q.
Okay.
MS. JIMENEZ: Now can we go to the template 20-3,
please.
Okay. Let's go to Corporations. We've got an LLC.
Corporations.
Okay. Go down, please.
Okay. Stop here.
BY MS. JIMENEZ:
Q.
Is it the case that for -- to calculate the payroll of
employees you would enter or include payments for employee
health insurance?
MR. ETRA: Objection. Leading.
THE COURT: Sustained.
BY MS. JIMENEZ:
Q.
On this document, this template, is there a line for --
advising the underwriter to locate payments to employees for
their health insurance?
A.
Yes, there is.
Q.
What about -- does the template ask the underwriter to look
for employee retirement plans?
A.
It does.
Q.
Why does it ask for employee retirement plans?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Those were eligible to be calculated as part of the loan
amount.
Q.
For payroll?
A.
Yes.
Q.
And is that the case for employee health insurance as well?
A.
Yes.
Q.
All right. So then now we go to the right side with the
blue-shaded boxes.
A.
Yeah.
Q.
Do you see that?
A.
Yes.
Q.
Now, it references 940 and 941s. Do you see that?
A.
Yes.
Q.
And then, Note 2, it refers to an IRS Form 1120, or 1120X,
or 990 IX. Do you know what a Form 1120 is?
A.
So an 1120 would be the tax form for a C corp.
Q.
It's an income tax?
A.
An income tax -- yeah, income tax return.
Q.
For a corporation?
A.
Yes.
Q.
This corporation had an income tax return; is that right?
A.
That's correct.
Q.
And was it an 1120?
A.
It was not.
MS. JIMENEZ: Can we go to the Partnership tab,
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
please.
If you go down -- not too far. Go down a little bit.
Yes -- sorry. The other way.
All right. Stop here.
BY MS. JIMENEZ:
Q.
Do you see lines 41 and 42? Does it ask the underwriter at
the bank to locate that information on Lines 41 and 42,
Employee Health Insurance, Employee Retirement Plans?
A.
Yes.
Q.
And what is that for?
A.
So you could include those amounts as part of your
calculation of your loan amount.
Q.
All right.
MS. JIMENEZ: Let's go to the right side. It's in
white.
BY MS. JIMENEZ:
Q.
And then here does it indicate what tax documents to obtain
to get that information from?
A.
Yes. You could obtain the IRS Form 1065, and you could use
these lines to find the expenses associated with those items.
Q.
The IRS Form 1065 is where -- is that where the underwriter
is being asked to look to find payments for employee health
insurance and employee retirement?
MR. ETRA: Objection. Contrary to the evidence that
the underwriter didn't use this tab, that this was the wrong
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
tab. That was the testimony.
THE COURT: The objection is overruled. If the
witness knows.
THE WITNESS: Can you repeat the question?
BY MS. JIMENEZ:
Q.
For a partnership, is that -- would the underwriter go to
the partnership return to find payments for employee health
insurance and employee retirement plans?
A.
Yes. If there was a business tax return uploaded, they
would look to see if those amounts were there.
Q.
Is there a tab for the 941 on this template?
A.
(No verbal response.)
Q.
I'm trying to locate what you were shown before that was a
941 with a drop-down.
A.
Oh. So that would be on the first -- that first tab.
Yeah. If you scroll down.
Q.
All right. Let's click on here. So if an LLC would be --
well, what does this tab indicate?
A.
So this indicates documents -- select payroll documents
provided by the applicant.
Q.
All right. And if the applicant is a partnership, where
can the applicant look for payments that may qualify as part of
their payroll?
A.
So they -- a partnership could look at their K-1s. And if
they had W-2 employees, they would submit -- they could submit
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
a 940, 941s. Yeah.
Q.
W-2s?
A.
W-2s.
Q.
Right. And does the K-1 document -- does it exist by
itself or is it part of the 1065 partnership return?
A.
It was included as part of the return.
Q.
There's somewhere on here where the template directs you
to -- oh. That's -- I think that's -- for the template -- hold
on a second.
MS. JIMENEZ: Could we go to 20-4, please.
Go down.
All right. 20-5.
BY MS. JIMENEZ:
Q.
All right. So you were asked about -- now, what does this
document reflect?
A.
So this reflects all the documents that were uploaded to
the application portal.
Q.
And then you were shown, toward the bottom of this page,
that it refers to a 2019 business tax return. Do you see that?
A.
I see it.
Q.
Now, what was submitted -- what was submitted?
A.
A 2020 tax return was submitted.
Q.
Now, part of the SBA and Northeast Bank, the -- in 2021,
the applicable year that the borrower could look to for their
documentation, was it the case that they could look to 2019 or
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
2020?
A.
Yes.
Q.
They could look to either; is that right?
A.
Correct.
Q.
Okay.
(Pause in proceedings.)
BY MS. JIMENEZ:
Q.
You were asked questions about how this -- the proceeds of
this loan amount can be used.
MS. JIMENEZ: Can we go to the 2483, the -- the 2483
that's part of 20-22.
Go down.
Stop.
BY MS. JIMENEZ:
Q.
Was this 2483 previously sent to the applicant?
A.
Yes. This was originally sent when they originally
applied.
Q.
And then we'll go down to the date on this in a moment, but
does this indicate the purpose --
MS. JIMENEZ: If we can get the middle box here --
BY MS. JIMENEZ:
Q.
-- the purpose of the loan? "Select all that apply."
A.
Correct. Yes.
Q.
Did they indicate that the purpose of the loan would be for
payroll?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
They did.
Q.
What is the date of this document?
A.
This is the -- I believe this is the March -- it was sent
on March 17th and signed on the 25th.
MS. JIMENEZ: Can we put this up side by side with
20-12.
BY MS. JIMENEZ:
Q.
On March 12th, what was indicated as the purpose of the
loan?
A.
Payroll costs, utilities, covered worker protection
expenditures.
Q.
Did the purpose of the loan change from the first DocuSign
version of this document to the second?
A.
It did not.
Q.
Did any other information that you observed change -- or
any information that was relevant for that loan application
change between the first document -- first DocuSigned version
and the second DocuSigned version?
A.
It did not.
Q.
Did you notice that anything changed?
A.
I don't see any changes.
(Pause in proceedings.)
BY MS. JIMENEZ:
Q.
Did you -- or did you have ACAP request a credit report for
this loan application?
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Miami, Florida 33128
(305) 523-5698
MR. ETRA: Objection. Beyond the scope and existing
issue we discussed as well.
MS. JIMENEZ: He was asked about a credit analysis.
THE COURT: The objection is overruled.
And Ms. Jimenez, just -- I would like to give the jury
a lunch recess at about 12:30. I'm not sure how much more you
have of redirect.
MS. JIMENEZ: We'll be fine.
THE COURT: Okay.
THE WITNESS: We didn't pull a credit report for the
borrower.
BY MS. JIMENEZ:
Q.
That you recall?
A.
I don't think we pulled credit reports for -- not that I
recall. I don't think we pulled credit reports as part of the
process. We pulled background checks, but...
Q.
And what about ACAP? Did they pull a credit report?
A.
Not that I'm aware of.
Q.
Is it something you don't remember?
A.
I don't think we -- for a triple P, we didn't pull credit
reports for borrowers that I recall.
Q.
Okay.
(Pause in proceedings.)
MS. JIMENEZ: Can we go to the signature page on both
of these documents.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Okay. Stop.
BY MS. JIMENEZ:
Q.
All right. On both of these documents, could someone --
did the authorized representative have to be the owner of the
business for purposes of signing this 2483?
A.
No.
Q.
Could it have been someone besides the owner of the
business?
A.
It could have been someone else.
Q.
Who was indicated -- who's indicated on both of these
DocuSigned certified documents was the individual who was
signing for this business?
A.
So the printed name is Eric Sheppard on both.
MS. JIMENEZ: Your Honor, the Government doesn't have
any other questions of the witness.
THE COURT: All right. Is Mr. Toye excused,
Ms. Jimenez?
MS. JIMENEZ: Yes, Your Honor.
MR. ETRA: Yes, Your Honor.
THE COURT: All right. Thank you, sir. You are
excused.
(Witness excused.)
THE COURT: And Ladies and Gentlemen, at this point in
time we will take our one-hour recess for lunch. I'll see you
back here at 1:30.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Have a pleasant lunch.
COURT SECURITY OFFICER: All rise.
(Jury not present, 12:26 p.m.)
MS. WEINTRAUB: Judge, can we know the lineup for the
afternoon?
THE COURT: Yes.
Ms. Jimenez?
MS. MARTINEZ: Aimee? I've lost her.
MS. WEINTRAUB: Don't you know?
THE COURT: Is everything okay?
MS. MARTINEZ: I'm sorry. What was the question?
THE COURT: Ms. Weintraub asked for who would be your
next witness. I know that we discussed this yesterday.
MS. JIMENEZ: Yes, Your Honor. The Government is
expecting to call Mr. Carlos Granda next.
THE COURT: Okay. All right, then.
MS. WEINTRAUB: After that? That's going to be very
quick, Judge.
THE COURT: Oh. That's going to be a short witness?
All right. After Mr. Granda?
MS. JIMENEZ: Are they promising that? Is that -- I
mean, can we hold them to that, please?
THE COURT: Well, I would certainly welcome any type
of promise by both sides.
All right. So after Mr. Granda will be Spencer Lord
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
and Maria Ataca?
MS. JIMENEZ: Yes, Your Honor.
THE COURT: All right, then. Have a nice lunch. I'll
see you back here at 1:30.
(Recess from 12:27 p.m. to 1:32 p.m.)
THE COURT: All right. Welcome back.
I trust everyone had a pleasant lunch.
Are we ready to get back to work?
MS. JIMENEZ: Yes, Your Honor.
MS. WEINTRAUB: Yes, Your Honor.
THE COURT: Okay. Can we see if we have all -- there
are 14.
Thank you.
(Pause in proceedings.)
COURT SECURITY OFFICER: Yes, Judge.
THE COURT: Okay. Thank you. We can bring them in.
Thanks so much.
(Before the Jury, 1:33 p.m.)
THE COURT: All right. Welcome back, Ladies and
Gentlemen.
Please be seated, everyone.
I trust that you had a pleasant lunch and ready to get
back to work.
And if the Government will call its next witness,
please.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
MS. JIMENEZ: Yes, Your Honor. The Government calls
Carlos Granda.
(Pause in proceedings.)
THE COURT: Good afternoon, sir.
If you'll come forward, please.
COURT SECURITY OFFICER: Please remain standing to be
sworn in.
CARLOS GRANDA, GOVERNMENT WITNESS, SWORN
COURTROOM DEPUTY: Thank you.
Would you please state your name and also spell it for
the record.
THE WITNESS: My name is Carlos Alberto Granda.
COURTROOM DEPUTY: Can you spell it.
THE WITNESS: Carlos, C-A-R-L-O-S. Alberto,
A-L-B-E-R-T-O-N --T-O. And Granda, G-R-A-N-D-A.
COURTROOM DEPUTY: Thank you.
DIRECT EXAMINATION
BY MS. JIMENEZ:
Q.
Good afternoon, Mr. Granda. Were you served with a
subpoena to appear at this trial?
A.
Yes, ma'am.
Q.
Briefly, what is your educational background?
A.
Recently got my master's degree in electrical engineering
from UCF. I got a master in electrical trade and electrical
contractor.
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Miami, Florida 33128
(305) 523-5698
Q.
I'm sorry. What was the last thing you said?
A.
And electrical contractor as well.
Q.
If you could speak up.
A.
Okay.
Q.
Where do you live?
A.
I live in Orlando, Florida.
Q.
What do you do for a living, Mr. Granda?
A.
I'm electrical contractor, electrician.
Q.
Do you have your own company?
A.
Yes. I have my own company.
Q.
What is the name of your company?
A.
CG Electric.
Q.
In the 2021 time frame -- or I should say 2019 and 2020
time frame, did you have your own company then?
A.
Yes.
Q.
Was it the same company?
A.
The same company.
Q.
In 2020, did you go do work at a location in Orlando called
the Shoppes at Alafaya?
A.
Yes.
Q.
What was your involvement with that location?
A.
That was a project in Burlington store. We take over the
job in the electrical construction part.
Q.
You took over the job you said?
A.
Yeah. That was -- somebody else was -- start it but never
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
finish it. So I took over the job.
Q.
Approximately when was that?
A.
Around May.
Q.
May of 2020?
A.
In '20, yeah.
Q.
And the project was already underway?
A.
Yeah. The project was already started, yeah, at that time.
Q.
And you say: "The Burlington project." Could you explain
what you were doing at that location?
A.
It's -- electrical contractor. We run all the wiring,
conduit, install lights, electrical panels, as was put in the
blueprints in the project.
Q.
And this is for --
A.
For the Burlington.
Q.
Was this a retail store?
A.
Yeah. A retail store, Burlington. That's the name of the
brand.
Q.
The shopping center, did it have other stores?
A.
Yeah. They had -- I remember they have a DICK'S store and
restaurant there. Bahama Breeze, I believe it is. And then
some other smaller stores.
Q.
Who hired you to do this project?
A.
Jeff Vasilas.
Q.
What was Mr. Jeff Vasilas's role in relation to this
project?
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Miami, Florida 33128
(305) 523-5698
A.
At the beginning, I thought he was a general contractor.
But after the project was going, I believe he was like a
manager of construction, supervising.
Q.
Like a project manager of sorts?
A.
Yeah. Probably like a project manager.
Q.
How often did you see Jeff Vasilas when you were doing this
work?
A.
He was mostly between three or four days per week.
Q.
And --
A.
Three days per week, yeah.
Q.
Where did you see him?
A.
At the site on Burlington. He was supervising all the
materials, checking.
Q.
Was he physically located at the Orlando shopping center?
A.
Yeah. I mean, he was there in the shopping center.
Q.
Now, did you enter into a contract to do the work for this
project?
A.
Yes.
Q.
And do you remember the name of the company that the --
A.
H -- HM Alafaya Trails something.
Q.
All right. Who was the owner of that business with whom
you entered into a contract?
A.
The owner of the business that was referred by Jeff,
Mr. Eric something -- Eric Sheppard.
Q.
Did you work with someone by the name of Martin Joe Beirne
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
at that location?
A.
Can you repeat that, please?
Q.
Did you work with someone named Martin Joe Beirne at that
location?
A.
Martin Joe Beirne?
Q.
Joe Beirne.
A.
Joe Beirne. Ah, Joe, yeah. He was working there. He was
practically managing the project.
Q.
Did you see Joe Beirne often?
A.
Oh, yeah. He was -- every day he always being early, like
six, 6:30. And then leave the last -- the same, six p.m.,
6:30 p.m. He was every day there.
Q.
How were you paid?
A.
I was being paid according when the money available.
Because it was by contract, so as soon as they have something
accomplished -- when we have something accomplished, I got
paid.
Q.
And how were you paid? Was it by check --
A.
Yeah. That was by check. At the beginning was by this
company, and then later on that was check for different company
named Diamond something.
Q.
All right. So at first you were paid by the HM-UP
Development Alafaya Trails company?
A.
Yes. Uh-huh.
Q.
Okay. And then you said at some point you were paid by
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
another company?
A.
Yes.
Q.
Approximately at what point did that change?
A.
Well, the money was very slow. They were -- start owing
money. And then looks to me at some point Jeff took over the
payments. And then he told me it was his company and he's
paying by his company.
Q.
And that company was Diamonds?
A.
Diamond. Yeah.
Q.
And how did Jeff Vasilas pay you from his -- was that also
a check?
A.
That was a check. And then sometimes I remember he made a
deposit himself in my account.
Q.
And who made those payments to you?
A.
Jeff.
Q.
Jeff Vasilas?
A.
Yeah.
Q.
Did you at some point meet Eric Sheppard when you were
doing this project?
A.
Only, I believe, twice. Only twice.
Q.
And what was Mr. Sheppard's role in this project?
A.
The first time when I was introduced, he told me he is the
owner of the property, he will not supply the money, but --
that was my understanding. That was the first time. And
second time was when we have issues with the plumber. It was
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
close to finalize the project, calling for finals, and then I
guess he show up to deal with the Burlington and I guess deal
with the plumber, and that was the second time I see him.
Q.
Now, were you paid -- when you were paid by HM-UP
Development Alafaya Trails, were you paid as a wage employee or
were you paid as an independent contractor?
A.
No. No. That was by a contract.
Q.
Were you always a contractor?
A.
Always been contractor.
Q.
And with respect to the payments that you received, were
there any type of withholdings like for Medicare taxes?
A.
No.
Q.
Social Security taxes?
A.
None of those. The amount they would allow -- I mean they
want to pay, nothing holding on it.
Q.
All right. From start to finish, you were an independent
contractor?
A.
Yeah. Always been contractor. Yeah.
MS. JIMENEZ: Can we show Government's Exhibit 18-3,
please. This is from records in evidence with PayPal's
forgiveness application, 18-3. This is very small.
Thank you.
All right. If we can go down.
I can't see.
Okay. Keep going. I know I've seen it.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Okay. Could we go down here to July 3rd -- oh. There
we go.
BY MS. JIMENEZ:
Q.
June 25th, do you see "Carlos Granda"?
A.
Yes. I see that.
Q.
Were you paid wages, sir?
A.
No.
Q.
All right.
MS. JIMENEZ: Can we go to -- can we go to 19-4,
please.
Down.
Keep going, please.
Okay. Here. All right. This is -- 19-14 is, for the
record, PayPal second draw loan application for HM-UP
Development Alafaya Trails.
BY MS. JIMENEZ:
Q.
Okay. On February 2020 -- so it looks -- were you -- well,
you started the job you testified sometime in 2020; is that
right?
A.
Yeah. That was around May.
Q.
I think you said you started in May. Is that your best
recollection, May 2020?
A.
Yeah. Yeah.
Q.
Okay. You see the top of the fourth column here? It says:
"Gross wages paid"?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Uh-huh.
Q.
And "Withholdings"?
A.
Yeah. I see that. Yeah.
Q.
I'm going to ask you again: Did this company, HM-UP
Development Alafaya Trails, pay you gross wages and withhold
any portion of your pay for Medicare, Social Security, income
tax?
A.
No.
Q.
All right. How long did you stay at this project at the
Shoppes at Alafaya?
A.
Probably we started May, we finish around February, and
then I still going to do some other stuff that Jeff asked me to
do.
Q.
All right. So you'd say May 2020 to approximately
February 2021?
A.
Approximately. That was around the final inspection.
Q.
Final inspection?
A.
Approximately. We have to check that. But it's
approximately that. And then after that I was -- Jeff called
me to do more stuff.
Q.
All right. When you say "Jeff," that's Jeff Vasilas?
A.
Jeff, yeah.
Q.
And he called you to do more things where?
A.
In the same shopping center. They have problems with the
lighting on the DICK'S, I remember, sports retail store, and
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
replace more lights. The same in Burlington, more issues on
the parking lot lights.
Q.
Okay. So before I ask you about that, when you finished
the project -- or was it considered finished after it passed
the final inspection?
A.
It's considered finished according to the -- we inspect it
and we agree.
Q.
Is that your contract? Is that what you mean?
A.
In the contract was -- have many things. We agreed just to
continue --
MS. WEINTRAUB: Referring to a contract that's not
been produced or in evidence.
MS. JIMENEZ: Talking about his contract.
THE COURT: I'm sorry?
MS. JIMENEZ: I said he could talk about his contract.
THE COURT: The objection is overruled at this point.
BY MS. JIMENEZ:
Q.
I'm sorry, Mr. Granda. So my question was: Was your --
let me ask this question: Was your -- did you consider your
contract to be completed at the point in time when there was a
final inspection that you passed?
A.
Yes. Yes. It was considered according with the terms
safety rule, yes.
Q.
What is that?
A.
Safety rule, when pass inspection.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Okay. Now, did your contract call for you to be paid?
Were you supposed to be paid?
A.
I have to be paid, yes. After finish whatever I have to do
in the agreement, yes, I have to be paid.
Q.
Now, at the point at which that project was completed, were
you owed any money for the work that you had done?
A.
Yes.
Q.
Approximately how much money were you owed?
MS. WEINTRAUB: Your Honor, I'm going to object on --
(Court reporter interruption.)
THE COURT: I'm sorry. On what grounds?
MS. WEINTRAUB: I'm objecting, Your Honor, on grounds
previously raised with the Court.
THE COURT: The objection is overruled.
You may continue.
Do you understand the question, sir?
THE WITNESS: Yes. How much they still owe me.
BY MS. JIMENEZ:
Q.
Yes.
A.
Yeah. So when I get -- my account say about 15,000 that
was to be paid, approximately. That was included more jobs I
did over there after the inspection.
Q.
So that -- the 15,000 -- well, how much were you owed
approximately at the point in time when you completed the
Burlington project and it passed inspection?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
I don't remember that but probably it's close to 7,000
something.
Q.
So approximately half of that money?
A.
Approximately half, yeah.
Q.
All right. And then you continued to do some jobs, you
indicated?
A.
Yeah. Yeah.
Q.
Yes?
A.
Yeah.
Q.
Who asked you to do additional work?
A.
Jeff.
Q.
Jeff Vasilas?
A.
Yeah.
Q.
And was -- where was the additional work that you were
doing?
A.
That was on the parking lot mostly, and the other shopping
centers have issues -- I mean the other retail stores have
issues.
Q.
It was at the same shopping center?
A.
The shopping center. Yeah.
Q.
Now, to do the additional work, did you enter into another
contract?
A.
No. That was a verbal agreement with him. I make him sign
some paper.
Q.
Who?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Making sign to -- Jeff -- some paper for the job needs to
be done as an agreement.
Q.
And essentially what was the agreement that you had with
Mr. Jeff --
A.
Well, since we have some money to be paid -- so if I agree
with him, helping any other job he needed if he pay me in
advance.
Q.
So from then on you wanted to be paid --
A.
In advance for other jobs he required.
Q.
Did Mr. Jeff Vasilas comply with that?
A.
Yeah. With, I guess, two or three jobs they needed, he pay
me in advance.
Q.
How -- did he pay you in person?
A.
Yeah. He pay me in person. We did a check, personal
check.
Q.
Where did he pay you?
A.
Where? He pay me right in Burlington store when I met him.
Q.
In Orlando?
A.
In Orlando, yeah.
Q.
What was the time frame of those occasions when Mr. Vasilas
paid you?
A.
Definitely it was after the final. Probably it was around
March, May, something.
Q.
How often did you see Mr. Vasilas in 2021?
A.
At that time, after that, that was probably once a week
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
maybe.
Q.
All right. And you saw him in person in Orlando?
A.
Yeah.
Q.
And those payments that Mr. Vasilas made to you in 2021,
were you paid by check or were you paid some other --
A.
Yeah. That was paid by check. A couple he made a deposit.
Q.
What do you mean that he made a deposit?
A.
Yeah. He asked me for the checking account and he made
deposit directly, couple of payments.
Q.
So he requested your checking account information and
deposited funds in your account?
A.
Yeah.
Q.
All right. And then were there other occasions when he
paid you by check?
A.
Paid me by check, yeah.
Q.
What company?
A.
The same, Diamond something.
Q.
And what did you understand that Diamonds company to be?
A.
He told me it's his company, and that's where he's paying
from.
Q.
Okay. What -- did you at some point in 2021 stop doing
work at the Shoppes at Alafaya?
A.
At some point I stopped because the money was very slow. I
needed money to pay my guys. And then, yes, I stop a couple
times. Yeah.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
And did there come a point in 2021 when you stopped and did
no more work?
A.
I'm sorry. Yeah, 2021. I was confused. 2020 we did the
job and then I stop. 2021 it was we do extra work.
Q.
In 2021 did there come a time when you no longer did any
work at the Shoppes at Alafaya?
A.
Uh-huh.
Q.
Yes?
A.
Yes.
Q.
How did that come about, sir? Why did you stop?
A.
Well, at that point after final inspection, and then I only
go when I had to go back by Jeff's request. That's it.
Q.
Did you have requests from Jeff Vasilas to do additional
work?
A.
Yes. And then also to do a bid for another project that he
had in mind, and then check some plans he has -- he asked me to
help him with -- as a consultant, but I never charged anything
for it.
Q.
You're saying there's things that you did not charge for?
A.
Yeah. Yeah. Because we become a little friendly. He
tried to make this work. And then I see I can help him with
something in my knowledge.
Q.
Did Mr. Vasilas try to make payments to you?
A.
Yeah. I think we try. He try. Well, that's my
understanding --
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
MS. WEINTRAUB: Judge, objection.
THE COURT: The basis?
MS. WEINTRAUB: It's total speculation. He doesn't
know. It's not from his personal knowledge.
THE COURT: Overruled.
BY MS. JIMENEZ:
Q.
All right. Now, what was the last assignment that -- job
request that you received from Mr. Vasilas?
A.
Jeff text me he got the problems with -- the shopping
center lights went out. That was late at night. And he told
me to go there.
And then, well, I guess I told him by the -- I
remember we have -- had a payment in advance, but he told me to
go because he's in the hospital. And then I went that night
with my guy, check it out. They show me what's going on. We
found the problem. And then I tried to contact him after that,
but he never replied back.
Q.
Approximately when in 2021 did that happen?
A.
That was July.
Q.
July?
A.
Yeah.
Q.
Did you speak to the -- did you speak to Eric Sheppard
after that at any point?
A.
Yeah. After couple days he call me.
Q.
Who is "he"?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Mr. Sheppard.
Q.
Okay.
A.
Because Jeff send me a picture. He was in the hospital.
That's why I went to see the shopping center.
Q.
How did Mr. Vasilas look in that picture?
A.
He got all the things on the mouth and the nose. He -- in
the text he told me he got pneumonia.
Q.
Okay. But from the hospital he directed you to go to --
A.
Yeah. To the shopping center to turn on the lights because
the lights were out.
And well, like I said, I find the problem and then
tried to contact him, never reply me back. So since -- I
couldn't fix it, because it's a big part to buy. So I couldn't
do it for myself. And a few days later, I got a call from
Mr. Sheppard, told me Jeff die.
Q.
He told you that Mr. Vasilas --
A.
Die, pass away.
Q.
-- had died?
A.
Yeah.
Q.
Did he tell you what he died of?
A.
Exactly the day, no. But he told me he die. That was, you
know --
Q.
Did you learn that it was COVID?
A.
Well, he told me that was COVID. That was the way I knew.
Q.
Okay. And what did Mr. Sheppard tell you -- well, what did
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
you discuss in that conversation with Mr. Sheppard?
A.
We discuss the problem in that shopping center and what
needs to be doing in order to be fixed. I mentioned I need to
get paid in advance because that was the agreement with Jeff,
and then I mentioned still the money being owed.
Q.
Did you tell him how much money was still --
A.
No. I say: "Some money is still owed. Jeff sign it."
That's it.
Q.
How much money were you owed at that point?
A.
At that point, that was almost 15,000. This is -- 14,070.
So 14,000 and something.
Q.
Did you ask Mr. Sheppard to pay you?
A.
I mention that Jeff signed something for monies owed. And
then he mention that -- he say: "I didn't sign it," and he
hang the phone.
Q.
I'm sorry. What is it that he said?
A.
He didn't sign it and hang the phone.
Q.
He didn't sign it, and then he hung up the phone?
A.
Yeah.
Q.
Okay. Did you have any other communication with Eric
Sheppard?
A.
After that, no. I tried to contact him, but no. And then
I guess his brother --
Q.
How did you try to contact him?
A.
The same phone number he call me. So I try to contact him.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Did you speak with him?
A.
No. After that, no.
Q.
Did you leave any messages?
A.
I left message. That's it, one. One or twice, that's it.
But nothing. And then mostly I tried to contact by text
because I guess I thought it was the most efficient way. But
no -- the brother reply me back, but that's it.
Q.
And then did there come a time when Eric Sheppard reached
out to you?
A.
After that?
Q.
Yes.
A.
No.
Q.
Did he ask you to do any other jobs?
A.
No.
MS. WEINTRAUB: Objection, Your Honor.
THE COURT: The objection -- is the -- what's the
basis of the objection?
MS. WEINTRAUB: Asked and answered.
THE COURT: Sustained.
BY MS. JIMENEZ:
Q.
Did anyone affiliated with this project ask you to do any
other work after that?
A.
After that, no.
Q.
Did -- of the $15,000 that you were owed, how much of it
was work that you had done at the Shoppes at Alafaya?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
That was -- everything was done. Everything they asked was
done.
Q.
At that location, at the same location?
A.
Yeah. Yeah. Yeah.
Q.
At any point did Eric Sheppard tell you that he was coming
into Paycheck Protection Program or Economic --
A.
No.
Q.
-- Injury Disaster Loan money to pay you?
A.
No. I never -- never heard from him until I got contact
from the FBI office.
MS. JIMENEZ: No other questions, Your Honor.
THE COURT: All right. Cross-examination.
CROSS-EXAMINATION
BY MS. WEINTRAUB:
Q.
Good afternoon, Mr. Granda.
A.
Good afternoon. Good afternoon, ma'am.
Q.
Mr. Granda, when the pandemic hit, were you working at that
time, at the end of March, beginning of April of 2020?
A.
Yeah. I was working for -- as a superintendent for a
different company.
Q.
And were you sent home when the pandemic hit, from that
job?
A.
No.
Q.
And were you available -- you were not working when you
went looking for a job at Burlington, right?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
I didn't looking. I was contact to do the job.
Q.
You were contacted by a friend of yours?
A.
Yes.
Q.
Who said that they were looking for people to work?
A.
They were -- contact me to do the job.
Q.
And you then spoke with Jeff Vasilas?
A.
Yes.
Q.
And Jeff Vasilas hired you?
A.
After discuss the terms, yes.
Q.
And Jeff Vasilas was the one who gave you direction and
told you what he wanted you to do, right?
A.
Basically, he handed me the plans, and then he told me:
"What needs to be done?" And then I told him what needs to be
done.
Q.
Right. And Jeff Vasilas paid you, right?
A.
He paid me at some point after stopped the payments --
regular payments by the company.
Q.
Okay. And you said -- you told the prosecutor a few
minutes ago that you were -- your companies -- the checks were
made out to your company. Is that what you said?
A.
Yes. They were made by my company.
Q.
Okay. Isn't it true that -- I'm going to show you an
exhibit. Did you file a 1099 that year for 2021?
A.
A 1099? Yes. I file it.
Q.
And you filed it as an individual, not as a company,
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correct?
A.
No.
Q.
You filed it as a company?
A.
As a company. The accountant told me --
MS. WEINTRAUB: Can we bring up and show the witness
only N-9.
BY MS. WEINTRAUB:
Q.
Do you see this form, Mr. Granda?
A.
Yes. I see it.
Q.
Do you see that it's made out -- recipient's name -- to an
individual? It says: "Carlos Granda."
A.
I see that. Yes.
Q.
Doesn't say your company's name, right?
A.
No. It doesn't say.
MS. WEINTRAUB: Your Honor, at this time...
MS. JIMENEZ: Your Honor, I object. I don't know
where this comes from.
THE COURT: Do you want to ask him if he recognizes it
in order to lay a proper foundation?
THE WITNESS: Well, I see my name on it, but --
THE COURT: Hold on. Hold on, Mr. Granda. There's no
question pending at this time.
BY MS. WEINTRAUB:
Q.
Mr. Granda, would you look at the next two pages?
A.
I see that. Yes.
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(305) 523-5698
Q.
Is that your address?
A.
That was my address.
Q.
And do you remember receiving this?
A.
Don't remember receiving that.
(Pause in proceedings.)
BY MS. WEINTRAUB:
Q.
And this is from the company HM Management?
A.
Uh-huh.
Q.
You have to say yes or no.
THE COURT: Sir, you have to answer verbally, either a
yes or no.
THE WITNESS: Yes. Yes. I see that.
BY MS. WEINTRAUB:
Q.
And that's the company that the paychecks were made out
from, correct?
A.
That's the company. Yeah.
Q.
And that is your home address?
A.
That was my old address. It doesn't show at the apartment,
but yeah.
MS. WEINTRAUB: At this time, Your Honor, most
respectfully, I would move this into evidence.
THE COURT: Is there an objection?
MS. JIMENEZ: Same objection.
THE COURT: Yeah. It hasn't been identified. The
objection is sustained.
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(305) 523-5698
BY MS. WEINTRAUB:
Q.
Now, it was your testimony that you did not get checks
individually, right?
A.
(No verbal response.)
Q.
I'm going to ask you to look at some checks.
A.
Uh-huh.
Q.
And tell me if those checks were made out to you.
MS. WEINTRAUB: N-8 only to the witness.
Not that one.
BY MS. WEINTRAUB:
Q.
Do you see the check that's on your screen?
A.
Uh-huh. Uh-huh.
Q.
Yeah. I'm sorry. Mr. Granda, you have to say --
THE COURT: Yes or no.
THE WITNESS: Yes, ma'am. Yes, ma'am.
BY MS. WEINTRAUB:
Q.
And is that check a check made out to you? Is that a
paycheck of yours?
A.
Yeah, it is.
Q.
It is, right? And is it made out to your company or is it
made out to you, Carlos Granda?
A.
It looks -- it's made out to me.
Q.
And that check is $7,000?
A.
Uh-huh.
Q.
You have to say yes or no.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
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A.
Yes. I'm sorry.
Q.
Sorry. The next check is made out for $4,600. It's made
out to Carlos Granda?
A.
Uh-huh.
Q.
Yes?
A.
Yes.
Q.
Again, it's not made out to your company. It's made out to
you, right?
A.
Yes. But can I explain one thing? At that time, I didn't
have a personal checking account. Everything was straight to
my company.
Q.
Okay. You might have -- you mean you deposited it into
your company?
A.
Yes.
Q.
Okay. But the checks were made out to you. Okay. That
explains things. So -- strike that. Let me start again.
So you deposited the checks into your company's bank
account?
A.
Yes.
Q.
Okay. But the checks were made out to you as an
individual, to Carlos Granda, like we see here?
A.
Yeah. That I see. Yes.
Q.
Okay.
MS. WEINTRAUB: With that said, Your Honor, at this
time I would move N-8 into evidence.
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Miami, Florida 33128
(305) 523-5698
THE COURT: I'm sorry. You said --
MS. WEINTRAUB: N-10.
THE COURT: Any objection?
MS. JIMENEZ: No objection --
THE COURT: Admitted into evidence.
MS. JIMENEZ: -- to the check.
(Defendant's Exhibit N-10 received into evidence.)
BY MS. WEINTRAUB:
Q.
Now, you said that you were owed money at the end, right?
A.
At the end, yes.
Q.
Now, Burlington -- the project was over at the end of
October, beginning of November, right?
A.
Totally, with all the extras, yes. I believe so.
Q.
And --
A.
November what year?
Q.
2020.
A.
No. The project wasn't ended then. It was still going.
Q.
There were still other things to do, but --
A.
Yeah.
Q.
-- the main project was done?
A.
Yeah. Yeah. The main project was done. The main project,
yes.
Q.
And the store opened?
A.
The store opened probably around that, yes.
Q.
And Jeff Vasilas at that time was the one that was paying
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you?
A.
Yes.
Q.
And Jeff Vasilas is the one that you looked to to get the
rest of the money, right?
A.
Yes. He was the representative of the company where he was
actually working for.
Q.
And you don't know what the financial arrangement was
between Mr. Sheppard, the owner, and Jeff Vasilas, do you?
A.
No.
Q.
You don't know if he gave money to Jeff Vasilas to pay you
do, you?
A.
I don't know.
Q.
When -- you told Jeff Vasilas that you called Eric
Sheppard. Yes?
A.
Yes. Because he handed me the phone number.
Q.
And didn't you tell the Government, the FBI agent, that
Jeff Vasilas told you: "Don't call Mr. Sheppard about me not
paying you"?
A.
He told me: "Don't let him know I give you his phone
number."
Q.
He didn't tell you not to let him -- not to talk to him
about it?
A.
I don't remember he told me: "Don't tell him I didn't pay
you." He told me: "Don't let him know I give you his phone
number."
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Miami, Florida 33128
(305) 523-5698
Q.
Do you remember speaking with the FBI agent in June of this
year?
A.
I don't remember.
Q.
You don't remember?
A.
It was sometime, but I don't remember exactly. It was June
or May.
Q.
Okay. If the FBI agent wrote down that you --
MS. JIMENEZ: Objection. Objection. Calls for --
MS. WEINTRAUB: I haven't even asked the question yet.
THE COURT: Let me hear the question.
BY MS. WEINTRAUB:
Q.
If the FBI agent wrote down that: "Granda said Vasilas
called him and said not to call Eric Sheppard about his
paychecks," would that have been wrong? Did she mishear it?
A.
I don't know. I don't know.
Q.
Are you denying that you said that?
A.
No. I not denying. I don't remember now I say that.
Q.
Okay. Does that refresh your recollection that that's what
you said?
MS. JIMENEZ: Objection. Asked and answered.
THE COURT: Sustained.
(Pause in proceedings.)
MS. WEINTRAUB: Can you pull up N-8 for the witness
only.
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Miami, Florida 33128
(305) 523-5698
BY MS. WEINTRAUB:
Q.
Mr. Granda, isn't it true that -- you're paid by HM-UP
Development Alafaya Trails, right? We established that before?
A.
Yes.
Q.
Yes. And...
(Pause in proceedings.)
THE COURT: For the witness only. What is the exhibit
number?
MS. WEINTRAUB: There we go. It is N-8, Your Honor.
THE COURT: N as in Nancy.
BY MS. WEINTRAUB:
Q.
Mr. Granda, I'm asking you to look at this check. This is
an HM-UP Development check. Yes?
A.
Yes. I see that.
Q.
And that's like your paychecks?
A.
Looks like a paycheck, yeah.
Q.
And can you see on the bottom what the memo says? "For
Carlos, the electrician, final payment"? Can you see that?
A.
I see that, yes.
Q.
And it's dated 11/30/2020. Do you see that -- the check?
A.
Yes.
Q.
And it's made out to Jeff Vasilas, right?
A.
Yes. I see that.
MS. JIMENEZ: Objection, Your Honor. This check is
not in evidence and the --
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(305) 523-5698
THE COURT: Is that an objection?
MS. JIMENEZ: It is an objection.
THE COURT: Sustained.
BY MS. WEINTRAUB:
Q.
All along weren't you told that you were being paid by
HM-UP Development because the checks came from HM-UP
Development and the money came -- and was given to Jeff Vasilas
to pay you?
A.
Yeah. That's what they said. Yes.
Q.
This check indicates that it was a final payment in
November --
MS. JIMENEZ: Objection.
THE COURT: The objection is sustained. The exhibit
is not in evidence. Please don't read from the exhibit.
BY MS. WEINTRAUB:
Q.
Is it your testimony that you were not paid in November of
2020?
A.
November 2020?
Q.
If you remember.
A.
I don't remember, to be honest with you.
Q.
The money that you were paid on that Burlington project,
was that money that -- was that job a job that you had -- you
would not have been bringing home money otherwise?
A.
Can you repeat the question, please?
Q.
If you weren't working at Burlington --
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Uh-huh.
Q.
-- during the COVID -- yes?
A.
During the COVID -- after COVID.
Q.
During COVID. During the pandemic.
A.
After pandemic.
Q.
Would you have been making money somewhere else or was that
a good thing that you had that job?
A.
Well, I was working as superintendent for another company
in that moment during the pandemia. So to take this job, I
quit that job. So to take this project, I quit my job.
Q.
Because this was a better job, yeah?
A.
No.
Q.
It was not a good job?
A.
Well, was a job -- one from other contracts I have it,
which came out after pandemia.
MS. WEINTRAUB: If I can just have a moment, Judge.
THE COURT: All right.
(Pause in proceedings.)
BY MS. WEINTRAUB:
Q.
After Burlington did you do any work on the -- on the Chase
Bank?
A.
No.
Q.
And what about the FedEx store?
A.
I did the -- couple demo he -- Jeff ask me to do. And then
the bid, he ask me to put it on it. That's it.
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(305) 523-5698
Q.
But you do agree that your hiring and not being paid, that
was all between you and Jeff Vasilas, right?
A.
Well, my understanding is between me and the company he
represents.
Q.
And that's what Jeff told you?
A.
Yes.
MS. WEINTRAUB: I have no further questions.
THE COURT: All right. Any redirect?
REDIRECT EXAMINATION
BY MS. JIMENEZ:
Q.
Mr. Granda --
A.
Yes?
Q.
-- to clarify, did you finish -- did you stop working at
the Shoppes at Alafaya in October, November 2020?
A.
I would say yes, around that time.
Q.
I thought you said the job -- the final inspection was in
February 2021.
A.
Well, my -- I have to recall -- yes. I tell you that, yes.
Q.
Did you continue to go to the Shoppes at Alafaya to do
various jobs?
A.
Yeah. Jeff told me to come back to do other things which
wasn't in the agreement.
Q.
In 2021?
A.
Yes.
Q.
Is that right?
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400 North Miami Avenue, 10-2
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(305) 523-5698
A.
Yes.
(Pause in proceedings.)
BY MS. JIMENEZ:
Q.
Did you -- before you -- well, let me ask you: After you
finished -- or after the project had passed final inspection in
2021, did you reach out to Eric Sheppard to try to be paid?
A.
No. Because before inspection -- before the final, I was
ready to -- like I said, I was about to stop the job. And then
since the money was slow, and then I was promised to get paid,
I was ready to leave.
Q.
Okay. Who promised to pay you?
A.
Jeff. Jeff. Jeff working out -- what I see, I believe he
was working out hard to get me pay. At least he give me
something. I see he show up to shake hands and: "Hey, this is
money." So he willing to fix the things. That's my
understanding.
Q.
And you continued -- why did you continue to do jobs at the
location even though you were owed money?
A.
At that moment, because I see Jeff, and then I feel that he
got the heart to get the things straight and right. And then
also his charismatic way to actually, I believe, convince me to
get with other jobs. So trying not to lose the business
because maybe he got the slow money, and then just give it a
chance to get paid, and don't get that desperate decision don't
do business at all, when probably in the future have a good
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Miami, Florida 33128
(305) 523-5698
opportunity to continue doing business. So that's why -- the
reason I keep going.
Q.
And did Jeff keep trying to have you work at this shopping
center to do the jobs?
A.
Yes, I did that. And then the agreement was: "At this
point you have to pay me in advance. You buy the materials. I
do the job. You pay me the labor in advance."
Q.
And then, from that point when you had that agreement with
Jeff Vasilas to be paid in advance, did he pay you in
advance --
A.
Yeah. For the --
Q.
Let me finish my question, please. Did he pay you in
advance each time that you met with him to do additional work
that he requested?
A.
Yes.
Q.
Until the last time when he died?
MS. WEINTRAUB: Objection. Leading.
THE COURT: Sustained.
BY MS. JIMENEZ:
Q.
Did he, in -- well, let me ask you: Did he, each time that
you -- that he asked you to do additional work -- did he keep
his promise and pay you the money?
A.
Yeah. He kept the promise. Yeah. He kept the promise.
Q.
Then the last time that he asked you to do work, did he pay
you?
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(305) 523-5698
A.
Well, I started but didn't pay me because he was sick.
Q.
He was sick?
A.
He was sick. So once he send me the picture, I can't --
well, he was nice with me, so I try to keep it nice as well
with him, and then be considerate he was sick.
Q.
And so did you reach out to Eric Sheppard to be paid --
A.
No. The --
Q.
-- money you were owed?
A.
After that, no. No, because once I have his phone number,
a few months ago, I didn't have the success to keep calling.
So when I called, never answer. So I never try again after --
after Jeff passed. No, I never tried. No.
Q.
But did you try the one time you had a conversation?
MS. WEINTRAUB: Objection, Your Honor.
THE WITNESS: After that, yes.
MS. WEINTRAUB: Asked and answered.
THE COURT: Sustained.
BY MS. JIMENEZ:
Q.
Did you have any conversation with Eric Sheppard?
A.
Yeah. That -- when he told me Jeff passed, then I have the
conversation.
Q.
Okay. Now, if Eric Sheppard was suggesting that
Mr. Vasilas had done something wrong, based on you knowing
Mr. Vasilas, would he want to come to this trial and tell the
jury --
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Miami, Florida 33128
(305) 523-5698
MS. WEINTRAUB: Objection, Your Honor.
THE COURT: And the basis?
MS. WEINTRAUB: Hypothetical. It's an improper
question. It calls for speculation.
THE COURT: Sustained.
BY MS. JIMENEZ:
Q.
Well, you knew Mr. Vasilas.
A.
Yes.
Q.
Were you friendly with Mr. Vasilas?
A.
Yes. He was a good friend.
Q.
Would he want to come here and --
MS. WEINTRAUB: Objection, Your Honor.
THE COURT: Sustained.
MS. JIMENEZ: No further questions.
THE COURT: All right. Is Mr. Granda excused?
MS. JIMENEZ: Yes, Your Honor.
MS. WEINTRAUB: Yes, Your Honor.
THE COURT: All right. Thank you, sir. You are
excused.
(Witness excused.)
THE COURT: And the Government's next witness.
MS. JIMENEZ: Yes, Your Honor.
The Government calls Spencer Lord.
(Pause in proceedings.)
THE COURT: Good afternoon, sir.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
SPENCER LORD, GOVERNMENT WITNESS, SWORN
COURTROOM DEPUTY: Thank you.
You can have a seat.
Could you please state your name and also spell it for
the record.
THE WITNESS: Spencer Lord. S-P-E-N-C-E-R L-O-R-D.
COURTROOM DEPUTY: Thank you.
DIRECT EXAMINATION
BY MS. JIMENEZ:
Q.
Good afternoon. Mr. Lord, were you subpoenaed to come to
this trial?
A.
Yes.
Q.
Where do you work, sir?
A.
Cross River Bank.
Q.
Where is Cross River Bank located?
A.
New Jersey.
Q.
Where is your office located?
A.
I work remotely from Washington State.
Q.
Washington State?
A.
Yes.
Q.
What is your current position with Cross River Bank?
A.
Associate program manager.
Q.
What are your responsibilities as associate program
manager?
A.
Assisting, managing, and maintaining the Paycheck
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Protection Program.
Q.
How long have you been employed by Cross River Bank?
A.
Since December of 2020.
Q.
Were you -- in 2021, did you work in -- well, was Cross
River Bank, in 2021, involved in the Paycheck Protection
Program?
A.
Yes.
Q.
In 2021, were you involved at Cross River Bank working on
the Paycheck Protection Program loan applications?
A.
Yes. I was working in customer support at the time.
Q.
Are you familiar with the policies and procedures that
Cross River Bank had in place in 2021 to process PPP loan
applications?
A.
Yes.
Q.
In 2021, where were Cross River Bank's servers located to
receive PPP loan application information and documentation?
A.
Pennsylvania.
Q.
All right. Now, in January and March of 2021, did a
business by the name of HM Management and Development, LLC
apply for a PPP loan with Cross River Bank?
A.
Yes.
Q.
Did Cross River Bank produce records to the Government in
response to a grand jury subpoena?
A.
Yes.
MS. JIMENEZ: Your Honor, we'd like to move into
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evidence Exhibit 21 and all of the sub-exhibits. It's actually
21 through 21-3.
THE COURT: Any objection?
MR. ETRA: Your Honor, we had raised an issue --
generally no, but we had raised an issue with respect to a
portion of certain of the documents which cover the other issue
we talked about for the other loan, the same type of material
summarized in these reports.
THE COURT: Are you going to be referring to those
documents? This was what he addressed at sidebar.
MS. JIMENEZ: No. I'm not going to display that
document.
THE COURT: All right, then. Subject to what we spoke
about, then, 21, 21-1, 2, and 3 are admitted into evidence.
(Government's Exhibits 21, 21-1, 21-2, and 21-3
received into evidence.)
MS. JIMENEZ: Also, Your Honor, 22-1 through 22-7 are
also Cross River Bank records.
THE COURT: Any objection?
MR. ETRA: Only for the same issue if it applies to
those documents. I...
THE COURT: All right. Subject to the same condition.
22-1 through 7 admitted into evidence.
(Government's Exhibits 22-1 through 22-7 received into
evidence.)
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Miami, Florida 33128
(305) 523-5698
MS. JIMENEZ: I would also like to move in the
DocuSign records for all of the companies, 10 -- they have a
business records certification -- 10-1 through 10-12.
THE COURT: Any objection?
MS. JIMENEZ: I mean, a lot of them are in evidence
insofar as --
MR. ETRA: I understand they're subject to
certification. So based on that, we don't object.
THE COURT: I'm sorry. Subject to certification?
MR. ETRA: There are certifications that support them;
therefore, we don't object.
THE COURT: All right. Then 10-1 to 10-12 are
admitted into evidence.
(Government's Exhibits 10-1 through 10-12 received
into evidence.)
BY MS. JIMENEZ:
Q.
All right. Now, Mr. Lord, how would someone interested in
applying for a Paycheck Protection Program loan with Cross
River Bank go about doing that?
A.
By accessing our website where there's a splash page with
information about the PPP loans and eligibility and
ineligibility.
Q.
I'm sorry. I didn't hear. Could you speak up, please.
A.
Yeah. Sorry. So by going to our website, and there was a
splash page that had information about the Paycheck Protection
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Program loans and if -- eligibility and ineligibility
questions. So they could kind of decide if they could apply
for a loan or not through our website.
Q.
Was the entire process done online?
A.
Yes.
Q.
Now, with respect to Cross River Bank's loan application
process, can you briefly explain -- can you briefly explain how
that application process worked in terms of when the
information would be supplied to Cross River Bank versus
documentation?
A.
Yes. So they could start the application process by
entering in basic personal and business information, such as
like address, things like that. And then the application flow
would prompt them with further questions about their business,
and they could proceed through the application flow answering
the questions and providing the requested information. And
then, finally, the last step was uploading the requested
documents to the application.
Q.
Could the person applying for the loan submit information
and then later -- submit information to Cross River Bank that
Cross River Bank would receive, and then later, when they came
upon records that were requested, submit those at a later time?
Could someone do that?
A.
Information, yes. Documents, no.
Q.
So when -- okay. And what does that mean: "Information
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
yes, documents no"?
A.
Like, if they had started their application and only put in
their basic personal information, they could continue where
they left off. But if they had entered in -- if they had
uploaded documents, that was the final step of the application.
Q.
So did the information and documentation go to Cross River
Bank all at once together in one transmission?
A.
They did, yes. That was -- the full application submission
was information and documents.
Q.
Now, as to the January or March 2021 application from HM
Management and Development, were either of those loan
applications approved and funded?
A.
No.
Q.
Was one or the other?
A.
There was one that was accepted, but there was two that
were -- one was accepted and one was incomplete.
Q.
Okay. All right. So let's talk about the January
submission.
MS. JIMENEZ: Can we pull up Exhibit 21-2, please.
COURTROOM DEPUTY: Is this in evidence for the jury to
see?
MS. JIMENEZ: All 21 and 22 should be in evidence.
THE COURT: It's in evidence.
All right.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
BY MS. JIMENEZ:
Q.
Mr. Lord, we're looking at Exhibit 21-2. Do you see it?
A.
I do, yes.
Q.
What is this?
A.
That's the electronic record of the loan application that
was propagated after the application was submitted.
Q.
And what time frame is this?
A.
January 19th, 2021.
Q.
All right. Does this record provide an email address
entered into by the person who applied?
A.
It does.
Q.
What is that email address?
A.
Hmfourmanager@gmail.com.
MS. JIMENEZ: Can we look at Exhibit 8-3, please.
All right.
BY MS. JIMENEZ:
Q.
Do you see the --
MS. JIMENEZ: Could we highlight the email address.
BY MS. JIMENEZ:
Q.
For that email hmfourmanager@gmail.com, does it indicate
who the subscriber was?
A.
Yes.
Q.
Who?
A.
Eric Sheppard.
Q.
Does it indicate created on?
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Miami, Florida 33128
(305) 523-5698
A.
Yes.
Q.
When was it created?
A.
Yes.
Q.
When?
A.
November 20th or -- October 20th, '20.
Q.
All right.
MS. JIMENEZ: Can we go back to 21-2.
BY MS. JIMENEZ:
Q.
Now, for this record of Cross River Bank, it has an IP
address; is that right?
A.
Correct.
Q.
What does -- at what point in time did Cross River Bank
capture an IP address?
A.
When the application was submitted fully.
Q.
When the application was submitted what?
A.
Fully.
Q.
Fully. So is it -- the information and documentation
together; is that right?
A.
Correct.
Q.
Okay.
MS. JIMENEZ: Can we go to the next page.
BY MS. JIMENEZ:
Q.
All right. So what does this page indicate?
A.
That's the information that the borrower input into the
application flow.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
And when you say: "Application flow," does that mean that
the person applying is answering questions in your portal?
A.
Correct. Or filling out like blanks. It will say their
name and they'll input the information.
Q.
All right. Now, the name of the business that's applying
here is what?
A.
HM Management and Development.
Q.
And it has a d/b/a of the same name, right?
A.
Correct.
Q.
Okay. It provides an address. Do you see that address?
A.
Yes.
Q.
What is the address?
A.
180 Bal Cross drive -- 180 Bal Cross Drive, Bal Harbour,
Florida 33154.
Q.
And it provides a phone number, right?
A.
Correct.
Q.
What is that phone number?
A.
(305)582-5529.
Q.
All right. Now, this is January 19, 2021?
A.
Correct.
Q.
So what are the number of employees listed on this
application?
A.
Twenty-three.
Q.
What is an NAICS code?
A.
It's the industry code for the type of business.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Do you know what this code represents?
A.
Not offhand, no.
MS. JIMENEZ: Could you go back in.
BY MS. JIMENEZ:
Q.
On this application, in the middle box, did the applicant
provide payroll information?
A.
Yes.
Q.
And what did you use the payroll information for?
A.
To determine the loan amount.
Q.
And was that two and a half times the average monthly
payroll?
A.
Correct.
Q.
Okay. And so that resulted in this loan amount?
A.
Correct.
Q.
And what is this loan amount?
A.
179,633.
Q.
All right. And then --
MS. JIMENEZ: Go back.
BY MS. JIMENEZ:
Q.
And then, as you go down, provides owner information?
A.
Correct.
Q.
And this is the same information previously provided above;
is that right --
A.
Correct.
Q.
-- essentially?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
MS. JIMENEZ: Okay. Let's go down.
All right. "I understand that checking the box below,
confirming that" -- could we -- okay.
BY MS. JIMENEZ:
Q.
Can you read the first bullet dot there?
A.
"To the best of my knowledge, the business information I
provided in this application is accurate and complete and..."
Q.
Okay.
MS. JIMENEZ: Let's go back.
Okay. And then go down.
Halfway into the -- this page it refers to ineligible
businesses.
And then this actually -- if you can go back and then
it --
BY MS. JIMENEZ:
Q.
This list goes on, is that right, of ineligible businesses?
A.
Correct.
Q.
Okay.
MS. JIMENEZ: Can we go down.
All right. Stop.
Can you highlight the -- Number 1.
BY MS. JIMENEZ:
Q.
All right. Can you read the first bullet.
A.
"Passive businesses owned by developers and landlords that
do not actively use or occupy the assets acquired or improved
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
with the loan proceeds, except as eligible passive companies
under 13 CFR 120.111, are not eligible."
Q.
All right. And then can you read the third bullet, please.
A.
"Businesses that are primarily engaged in owning or
purchasing real estate and leasing it for any purpose are not
eligible. For example, shopping centers, salon suites, and
similar business models that generate income by renting space
to accommodate independent businesses that provide services" --
Q.
Okay. Thank you. That's enough.
So -- and you indicated this is January 19th -- oh.
MS. JIMENEZ: I'm sorry. Go back to the page.
And then if we scroll down.
Okay. Stop.
BY MS. JIMENEZ:
Q.
Is the box checked --
MS. JIMENEZ: Can we highlight the box that's checked.
BY MS. JIMENEZ:
Q.
So what did the individual indicate?
A.
That they confirmed and agreed to all the statements above.
Q.
All right. And this was January 19th, 2021?
A.
Correct.
MS. JIMENEZ: Can we go to Exhibit 19-2, please.
All right. Could we go to the next page. This is,
for the record, a PayPal record.
I'm sorry. No. The next page.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
All right. This is -- if we can go all the way down,
so we could see the date on this.
BY MS. JIMENEZ:
Q.
This is an application submitted -- what is the date
reflected?
A.
January 19th, 2021.
Q.
Is that the same day as your Cross River application?
A.
Yes.
Q.
Okay.
MS. JIMENEZ: Can we go to the business that's
applying.
BY MS. JIMENEZ:
Q.
The legal name of the business for this application was
what, on the right-hand side in the middle?
A.
HM-UP Development Alafaya Trails.
Q.
All right. And then on the left-hand side, doing business
as who?
A.
HM Management and Development.
Q.
Is that the name of the business that applied to you on
that day, January 19th, 2021?
A.
Yes.
Q.
All right.
MS. JIMENEZ: Can we go back to 21-2, please.
BY MS. JIMENEZ:
Q.
All right. Now, were there any documents produced with
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
this application?
A.
Yes.
MS. JIMENEZ: Can we go to 21-1.
BY MS. JIMENEZ:
Q.
Is this a document, 21-1, that was produced with this loan
application?
A.
Yes.
Q.
All right. And it indicates total payments to employees in
the amount of?
A.
910,340 and 25 cents.
Q.
And that is for tax year 2019?
A.
Yes.
Q.
All right.
MS. JIMENEZ: Can you go back out.
Go to the second page.
BY MS. JIMENEZ:
Q.
All right. Was this document signed?
A.
Yes.
MS. JIMENEZ: Can we go to Part 7.
BY MS. JIMENEZ:
Q.
Does the document indicate who signed this IRS Form 940?
A.
Yes.
Q.
Who does it indicate signed the document?
A.
Eric Sheppard.
Q.
Is that the phone number 5529 provided on the application?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Yes.
MS. JIMENEZ: Can we go to Exhibit 12-5, please.
BY MS. JIMENEZ:
Q.
This is an IRS record for taxpayer HM Management and
Development. Now, for Form 940 Employer's Annual Federal
Unemployment, what does it indicate? What does the IRS
indicate?
A.
The -- for the 940?
Q.
For the 940. The portion that's highlighted, what did the
IRS say?
A.
"As of June 4th, 2020, the Internal Revenue Service shows
no return filed for the following tax years pertaining to the
individual described above."
Q.
And the tax years are 2019, 2020, and 2021?
A.
Correct.
Q.
All right. Was there also a portion of a tax return
provided with this application?
A.
Correct.
(Pause in proceedings.)
MS. JIMENEZ: If we can go to the ELMO for a moment.
BY MS. JIMENEZ:
Q.
This is Composite Exhibit 21, Bates Stamp Number 106052.
Is this document a document that was provided --
A.
Yes.
Q.
-- for this loan? And what is it?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
A Schedule K-1.
Q.
Does that belong with the tax return 1065 for this
business?
A.
Yes.
Q.
And the business listed is who?
A.
HM Management and Development.
Q.
And the 99 percent owner is who?
A.
Eric Sheppard.
MR. ETRA: Aimee, is there an exhibit number to this?
MS. JIMENEZ: I don't have a sub-exhibit for this.
It's 21. Yes.
MR. ETRA: Part of 21?
MS. JIMENEZ: Yes.
BY MS. JIMENEZ:
Q.
And then this page, Bates Stamp Number 10585, was this also
provided to you with this loan application?
A.
Yes.
Q.
Again, was this all part of the same submittal
January 19th, 2021?
A.
Yes.
Q.
All right. What is that page?
A.
That is a list of affiliated businesses.
Q.
That was produced to you from this company?
A.
Correct.
Q.
Okay. Do you see the name of a business HM-UP Development
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Alafaya Trails, LLC?
A.
Yes.
Q.
Well -- well, is it -- are you reading this one here?
A.
Yes.
Q.
Okay. This one is HM-UP Development Alafaya Trails TRU,
LLC. Do you see that?
A.
Yes.
Q.
Do you see one with a name HM-UP Development Alafaya
Trails, LLC?
A.
No.
Q.
Did you see a company by the name of CJUF Roman numeral III
Flagler, LLC?
A.
No.
Q.
Do you see a business name HM Six, LLC?
A.
No.
Q.
This document that we were just looking at, it's an
addendum to what?
A.
The application?
Q.
Was there a 2483 SBA form executed with this application?
A.
No.
MS. JIMENEZ: Can we look at 21-2, please.
(Pause in proceedings.)
MS. MARTINEZ: It's on the ELMO, so it needs to be at
counsel's table.
Ms. Jimenez, do you want counsel table?
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Miami, Florida 33128
(305) 523-5698
Okay. We have counsel's table. So...
MS. JIMENEZ: Okay. So I have the wrong number.
Hold on.
Okay. All right. Let's go to 21-3, please.
BY MS. JIMENEZ:
Q.
All right. What is this record that we're looking at?
A.
That is an email sent to our support email.
Q.
Okay. Who sent this email?
A.
Eric Sheppard.
Q.
And what is the email address provided?
A.
HM --
Q.
I'm sorry. What is the email that it came from?
A.
Hmfourmanager@gmail.com.
Q.
Okay. "To support."
MS. JIMENEZ: Can you highlight the first sentence,
please.
BY MS. JIMENEZ:
Q.
What did Mr. Sheppard say in this email?
A.
"To support. As managing member on behalf of my company HM
Management and Development, LLC, a Florida limited liability
company, last four TIN Number 4219, I submitted to Cross River
a complete PPP application last Tuesday."
Q.
All right.
MS. JIMENEZ: Can we go back.
Can you highlight the second -- well, just highlight
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Miami, Florida 33128
(305) 523-5698
the rest of the email so that it's not piecemeal.
BY MS. JIMENEZ:
Q.
So in the next sentence, what does he say?
A.
"I have not received any email communication verifying full
complete receipt of the application."
Q.
All right. And then does he indicate that he could be
reached and where he could be reached?
A.
Yes.
Q.
And what does he say?
A.
"I can be reached through this email or on my cell phone,
(305)582-5529."
Q.
All right. Now, what happened with this application?
A.
It looks like it wasn't able to be responded to. There's
an assignee, Ayanna Thomas.
Q.
I'm sorry. Say that again.
A.
There's an assignee, Ayanna Thomas. If you could --
MS. JIMENEZ: Go back.
Yes.
BY MS. JIMENEZ:
Q.
So there's an assignee, Ayanna Thomas. What does that
mean?
A.
That means with our support staff it was assigned to that
person -- the ticket was.
Q.
All right. Was there a decision made on this application?
A.
Yes.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
What was the decision made on this application?
A.
That it wasn't able to be completed because of incomplete
documentation.
Q.
Was that communicated to the applicant?
A.
Would you mind going to the next page, please.
MS. JIMENEZ: Go ahead.
Yes. Okay. Can we highlight the whole thing.
THE WITNESS: So in the second line it says: "After
checking further into your application, unfortunately, it was
not successful on this attempt for approval through our
automated system."
BY MS. JIMENEZ:
Q.
All right. And then, in your records, did you find what
the reason was as to why the loan application was not approved?
A.
The automatic system wasn't able to read the documents
correctly, but that's all that I know of. We had an
underwriting team that would have more details, but that's all
the information that we as support staff were given.
Q.
All right. So ultimately, this application was not funded.
A.
Correct.
Q.
Is that right?
Okay. Then did you receive a subsequent application
from this same business entity, HM Management and Development,
LLC?
A.
Yes.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
All right.
MS. JIMENEZ: Can we --
BY MS. JIMENEZ:
Q.
And was that in March of 2021?
A.
Yes.
Q.
Was that application submission funded?
A.
Yes.
Q.
All right.
MS. JIMENEZ: Can we look at 22-1, please.
BY MS. JIMENEZ:
Q.
This looks like a similar record as the one we previously
saw; is that right?
A.
It is, yes.
Q.
What does this record reflect?
A.
The same information as the previous electronic record of
loan with the information that the applicant provided in the
application.
Q.
And does this record indicate whether all of the
information and all of the documentation was supplied to Cross
River Bank all at once on this date and time from this IP
address?
A.
Yes.
Q.
What is the email that was provided here?
A.
Eshmmanagementndev@gmail.com.
Q.
All right.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
MS. JIMENEZ: Can we go to Google, 8-2.
BY MS. JIMENEZ:
Q.
Okay. For eshmmanagementndev@gmail.com, does this record
provide subscriber information?
A.
Yes.
Q.
Who is the subscriber?
A.
Eric Sheppard.
Q.
When was this email created, based on this record?
A.
March 13th, 2021.
THE COURT: Ms. Jimenez, just let me know when it
might be a good time to give the jurors a little break.
MS. JIMENEZ: Sure. Now is good, Your Honor.
THE COURT: Okay. Ladies and Gentlemen, let's take a
10-minute comfort break.
COURT SECURITY OFFICER: All rise.
(Jury not present, 2:54 p.m.)
THE COURT: All right. We're on a 10-minute recess.
MR. ETRA: Your Honor, are we finishing at five today?
THE COURT: I'm sorry.
MR. ETRA: Are we finishing at 4:30 or five? I didn't
recall.
THE COURT: We're finishing at five.
And just for purposes of scheduling tomorrow, we do
have one matter in the morning, so we'll start at 9:30.
MS. MARTINEZ: And we'll go till five?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
THE COURT: Yes.
MS. MARTINEZ: Thank you.
(Recess from 2:54 p.m. to 3:06 p.m.)
THE COURT: All right. Let me acknowledge the
presence of the Defendant.
Are both sides ready to continue?
MS. JIMENEZ: Yes, Your Honor.
MR. ETRA: Yes, Your Honor.
THE COURT: Okay. Let's bring in the jurors.
(Before the Jury, 3:06 p.m.)
THE COURT: All right. Welcome back, Ladies and
Gentlemen.
Please be seated, everyone.
And we'll continue with the direct examination.
MS. JIMENEZ: Thank you. Can we display 21-2, please.
21-2.
BY MS. JIMENEZ:
Q.
All right. So looking at 21-2, the -- oh.
MS. JIMENEZ: Oh. I'm sorry. 22-2 -- no. Hold on.
BY MS. JIMENEZ:
Q.
All right. What is this?
A.
The identification that was submitted by the borrower.
Q.
Whose driver's license is this?
A.
Eric Sheppard.
Q.
All right.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
MS. JIMENEZ: Go back to 22-1.
BY MS. JIMENEZ:
Q.
Okay. For 22-1, the information and documentation, on what
day was it submitted?
A.
March 12th, 2021.
Q.
And the IP address that was captured, is that the one
reflected on this record?
A.
Yes.
Q.
Ending in 129?
A.
Yes.
Q.
Okay.
MS. JIMENEZ: Let's go back and go to the next page.
BY MS. JIMENEZ:
Q.
Okay. Here, the business information, what did the
applicant provide? What is the name of the business?
A.
HM Management and Development.
Q.
And it's doing business as what?
A.
Construction Service X.
Q.
What is your understanding of what the d/b/a is?
A.
It's the name of the business. That might not be the --
they could be doing business as a different name.
Q.
A different name?
A.
Uh-huh.
Q.
And for this application in March of 2021, how many
employees did the applicant indicate were in the business?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Eighteen.
Q.
You remember how many employees were listed in the January
application?
A.
Twenty-three.
Q.
All right. Is this the same phone number that was
previously provided in January?
A.
Yes.
Q.
All right. And then Eric -- eric.sheppard10@gmail.com, was
that an email provided in addition to the
eshmmanagementndev@gmail.com?
A.
Yes.
Q.
Okay.
MS. JIMENEZ: Let's go back.
BY MS. JIMENEZ:
Q.
All right. Loan information -- all right. Now, was this
payroll information or payroll figures different than the ones
provided in January of 2021?
A.
Yes.
Q.
In January 2021 was the amount -- the loan amount that it
generated above or below 150,000?
A.
I don't remember.
Q.
You don't remember.
MS. JIMENEZ: All right. Can we just quickly take a
look at 12-2.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
BY MS. JIMENEZ:
Q.
The January application, was the loan amount below or above
150,000?
A.
Above.
Q.
All right.
MS. JIMENEZ: Now, let's go back to 22-1, please.
BY MS. JIMENEZ:
Q.
And then, what is the -- is the owner the same owner as
previously provided, Eric Sheppard?
A.
Correct.
Q.
All right.
MS. JIMENEZ: Let's go back, and go down.
Okay. Stop.
Can you highlight: "I understand that by checking the
box below."
BY MS. JIMENEZ:
Q.
The first bullet point, what does it say?
A.
"To the best of my knowledge, the business information I
provided in this application is accurate and complete."
Q.
All right.
MS. JIMENEZ: Go back.
And then that same box -- can you just highlight the
first half of the page.
BY MS. JIMENEZ:
Q.
All right. And then did the applicant give Cross River
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Bank permission to obtain his personal credit report?
A.
Yes.
Q.
And whose credit report is being requested?
A.
Eric Sheppard.
Q.
Did you obtain a credit report for Eric Sheppard?
A.
Yes.
Q.
All right.
MS. JIMENEZ: Can you go back.
BY MS. JIMENEZ:
Q.
Was that credit report part of the loan file that someone
reviewed?
A.
Yes.
Q.
All right. Okay. And then you have the same series of
questions about whether or not the business is eligible; is
that right?
A.
Correct.
Q.
Okay.
MS. JIMENEZ: Can we go back to the first page.
Okay. Stop.
Okay. Next page, please.
BY MS. JIMENEZ:
Q.
Okay. So the loan amount that the payroll information
generated, what was the amount?
A.
148,592.
Q.
Now, for the business payroll, what did -- what was it
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
supposed to be based on?
A.
Wages and salary to employees.
Q.
What supporting documents did Cross River request?
A.
Filed tax forms, identification, and voided check.
Q.
Okay. And the tax forms -- what tax forms did you request?
A.
It depended on the type of business.
Q.
Okay. In this case what tax forms were provided?
A.
A 1065 and a 940.
Q.
Was there also a 941?
A.
I think it was just the 940.
Q.
Okay. Now, for this loan application, what time frame did
you require the tax documents be from, 2019 or 2020, or could
it be either?
A.
It could be either.
Q.
Did you receive any record -- any document or any
information from HM Management and Development doing business
as Construction Service X -- any information or record
indicating that the payroll calculation was based on payments
to 1099ed workers?
A.
No.
Q.
Did you receive any 1099s?
A.
No.
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?
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Case 1:22-cr-20290-BB Document 312 Entered on FLSD Docket 02/25/2025 Page 198 of 293
199
Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Zero.
Q.
Okay.
MS. JIMENEZ: Let's go to Exhibit 22-3.
BY MS. JIMENEZ:
Q.
What is this?
A.
That's the 1065 Form that was included in the application.
Q.
All right. Now, does it indicate, Line 9, which we barely
caught -- Line 9, does it indicate salaries and wages paid by
this business?
A.
Yes.
Q.
What is the amount?
A.
815,358.
Q.
All right. And the top left has a business code number.
What is that business code?
A.
636220.
Q.
Okay. The gross receipts for this business indicated on
this tax return, what was it?
A.
One thousand -- or 1,263,837.
Q.
All right.
MS. JIMENEZ: Can we go to Exhibit 12-4.
BY MS. JIMENEZ:
Q.
All right. This is an IRS record for HM Management and
Development for tax return 1065. What does the IRS say?
A.
"As of June 4th, 2022, the Internal Revenue Service shows
no return filed for the following tax years pertaining to the
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
individual described above."
Q.
And that's tax years 2018, 2020, and 2021?
A.
Correct.
Q.
Now, you said a tax return was provided -- or was
requested. Did you request a tax return for a specific year or
could the applicant submit a tax return for either 2019 or
2020?
A.
It could be either year.
MS. JIMENEZ: Now, can we look at 12-1.
BY MS. JIMENEZ:
Q.
All right. This is an IRS record, 1065 return for HM
Management and Development. For what tax year is this?
A.
2019.
Q.
All right. Does it indicate any salaries and wages?
A.
Yes.
Q.
What is that amount?
A.
134,811.
Q.
Does it indicate a business code?
A.
Yes.
Q.
What is that?
A.
531390.
Q.
Is that the same code that you were supplied or a different
one?
A.
Different.
Q.
Now, in a -- when Cross River -- when someone applies to
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Cross River as a business owner seeking a loan outside the PPP
context, does Cross River request an income tax return for the
business?
A.
I don't know. I only know about the PPP.
Q.
You only know about the PPP?
A.
Correct.
Q.
And then, for the PPP loans, did it request tax returns?
A.
Yes.
Q.
Income tax returns?
A.
Yes.
Q.
All right.
MS. JIMENEZ: Can we look at 22-4.
BY MS. JIMENEZ:
Q.
Was this document supplied to you?
A.
Yes.
Q.
It's an IRS Form 940 for tax year 2020, correct?
A.
Correct.
Q.
For this business, same business?
A.
Correct.
Q.
All right. What does it indicate in 2020 the business paid
to its employees?
A.
713,420.
Q.
All right.
MS. JIMENEZ: Can we look at 12-5, please.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
BY MS. JIMENEZ:
Q.
For this IRS record for HM Management and Development, what
does the IRS say about Forms 940 for this business?
A.
"As of June 4th, 2022, the Internal Revenue Service shows
no return filed for the following tax years pertaining to the
individual described above."
Q.
Now, the 1065 income tax return that was provided for this
business, did Cross River Bank have any information that the
tax return had false information?
A.
No.
Q.
Did you have any indication that the tax preparer's
signature on that return had been forged?
A.
No.
Q.
If you had that information, that the income tax return had
false information regarding salaries and wages, the business
code, and that the accountant's signature had been forged,
would Cross River Bank have approved the loan?
A.
No.
Q.
For the IRS Form 940, did you have any information that the
Form 940 was false?
A.
No.
Q.
That it had false information about wages?
A.
No.
Q.
If you had that information, and you had information that
the 940 submitted to Cross River Bank was a false record -- a
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
falsified record, would the loan have been approved and funded?
A.
No.
Q.
All right. Did you acquire a voided check?
A.
Yes.
Q.
For what reason?
A.
To verify the -- either if it was a business account or to
make sure that the account and routing information for the F5
that they were requesting was legitimate.
Q.
Is that the account to which the funds would go --
A.
Yes.
Q.
-- if the loan was funded?
A.
Yes, it was.
Q.
All right.
MS. JIMENEZ: Can we look at 22-6, please.
BY MS. JIMENEZ:
Q.
All right. 22-6 is several pages long. What is this?
A.
That is the closing contract that was sent to the borrower
after the SBA had approved the loan.
Q.
Okay.
MS. JIMENEZ: Can we go down this page.
BY MS. JIMENEZ:
Q.
So is this a record that --
MS. JIMENEZ: Let's -- I'm sorry. Let's just keep
going down for a moment.
All right here.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
BY MS. JIMENEZ:
Q.
Is this a record that Cross River Bank generated or that
the applicant sent to you?
A.
It was generated.
Q.
And who provided the information that is on this 2483?
A.
The borrower.
Q.
From the record that you have dated March 12, 2021; is that
right?
A.
Correct.
Q.
Okay. Does this information match the information that you
received on March 12, 2021?
A.
Yes.
Q.
Okay.
MS. JIMENEZ: Can we go down. Can we just go back
out.
All right. Can you highlight the middle.
The other middle.
"Average Monthly Payroll."
BY MS. JIMENEZ:
Q.
Okay. Here, the average monthly payroll amount -- was this
based on the information in the records you received?
A.
Correct.
Q.
The purpose of the loan -- did the applicant tell you what
the money -- or what the reason for the loan was, what they
were going to use the money for?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Correct.
Q.
And they indicated payroll?
A.
Payroll, utilities --
Q.
And the payroll information that was provided to you, did
it have any information about payments to 1099?
A.
No.
Q.
Okay.
MS. JIMENEZ: Let's go down.
BY MS. JIMENEZ:
Q.
This form --
MS. JIMENEZ: If we can go down. Next page.
And the next page.
BY MS. JIMENEZ:
Q.
-- it has certifications, right, that you're familiar with?
A.
Yes.
Q.
Were the applicant certifications important to the loan
application process for Cross River Bank?
A.
Yes.
Q.
Why?
A.
To verify that the information was correct.
Q.
Did Cross River Bank, in the context of PPP loans, conduct
an independent investigation of the information and the
documentation that was provided by the applicant?
A.
No.
Q.
Was the process intended to be somewhat expedited?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Yes.
MS. JIMENEZ: And the last two paragraphs here,
before -- with the signature, can we highlight that.
I'm sorry. The last two initialed paragraphs and the
signature block.
BY MS. JIMENEZ:
Q.
All right. So if you could just read the certification:
"I further certify."
A.
"I further certify that the information provided in this
application and the information provided in all supporting
documents and forms is true and accurate in all material
respects."
Q.
Was this certification in all of your 2483 Forms?
A.
Yes.
Q.
The signature provided indicates that who signed this
document?
A.
Eric Sheppard.
Q.
Did you require the owner of the business to sign or an
authorized representative of the business to sign?
A.
Yes.
Q.
Either one?
A.
Yes.
Q.
Okay. Can the authorized representative be someone other
than Eric Sheppard?
A.
Yes.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
All right. What is the date indicated on this signature
block?
A.
March 25th, 2021.
Q.
All right. Then up, which is --
MS. JIMENEZ: Can we go to Page 15.
Stop here.
Go up.
BY MS. JIMENEZ:
Q.
What is the Resolution to Borrow?
A.
That is a promissory note from the SBA.
Q.
Okay.
MS. JIMENEZ: And can you go back out.
BY MS. JIMENEZ:
Q.
Does the applicant DocuSign this document as well?
A.
Yes.
Q.
What are they certifying?
A.
That the --
MS. JIMENEZ: Go back out.
BY MS. JIMENEZ:
Q.
Well, generally, what is the Resolution to Borrow? What
are they supposed to be signing?
A.
That they are accepting the terms of the loan.
Q.
And the terms of the loan -- what were the terms of the
loan? What was the interest rate of the loan?
A.
One percent.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
But if they have to pay the loan back; is that right?
A.
Correct.
MS. JIMENEZ: Can we go to Page 18 of this record.
BY MS. JIMENEZ:
Q.
All right. What is this document?
A.
That is the 4506-T, which is a Request for Transcript of
Tax Return.
Q.
Is this signed at the bottom?
A.
Yes.
Q.
Indicated to be Eric Sheppard?
A.
Yes.
Q.
And what does this record do? What does this document do?
A.
It gives Cross River Bank the right to request the
transcript of tax return from the IRS.
Q.
For this business; is that right?
A.
Correct.
Q.
So with this signature on this document, you can turn to
the IRS and request IRS records for HM Management and
Development; is that right?
A.
Correct.
MS. JIMENEZ: Can we go to Exhibit 10 -- 10-6.
BY MS. JIMENEZ:
Q.
The 2483 Form that we were looking at, was it DocuSigned?
A.
Correct.
Q.
And what is this document, 10-6?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
That's a Certificate of Completion for the DocuSign that
was sent to the borrower.
Q.
Is that the 2483 that was sent to him with the note, with
the loan note?
A.
Correct. It was -- all the previous pages were together as
one, the closing contract for the loan.
Q.
All right. And what is the day that this -- that the 2483
and the other documents were signed?
A.
March 25th, 2021.
Q.
And with that -- at the time that the documents were
signed, did DocuSign capture an IP address?
A.
Correct.
Q.
And what does the IP address indicate?
A.
The IP address from which the DocuSign was signed.
Q.
And that's the IP address ending in 129?
A.
Correct.
Q.
Now, this loan was funded in the amount of $148,591; is
that right?
A.
Correct.
Q.
The voided check, which is Exhibit Number --
MS. JIMENEZ: Give me a second.
22-5, please.
BY MS. JIMENEZ:
Q.
All right. Is this -- does this check indicate the account
to which the funds were sent?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Yes.
Q.
HM Management and Development, account ending in 7571, at
SunTrust Bank?
A.
Yes.
Q.
If --
MS. JIMENEZ: Let's go back to 22-1.
BY MS. JIMENEZ:
Q.
This is the moment in time when the information was
provided that populated the 2483; is that right?
A.
Correct.
Q.
Okay. And so if Cross River Bank had reason to believe
that the information provided by the applicant on
March 12th, 2021, such as its payroll amount, number of
employees, business industry, was false, would this loan have
been funded?
A.
No.
Q.
Did this borrower apply for forgiveness for this loan?
A.
No.
Q.
In your experience at Cross River Bank, did most -- did --
approximately what percentage of applicants whose PPP loans
were funded applied for forgiveness? Is it a large percentage?
A.
It is, yes. I'd say currently close to -- I think it's
about -- for the first round I think it's about 90, and the
second round it's a bit lower.
Q.
Percent you mean?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Yes.
MS. JIMENEZ: If I could just have a moment, Your
Honor.
THE COURT: Certainly.
(Pause in proceedings.)
MS. JIMENEZ: Okay. One second.
(Pause in proceedings.)
MS. JIMENEZ: Could we take a look at 22-7, please.
BY MS. JIMENEZ:
Q.
What is this record?
A.
This is the internal loan report we have, with a
description of the loan and the information included.
Q.
So -- and it -- does this indicate that the loan was
funded?
A.
Yes.
MS. JIMENEZ: Okay. All right. I don't have any
other questions.
THE COURT: All right. Cross-examination.
MR. ETRA: Yes, Your Honor.
(Pause in proceedings.)
MR. ETRA: May I proceed, Your Honor?
THE COURT: Yes. Of course.
CROSS-EXAMINATION
BY MR. ETRA:
Q.
Good afternoon, Mr. Lord. How are you?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Good. How are you?
Q.
We're never met before, correct?
A.
Correct.
Q.
But you have met with the Government, right?
A.
Correct.
Q.
To prepare for trial?
A.
Correct.
Q.
Approximately how many times did you meet with the
Government?
A.
Three to four.
Q.
Was Special Agent Halleran there?
A.
Yes.
Q.
And the prosecutors?
A.
Yes.
Q.
Were they asking you questions?
A.
Yes.
Q.
Did you answer them?
A.
Yes.
Q.
Did they take any notes?
A.
I'm sorry. Did they take notes or did I take notes?
Q.
Well, let's start with them. Did they take notes?
A.
It was over a video call, so I couldn't say for sure.
Q.
Didn't see. Okay. You were not involved in this loan
application, correct -- or these loan applications, correct?
A.
No.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Are you agreeing with me?
A.
I -- I'm not involved, no.
Q.
Okay. I wasn't sure, the way you answered the question.
A.
Yeah. Sorry.
Q.
So you don't have any personal knowledge about the actions
that were taken by Cross River in connection with this loan,
right?
A.
Outside of my job, no.
Q.
Well, outside of your job. I want to keep your job into
it. You don't have any personal knowledge, for example, of
information requested from Cross River to the borrower,
correct?
A.
I'm sorry. Can you --
Q.
Okay. Just -- I want to take a step back and take a big
picture. You're a manager at Cross River, right?
A.
Yes.
Q.
And you had managerial responsibility for the PPP program,
correct?
A.
Not at the time of the loan application in question.
Q.
Okay. So at the time of the application in question, you
were not a manager in PPP?
A.
Correct.
Q.
You were not handling these loans?
A.
Correct.
Q.
You were not the person dealing with the information,
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
right?
A.
Correct.
Q.
You were not the person asking for information?
A.
Correct.
Q.
You were not the person reviewing information?
A.
Correct.
Q.
You're not the person making underwriting decisions or
recommendations, correct?
A.
Correct.
Q.
Other people were doing that?
A.
Correct.
Q.
So you don't have any personal knowledge about all those
things I just described, correct?
A.
No. But through my job, yes.
Q.
When you say through your job, yes, what does that mean?
A.
That we were trained to know about the program.
Q.
So your training is in what the procedures are supposed --
what the procedures are supposed to be, correct?
A.
Correct.
Q.
You're not -- that training doesn't tell you what actually
happened with this loan, right?
A.
It prepares you for things that could happen and gives you
an overview of the loan process, whether it would be successful
or unsuccessful.
Q.
Right. But it doesn't tell you what actually happened in
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
this case, correct?
A.
I mean, we could see the application. We would see --
Q.
Okay. Are you done with your answer?
A.
Well, because we could see an application as it was going
through the process. So that was mainly where we would come
in, was the borrowers would call in or email if they had
questions, and we would assist them through the process.
Q.
You're here and you're capable of explaining some of the
documents, right?
A.
Yes.
Q.
But if it's not in the documents, you can't say what
happened with this loan, right?
A.
Correct.
Q.
Okay. Let me just ask -- cut to the chase on one of these
issues. The 1065 tax return that you talked about --
correct --
A.
Correct.
Q.
-- there is no document that shows that that document --
that the 1065 was requested from HM Management; am I correct?
A.
Not a physical document now, but it was on the application
flow of the requested documents.
Q.
Okay. You've produced documents in this case, correct?
A.
Correct.
Q.
Is there -- any of the documents that you have produced
show or evidence Cross River asking for the 1065 return from HM
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Management?
A.
It was on the website.
Q.
What does that mean, it's on the website?
A.
It was part of the application flow where that was a
requested document for them to provide.
Q.
Did you produce that thing you call the application flow
that shows or requests that the 1065s were being requested?
A.
No.
Q.
Okay. So for all the documents that you produced to the
Government, which they presumably produced to us, none of those
documents show that Cross River asked for the 1065 from HM
Management, correct?
A.
No. But it was listed on the application portal.
Q.
Okay. When you say: "The application flow," I don't know
what that means. What is the application flow?
A.
Whenever a potential borrower would log on to the website,
the application flow, which was what was in question of the
information they would provide, it would state the 1065 as a
required form, if that was -- if they were the business type
that required that.
Q.
If it was a requirement. Do you know if it was a
requirement for this applicant?
A.
If they listed that that's how they filed, yes.
Q.
I'm sorry. I didn't understand your answer. Could you
repeat yourself a little louder, please.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Yeah. I'm sorry. If that was how they filed -- if that
was how they were filing their taxes, then yes.
Q.
I don't understand your question [sic]. Under what
circumstances did Cross River request the 1065 -- a 1065 tax
return?
A.
If the potential borrower was filing as a business entity
that required it.
Q.
And which business entity required it?
A.
Partnership.
Q.
Okay. In fact, didn't -- didn't the -- HM Management file
as an LLC?
A.
Yes.
Q.
So if you file it as an LLC, Cross River doesn't demand or
request the tax return, correct?
A.
A tax return, yes, still.
Q.
I'm sorry?
A.
They still have to return -- they still have to provide a
tax form, regardless of what they are filing as.
Q.
So I thought you said earlier it depends on what you're
filing as, and if you're a partnership that's when you have to
provide the tax return. I thought you said that earlier,
didn't you?
A.
I did. It depends on what type they were. Like if they
were a sole proprietorship, then it would be the relevant form,
which is a 1040. If they were an S corp., it would be an 1120.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
If they were a partnership, it would be an 1165.
Q.
And if it's an LLC, is a tax return always required?
A.
Yes.
Q.
But you didn't produce the documents that show that,
correct?
A.
No.
Q.
And what is done with that tax return when it's required?
A.
The information provided is reviewed for the loan
application.
Q.
For which part?
A.
For which one, the loan application or which part of the
form?
Q.
Yeah.
A.
For the payroll amount.
Q.
And where on the documents that you provided does it show
that the 1065 was reviewed for the payroll amount?
A.
It didn't.
Q.
It doesn't show that?
A.
Correct.
Q.
Okay. None of the documents you produced show that the
1065 was requested, correct?
A.
Correct.
Q.
None of the documents you produced show that the 1065 was
relied upon for the payroll amount, correct?
A.
It says the tax forms they provided, which -- information
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
they provided, which was the 1065.
Q.
Do the documents that you produced show that Cross River
requested the 1065? That's my question.
A.
No.
Q.
Okay. And none of the documents you produced show that
anyone at Cross River even read the 1065 tax return; isn't that
correct?
A.
No.
Q.
No, it's not correct?
A.
No.
Q.
Which documents here that you produced -- and I'll put them
up if you want -- show that the Cross River actually read the
1065?
A.
On the March application, there was a underwriter that
says: "UW analysis notes," and there's an underwriter that
signed their name that they reviewed the documents.
Q.
Okay. We'll get there and you'll show me when we get
there.
Okay. Who did the underwriting? Was it Cross River
or was it Revenued?
A.
Cross River.
Q.
Okay. Do you know how it comes about that -- I think you
said that -- why don't we just start with the first document,
Bates SHEPP 3.
THE COURT: Just for the witness or is this in
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
evidence?
MR. ETRA: Well, first it's for the witness. It is in
evidence. It was in evidence as the large group of documents
put into evidence.
THE COURT: Right. But what exhibit number?
MR. ETRA: Through 21.
THE COURT: I'm sorry. Through 21?
MR. ETRA: Sorry. The Government's Exhibit 21 is the
full collection of documents. This is from that.
MS. JIMENEZ: Well, 21 is --
(Pause in proceedings.)
THE COURT: All right. So this document on the screen
is in evidence as Exhibit 21, Mr. Etra?
MR. ETRA: It's part of Exhibit 21 that the Government
offered for the full collection --
THE COURT: All right. But it's part of those
exhibits?
MR. ETRA: Okay.
THE COURT: All right. Then it may be shown to the
jury.
MR. ETRA: Thank you.
BY MR. ETRA:
Q.
Sir, do you see the document on the screen?
A.
Yes.
Q.
You didn't go over this with the Government in your direct,
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
did you?
A.
No.
Q.
This actually shows something happened before the first
document you went over on your direct, correct?
A.
Correct.
Q.
And what's going on in this document?
A.
That is an incomplete application.
Q.
And submitted on January 18th?
A.
Yes.
Q.
Okay.
MR. ETRA: And could we go down a little further,
please.
BY MR. ETRA:
Q.
Do you see the -- it says: "Opportunity Name." What does
that mean, "opportunity name," in your parlance?
A.
That is just the application name.
Q.
Okay. And it says: "HM Management and Development,"
right?
A.
Correct.
Q.
And then d/b/a name, it has "HM Management and
Development," right?
A.
Yes.
Q.
And what does it say under "Account Name"?
A.
"HM-UP Development Alafaya Trails, LLC."
Q.
So the borrower was identifying an affiliate here of HM-UP
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Development Alafaya Trails, LLC, correct?
A.
Correct.
Q.
Okay. And that was in the first contact that the borrower
had with Cross River, correct?
A.
Correct.
Q.
If you go to Referral Source, a little further down, do you
see that?
A.
Yes.
Q.
What does that mean?
A.
That was who the borrower is referred from.
Q.
Could you explain how that works -- how that worked --
referral source for a borrower in the context of the PPP loan
and Cross River?
A.
Yes. So it would be -- we had a lot of different referral
sources, where they would be kind of -- I mean, if they were
just referred to Cross River Bank from different organizations
for PPP -- for potentially receiving a PPP loan.
Q.
Are these --
MS. JIMENEZ: Objection. Outside the scope.
Irrelevant.
THE COURT: Overruled at this point.
BY MR. ETRA:
Q.
Is this essentially like a lead generator? They find leads
and they send them to Cross River?
A.
I don't know.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Do you know how it is that the applicant first got to Cross
River?
A.
I don't.
Q.
Do you know if the applicant was --
MS. JIMENEZ: He said no.
BY MR. ETRA:
Q.
Is one of the ways that Cross River got borrowers is to
have sent emails out soliciting applications?
MS. JIMENEZ: Objection. Irrelevant.
THE COURT: Sustained.
BY MR. ETRA:
Q.
Do you know what information was provided -- do you know if
the applicant on their own went to the website or whether they
were solicited by someone?
MS. JIMENEZ: Objection. Asked and answered.
THE COURT: Sustained.
BY MR. ETRA:
Q.
Well, you testified on direct that the way you started an
application is by going to the website, right?
A.
Correct.
Q.
Doesn't the process start earlier when the applicant is
given information about Cross River to go to the website?
A.
It depends.
Q.
So in some cases the applicant is first given information
by someone saying: "Hey, this is the deal. Go to the
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
website," right?
A.
Possibly, yes.
Q.
And that's what Yarrow was doing here, right?
A.
I don't know.
Q.
And do you know what happened to this opportunity?
A.
It was timed out because it was incomplete.
Q.
It only took a day for it to be timed out, right, because
there's another one the next day?
A.
Correct.
Q.
Do you know why it gets timed out so quickly?
A.
I think if you go back to the other -- if you scroll down a
little bit, it's not timed out immediately. It's generally
after 72 hours.
Q.
Okay. All right. And before we leave this, what email --
let's go to the email there. It says: "Preferred email." Do
you see that?
A.
Yes.
Q.
And what email address is listed there by the applicant?
A.
Eric.sheppard10@gmail.com.
Q.
And when it says "Preferred Email," why does the form say
preferred email and not just email?
A.
I don't know.
Q.
You're telling the borrower they can use any email they
want, right?
A.
Yes.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
You had no rules about what email to use, right?
A.
No.
Q.
Correct?
A.
Yeah. That's correct. We had no rules.
Q.
For example, it didn't say: "Use the email you use for
your accounts receivable" or something like that?
A.
Correct.
Q.
You could do whatever you want?
A.
(No verbal response.)
MR. ETRA: Let's go to the January 18th application --
January 19th application, 21-2.
BY MR. ETRA:
Q.
This is the January 19th application that got aged out,
correct?
A.
Correct.
Q.
Okay. And I was a little confused by your testimony about
the IP address. At what point does the IP address -- let me
ask it differently.
Someone went on the portal and filled out information,
and that's what we have here for this electronic record of loan
application, correct?
A.
Correct.
Q.
And you have the IP address of that act, right?
A.
Yes.
Q.
Okay. So according to this, on January 19th, 2020, at
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Miami, Florida 33128
(305) 523-5698
maybe three o'clock in the afternoon, someone filled out this
information from the IP address listed, right?
A.
Yes.
Q.
Okay. And here it's indicated the name Eric Sheppard, and
it's a different email address used, hmfourmanager@gmail.com.
Do you see that?
A.
Yes.
Q.
Nothing wrong with using a different email, right?
A.
Correct.
Q.
Okay. And in fact, isn't it the case that in this program
you had to use a different email for a different loan
application -- let me say it differently.
You couldn't use the same email for multiple loan
applications; isn't that correct?
A.
Correct.
Q.
Okay. So if you're a manager of multiple companies and
affiliates, and you're applying for loans for each of them, you
have to use a different email address for each of them,
correct?
A.
Correct.
Q.
Okay.
MR. ETRA: Let's go to the next page, please.
BY MR. ETRA:
Q.
For "Number of Employees" it says 23, right?
A.
Correct.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Is this the way -- it says: "Number of Employees," and the
information -- sorry. Let me start again.
These are a series of prompts, and there are answers
to it, right?
A.
Yes.
Q.
Are the prompts that appear here the way they appeared on
the portal?
A.
Appeared like -- if that was just like this but blank, but
they would fill it in?
Q.
Right.
A.
No. It was like prompted with questions. It looked
different.
Q.
So for example, where it says: "Legal Name," colon -- do
you see where it says that in the document?
A.
Yes.
Q.
And then the person fills in: "HM Management and
Development, LLC." Do you see that?
A.
Yes.
Q.
Are you saying the prompt said something other than "Legal
Name"?
A.
It would say name of the business, like legal business
name, yes.
Q.
So did you produce to the Government, for the Government to
produce to us, what the prompts looked like for the person
filling out the online application?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
No.
Q.
Why not?
A.
Because it's unavailable.
Q.
So we don't have the ability to see what the questions
looked like when the person was filling it in, correct?
A.
We have -- for training purposes internally we have
screenshots of the application flow, but we can't access the --
like what it looked like exactly.
Q.
But you did not produce that, correct?
A.
No.
Q.
All right. So for number of employees, where it says --
well, for -- let's start off with NAICS code, where that's the
question. Is that how it appeared in the portal?
A.
Yes.
Q.
And "Number of Employees" -- that's the question -- is that
how it appeared in the portal?
A.
Yes.
Q.
So the portal didn't specifically state that -- only count
W-2 employees, correct?
A.
Yes.
Q.
You're agreeing with me?
A.
It did state to count only W-2 employees.
Q.
It says: "Only count W-2 employees"?
A.
Yes. Because 1099s could get their own loans, so they
weren't eligible.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
I'm not asking what the rules were or how you understood
the rules. But the prompt just said: "Number of Employees,"
correct?
A.
It said: "Number of W-2 employees."
Q.
And where does it say that?
A.
On the application flow.
Q.
Which you did not produce?
A.
Correct.
Q.
Did you tell the Government that the prompts are different
than the way they appear here?
A.
It's the same information, so no.
Q.
Well, here it says: "Number of Employees." It doesn't
say: "Number of W-2 employees." Before you walked into court
today, did you tell the Government that the prompts appear
differently in the portal than they do on this page?
A.
No.
Q.
You think that would be important information to share?
A.
Well, non-W-2 employees weren't accepted, so it would only
have been W-2 employees.
Q.
You understand that, correct?
A.
Correct.
Q.
You are very involved in this program as a professional,
correct?
A.
Correct.
Q.
But to your experience, does every person in the public
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
know that?
A.
How would I know that?
MS. JIMENEZ: Objection. Speculative.
THE COURT: Sustained.
BY MR. ETRA:
Q.
Okay. Let's go to the next box. "Average Monthly
Payroll," do you see that?
A.
Yes.
Q.
That's what -- it doesn't say in -- right here to only
include payments to W-2 employees, correct?
A.
Correct.
Q.
But your testimony is that somewhere else that's where it
says, but we can't see it?
A.
Yes.
Q.
What else is in the portals -- portal that we don't get to
see on this document?
A.
This is an -- information that is taken from the potential
borrower in response to the questions.
Q.
I'm talking about the questions. We see words that are
questions here. I want to know everything that's in the portal
that's not written here as questions so we know what the portal
says.
A.
It was two years ago. I can't provide that.
Q.
So it was two years ago. You don't remember, right?
A.
Yes.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Okay. So -- yet, you remember that when it says: "Number
of Employees" here in the portal, it really says: "Number of
W-2 employees"? Is that your testimony?
A.
Yes. I remember relevant things about the application, but
I don't remember every aspect of it.
Q.
And you remember that where it says: "Payroll" here, from
two years ago, in the portal that we can't see, it says:
"Don't include 1099ed workers," right? That's your testimony?
A.
I don't remember if on that part it included not including
1099s.
MR. ETRA: Your Honor, can we come sidebar for a
moment?
THE COURT: All right. Come on forward.
(At sidebar on the record.)
MR. ETRA: Your Honor, we move to strike his
testimony. He has no personal knowledge. He's testifying
about the documents, but when I push him now there are these
other documents that we've never seen. And he's here -- I
can't cross-examine him about what he's seen -- remembers from
two years ago. It's a moving target.
None of this is personal knowledge to begin with. So
as it is, all these witnesses are kind of stretching the notion
of a percipient fact witness, and now I'm chasing goats about
documents I've never seen that's never come up before. I think
it's improper.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
THE COURT: Okay. Response?
MS. JIMENEZ: Do I need to respond to that?
These are not documents that were never seen before.
He's described over and over again, answering the questions,
this is what someone logging into the portal would observe.
And he remembers the germane aspects of the questions that were
being asked, the most germane of which is, you know, employees
and payroll.
There's not a physical document that -- first of all,
he's not the person at Cross River Bank who produced records.
But apart from that, it's not a record. I mean, the business
records are the records that they maintained. This is not a
record that they maintained, and he's answered that question
multiple times.
THE COURT: All right.
MR. ETRA: May I add, Your Honor?
If I had gotten the screenshots which existed, I would
have handled this witness the way I handled the last witness,
where I would have said: "You made it clear in the portal, but
you didn't make it clear in the 2483."
Now, I look kind of like an idiot by suggesting --
taking a different approach based on the documents produced and
fighting with him about documents that I'm never going to get
to see and I doubt exist.
THE COURT: All right. I think I've heard enough.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
The motion to strike the testimony is denied. This is a fact
witness. The exhibits were admitted into evidence without
objection. The witness's knowledge or lack of knowledge with
regard to the specific process and the actual exhibits goes to
the weight of his testimony, certainly not to the
admissibility.
So you'll have an opportunity to cross-examine. You
have an opportunity to extrapolate that lack of knowledge at
the time of your closing argument or with other witnesses. But
right now, there's no basis to strike the witness's testimony.
Let's continue.
(End of discussion at sidebar.)
THE COURT: All right. Mr. Etra, Ms. Jimenez, one of
the jurors is in need of a comfort break.
Not a problem.
Let's go ahead and take a 10-minute recess.
COURT SECURITY OFFICER: All rise.
(Jury not present, 3:59 p.m.)
THE COURT: Okay. We're on a 10-minute recess.
(Recess from 4:00 p.m. to 4:12 p.m.)
THE COURT: All right. Let me acknowledge the
presence of the Defendant, Mr. Sheppard.
Are we ready to proceed?
MS. JIMENEZ: Yes, Your Honor.
MS. WEINTRAUB: Yes, Your Honor.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
THE COURT: See if they're ready.
(Pause in proceedings.)
(Before the Jury, 4:12 p.m.)
THE COURT: All right. Welcome back, Ladies and
Gentlemen.
Please be seated, everyone.
And we'll continue with the cross-examination.
BY MR. ETRA:
Q.
Mr. Lord, I was -- wanted to go back to what you were doing
in beginning of 2021, what your job was in connection with the
PPP program.
A.
So I was working with the customer support team at the
time.
Q.
So you weren't managing the flow of information or the flow
of documents, right?
A.
No.
Q.
And you've seen training materials, screenshots that
reference the fact that "Number of Employees" is W-2, correct?
A.
Yes.
Q.
That doesn't necessarily mean that that's how the portal
read the date here in January 19 of 2021, correct?
A.
There was screenshots of the portal at that time.
Q.
So you're saying you actually remember seeing screenshots
of the portal as they appeared on January 19th, 2021, on that
very date. Is that your testimony?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
There were screenshots of the portal, but I can't confirm
the date that that -- that exact date.
Q.
So you don't know -- so you can't say what the portal
prompts looked like when the applicant answered the questions
on January 19th, correct?
A.
Not on that specific day, no.
Q.
Okay. Did the prompts change over time?
A.
Slightly.
Q.
What do you mean "slightly"?
A.
Well, the application, but the prompts --
Q.
The prompts -- sorry?
A.
The prompts wouldn't.
Q.
They never changed?
A.
No.
Q.
Not once in the entire time of the PPP program? The
prompts never changed?
A.
Well, I mean, the eligibility was the same throughout the
whole program, so -- or not the whole program, for each year.
Q.
At no point during the process did Cross River decide to
make the prompts -- improve them or make them clearer. They
just kept them the same from the very beginning of the program
till the very end of the program. Is that your testimony?
A.
I don't know enough to answer that.
Q.
You don't know. You don't know if the prompts changed over
time, correct?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
I know that they did at some point, but I don't know enough
to say why.
Q.
You can't say what the prompts looked like on
January 19th, 2021, correct?
A.
Not on that exact day, no.
Q.
How about January 18th? Can you say on that day?
A.
No.
MR. ETRA: Let's go back to 21-2, please.
BY MR. ETRA:
Q.
I just want to clarify the d/b/a here -- this is the
January 19th portal application, right?
A.
Correct.
Q.
Is that a fair term, "portal application"?
A.
Yes.
Q.
And the d/b/a here is HM Management and Development, right?
A.
Yes.
MR. ETRA: Let's go to the list of ineligible
businesses a few pages down.
BY MR. ETRA:
Q.
Now, this is -- the way it appeared in the portal, it looks
like -- the way this appears here, the information we're
looking at on ineligible businesses is after you provide
information. It seems to follow that; is that correct?
A.
That it's after the information?
Q.
So there's no place to -- for the -- there's no place where
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Cross River says: "Click here so you see this information,"
correct?
A.
That was part of the portal. It was listed.
Q.
But it was after the -- the last click here seems to be the
one that you're looking at at the top of the page, basically
agreeing to give permission to run a credit, right?
A.
Yes.
Q.
Okay. And the rest of the information after that, Cross
River wasn't putting places to click to make sure the borrower
was looking at the information, correct?
A.
I don't recall the exact format of the application --
Q.
You don't know whether there's any way -- any clicking or
prompts for the borrower to see that information, right?
A.
They were provided that information, but I can't confirm on
whether it was a click or whichever one you're meaning.
Q.
How old are those screenshots you were testifying about?
A.
I don't know.
Q.
When's the last time you saw them?
A.
Earlier this year.
Q.
Okay. Let's talk about what it says about ineligible
businesses. Says: "Ineligible businesses for Cross River's
SBA Paycheck Protection Program," right?
A.
Yes.
Q.
Doesn't say: "For the PPP program." It says: "For Cross
River's PPPP [sic] program," correct?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Yes.
Q.
I added a P there by accident.
MR. ETRA: Okay. Now let's go down to the next page.
BY MR. ETRA:
Q.
And it talks about passive businesses and it gives specific
examples, correct?
A.
Correct.
Q.
So I want to understand if any of these apply to the
company HM Management and Development if it provides managerial
and construction services for affiliated companies. Does that
make it a passive business under any of these definitions?
A.
I don't know.
Q.
It doesn't make it a passive business under these
definitions, correct?
MS. JIMENEZ: Objection. Asked and answered.
THE COURT: Sustained.
BY MR. ETRA:
Q.
Did you say you don't know? I wasn't sure I heard your
answer before the sustaining of the objection. So do you know
whether that type of business is a passive business under these
definitions?
MS. JIMENEZ: Objection. Asked and answered.
THE COURT: Sustained.
"Does that make it a passive business under those
definitions?" The answer was: "I don't know."
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
MR. ETRA: Oh. I wasn't sure. "I don't know."
THE COURT: Yes.
MR. ETRA: Sorry, Your Honor.
BY MR. ETRA:
Q.
Okay. Well, let's look at the fourth bullet. It says:
"Businesses that have entered into a management agreement with
a third party that gives the management company sole discretion
to manage the operations of a business." Do you see that?
A.
Yes.
Q.
That's not the situation I'm talking about where the
management company is working with affiliated companies,
correct? Or do you not know?
A.
I don't know.
Q.
Okay. Fair enough. So you have no information to suggest
that HM Management and Development was an ineligible business,
correct?
A.
Other than that they certified that they were not an
ineligible business.
Q.
I'm sorry?
A.
Other than that they certified they weren't an ineligible
business.
Q.
Okay. All right.
MR. ETRA: Let's go a little further down. It says:
"Speculation" or "Speculative."
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
BY MR. ETRA:
Q.
Under 11, "Speculation. Speculative businesses are not
eligible. This prohibits loans for an applicant for" --
MR. ETRA: Go to the second bullet point.
BY MR. ETRA:
Q.
-- "engaging in a risky business for the chance of an
unusually large profit." Do you see that?
A.
Yes.
Q.
Is there any explanation for what that means?
A.
I don't know.
Q.
So if the business is risky for a large profit, does that
make it ineligible under Cross River's PPP program?
MS. JIMENEZ: Objection. He said he did not know.
THE COURT: Sustained.
MR. ETRA: Let's go to --
BY MR. ETRA:
Q.
Do you know who reviewed these actual applications within
Cross River?
A.
It was through an automated system. And then, if anything
was flagged it was done manually.
Q.
I'm sorry. It was done manually or it wasn't done
manually?
A.
If anything was flagged, it was done manually.
Q.
If anything was what?
A.
Flagged.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Flagged. Before you came to testify, did you locate the
individuals who were involved in reviewing these applications?
A.
No.
Q.
Did you do an investigation to determine what had happened
beyond what we can see in these documents?
A.
Me personally, no.
(Pause in proceedings.)
MR. ETRA: For the witness only, Your Honor.
THE COURT: All right. The exhibit number, please.
MR. ETRA: It's part of Exhibit 21. We're using a
part that wasn't put up by the Government.
THE COURT: I'm sorry. So it is in Exhibit 21?
MR. ETRA: It is part of Exhibit 21.
THE COURT: All right. Then if it's part of Exhibit
21, then it can be shown to the jury.
MS. JIMENEZ: Can we see what it is?
MR. ETRA: It goes along with the -- it's the
opportunity and goes along with the January 19.
BY MR. ETRA:
Q.
Do you recognize this document?
A.
Yes.
Q.
Could you explain what it is?
A.
It's the -- the application that was submitted on
January 19th, 2021.
Q.
What's the relationship between the previous document we
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
looked at and this document?
A.
It's the same business.
Q.
Essentially this is more of an internal record about what
happened with the application?
A.
Correct. Yes. This is an internal view of the application
information.
MR. ETRA: If we could just go down to the middle of
the page, where it says: "D/b/a name."
BY MR. ETRA:
Q.
Do you see it says: "Opportunity Name: HM Management and
Development"?
A.
Yes.
Q.
You see it says: "D/b/a Name: Construction Service X"?
A.
Yes.
Q.
That's a mistake, isn't it?
A.
It's whatever the borrower would have entered.
Q.
Well, if we just saw in the application for January 19th
they didn't use the -- the person who submitted the application
on January 19th didn't use the d/b/a of Construction Service X,
they used a d/b/a of HM Management and Development -- do you
remember that?
A.
Yes.
Q.
So why does it put here this d/b/a name that comes later in
March?
MS. JIMENEZ: Objection. Asks the witness to
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
speculate as to why the borrower put that information.
MR. ETRA: No. That's not -- I don't know if you want
me to respond.
THE COURT: The witness may answer the question, if he
has personal knowledge.
THE WITNESS: I don't have personal knowledge.
BY MR. ETRA:
Q.
But do you agree with me that this is a case where,
according to the records of Cross River, the January 19th
applicant put the d/b/a name Construction Service X but we saw
a document that shows that the January 19th applicant didn't
use that d/b/a name? Do you agree with me on that?
A.
It has the d/b/a listed as Construction Service X, so they
must have put it in at some point.
Q.
Well, that probably happened in March, right?
A.
No. Because it's from January.
Q.
So where do you see -- okay.
MR. ETRA: Let's go back to 1 -- let's go back to
21-2.
BY MR. ETRA:
Q.
This is the portal application submitted on January 19th,
right?
A.
Yes.
Q.
Is there any other information submitted on January 19th
besides what's in here?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
The documents that they provided.
Q.
Where does it show what documents were provided?
A.
It doesn't say on this -- the electronic record of loan
application.
Q.
And on this electronic record it shows a d/b/a we saw of HM
Management, right?
A.
Yes.
Q.
You testified that the 940 Form was submitted with this
application, correct?
A.
Yes.
Q.
And what is the basis for saying that?
A.
The basis was that the borrower uploaded it with the
application.
Q.
Do you know that from personal knowledge?
A.
How would I know?
Q.
I don't know. I'm trying to find out how you would know.
A.
I mean, I wouldn't. I'm not there with him when he's
submitting the application.
Q.
Where in the records does it show --
MR. ETRA: Let's go back to the -- let's go back to
Bates 117.
BY MR. ETRA:
Q.
This is the internal record that goes with the January 19th
application, right?
A.
Yes.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Just tell me where it shows that the 940 was submitted with
the January 19th application. Do you want us -- we can go
page --
A.
If you scroll down further, a little more.
I'm sorry. If you keep going, I'll tell you when to
stop.
So in this -- sorry. If you go back up.
So if you -- in this section, the Documents tab, it
generally shows the documents provided.
Q.
I'm having a hard time hearing you. Could you say that
louder, please?
A.
Yeah. So in this bracket of the application view, this is
the section where it includes the documents.
Q.
And where does it say the 941 was filed?
A.
So it doesn't on this one.
Q.
Okay. So you don't know when the 940 for 2019 was filed,
correct?
A.
When it was filed with the application or when it was filed
by the borrower to the IRS?
Q.
Sorry. It says: "Zero items," right?
A.
Right.
Q.
So no documents were submitted with this application,
correct?
A.
I can't confirm that because sometimes the page doesn't
load correctly. So "zero" there doesn't necessarily mean zero.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
So at least based on the documents you produced to us, if
we rely on those, then no documents were submitted with the
January 19 online application, correct?
A.
Could you scroll to the top, please.
So for the -- for this opportunity, internally we
have -- it goes by opportunity number -- or opportunity ID,
rather. So any opportunity that was submitted has a unique
opportunity ID, which internally we have a folder for each
opportunity ID which includes the documents that the borrower
uploaded, if there were any.
Q.
And does it show that -- does it show that the 941 was
submitted with the January 19 application? Yes or no?
A.
On this page, no.
Q.
Does it show it anywhere on this document?
A.
If you scroll down a little more, there's a note that
says -- there's a bracket that says: "UW analysis."
Q.
Okay. Let's look for it.
A.
I think it's, I think, about midway.
Okay. That's it.
Q.
Where? Please tell me where we're looking.
A.
It will say: "UW analysis notes." Sometimes they'll state
the reason for documents, which was if documents needed to be
reviewed. So I was just seeing if they had noted that the 940
was reviewed.
Q.
Do they say here in UW analysis -- does it identify any
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
documents submitted?
A.
No.
Q.
Okay. So again, in this entire document, is there any
indication that documents were submitted with the January 19th
portal application? Yes or no?
A.
No. But it could be an outdated version of the page.
Q.
You're speculating, aren't you?
A.
(No verbal response.)
Q.
Sorry. You're speculating, aren't you?
A.
I mean, no.
Q.
How -- so the -- okay. You've come to court and you've
said that the 940 was submitted with this application, correct?
A.
Correct.
Q.
And you said that the K-1 was submitted with the
application, correct?
A.
Correct.
Q.
And you said that the page that had affiliates on it was
submitted with this application, correct?
A.
Correct.
Q.
And this document is where you would see -- document on the
screen right now, which would identify which documents were
submitted with the application, correct?
A.
Yes.
Q.
And yet none are identified, correct?
A.
Correct.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Okay.
MR. ETRA: Okay. Could we put up -- could we put up
the K-1.
We could take that down.
Your Honor, this is also -- well, this was offered by
the Government.
THE COURT: Is this part of Exhibit --
MR. ETRA: This is in evidence as part of 21, right?
Yes. This is part of 21 in evidence.
THE COURT: All right.
BY MR. ETRA:
Q.
This was submitted at some point to Cross River, right?
A.
Yes.
Q.
Okay. We can agree on that. All right.
And this is a K-1, right?
A.
Yes.
Q.
Okay. And there's no place to put information for a tax
preparer in this form, correct?
A.
Can you scroll down, please.
Not on the page provided.
Q.
Okay. And we looked at the email -- well, actually, you
looked at it with the prosecutor, where Cross River is telling
the applicant that the January 19th application didn't work.
Remember that?
A.
Yes.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
And there's nothing in there that said the applicant wasn't
qualified, right?
A.
Yes.
Q.
It was simply that it didn't work for the automated system,
right?
A.
Correct.
Q.
And feel free to reapply?
A.
Correct.
Q.
Is that right?
A.
Yes.
Q.
Okay.
MR. ETRA: Okay. Let's turn to the March 12th
paperwork, Exhibit 22-1 in evidence.
BY MR. ETRA:
Q.
This is now -- we're now jumping forward to March 12th,
right?
A.
Yes.
Q.
Okay. And it's like the other version, but now we're on
March 12th?
A.
Yes.
Q.
Same kind of document. And you also have the IP address
for this, correct?
A.
Correct.
Q.
Okay. And here the applicant gives the name of Eric
Sheppard, right?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Yes.
Q.
And the -- a different email address of
eshmmanagementndev@gmail. Do you see that?
A.
Yes.
Q.
Again, no rule against which email you use, correct?
A.
Correct.
MR. ETRA: Now let's go to the next page.
BY MR. ETRA:
Q.
Here, in March, the applicant puts the d/b/a name of
Construction Service X, correct?
A.
Correct.
Q.
Isn't that why that name got put into the January 19th
internal data?
A.
I don't know.
Q.
Okay. You don't know one way or the other?
A.
Right.
Q.
Okay. Fair enough. But here also you do have the
ericsheppard10 Gmail email as well, correct?
A.
Correct.
MR. ETRA: Let's go to the loan information.
BY MR. ETRA:
Q.
And here the average monthly payroll is $59,437, correct?
A.
Correct.
Q.
Okay. And if you multiply that by 12, it's about $713,000.
Do you know if that's the case?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Yes.
Q.
Okay.
MR. ETRA: Now let's go to the 940 for 2020. It's
Exhibit Number 22-4.
BY MR. ETRA:
Q.
And you see -- what's the amount listed as wages there?
713,000, right?
A.
Yes.
Q.
Pretty much the exact match with 12 times the average
monthly payroll, right?
A.
Correct.
Q.
And isn't it a fact that Cross River used this form as
support to verify the payroll amount? Correct?
A.
Yes.
Q.
Okay.
MR. ETRA: Let's go back to the application form.
Actually, we can move past that.
Let's go to the document that starts Bates 110.
BY MR. ETRA:
Q.
Do you recognize this -- sorry.
MR. ETRA: Is that the exhibit number or no?
This is part of Exhibit 21 in evidence, Your Honor.
THE COURT: All right.
MR. ETRA: May I proceed?
MS. JIMENEZ: No objection.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
THE COURT: It's in evidence. You may continue.
MR. ETRA: Okay. Thank you.
BY MR. ETRA:
Q.
Do you recognize this page?
A.
Yes.
Q.
Could you tell me what this is.
A.
This is the application from March 12th, 2021.
Q.
Right. So it's the --
A.
The internal view.
Q.
It's the internal version of what the user is using, right?
A.
Yes.
Q.
We saw that for January 19th. Now we're seeing it for
March 12th, right?
A.
Correct.
Q.
Okay. Great. And what I'd like you to do is tell me where
in here it shows that the underwriter reviewed or analyzed the
1065 Form. Okay? Because I think you said that it would be
here.
A.
So in the -- I mentioned in the previous one there's -- the
back of this that says: "UW analysis."
MR. ETRA: Well, let's go to UW analysis. It's on
Page 112.
THE WITNESS: I think if you go up a little bit.
MR. ETRA: No. That's not UW analysis. Keep going.
It's 112.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
There it is.
BY MR. ETRA:
Q.
Okay. Do you see it, sir?
A.
Yes. So the UW analysis notes.
Q.
Where in here does it say that the underwriter reviewed the
1065 tax returns?
A.
So it doesn't specify the 1065. But whenever they date it
and sign it, they would have reviewed all the documents.
Q.
Okay. So let's first focus on what's here. You said
earlier -- I asked you: "Isn't it a fact that there's no
record of anyone reading the 1065 return?" And you said: "No.
I think it would be in the UW analysis." Do you remember that?
A.
Yes.
Q.
And we're looking at that UW analysis here, correct?
A.
Correct.
Q.
And it's not here, correct?
A.
It's not that they -- they didn't list the 1065 out.
Q.
So is there any -- anything in the records that verify that
a single person at Cross River actually read the 1065 return?
A.
Not that was specifically notated.
Q.
Okay. And again, you don't have personal knowledge, right?
A.
Right.
Q.
My colleague pointed out something to me. It actually
refers to a different form here, correct?
A.
Correct.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
What form does it refer to?
A.
The 940.
Q.
The 940?
A.
Yes.
Q.
And that shows that the payroll -- the underwriters
definitely reviewed the 940, right?
A.
Yes.
Q.
And that's how they verified payroll, right?
A.
Yes.
(Pause in proceedings.)
MR. ETRA: Could we put up the 1065 tax return.
BY MR. ETRA:
Q.
I have Exhibit 22-3 on the screen. That's a 1065 tax
return. Do you see that?
A.
Yes.
Q.
And again, there's no evidence showing -- let me take a
step back.
MR. ETRA: Let's go up to look at the top of the form,
please.
BY MR. ETRA:
Q.
The NAICS code put there, do you see that?
A.
Yes.
Q.
You see it says 636220. Do you see that?
A.
Yes.
Q.
Do you know what number that is?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Do I know what business that refers to?
Q.
Yeah.
A.
No.
Q.
That's not the number that was used in the final
application, correct?
A.
If you can go back and confirm.
Q.
Okay. We'll go back to that later, okay? Fair enough.
MR. ETRA: Let's go to the bottom of the page.
BY MR. ETRA:
Q.
You see here there's a purported -- signatures and dates,
right?
A.
Yes.
Q.
And there's a place for the tax preparer -- unfortunately
the sticker covers it up, but you recognize that line with
"Mr. Cupersmith" is for the tax preparer, correct?
A.
Correct.
Q.
And in this case, it shows "Mr. Cupersmith," his purported
signature, date, and a PTIN number. Do you see that?
A.
Yes.
Q.
Am I correct that to the extent Cross River ever needed tax
returns, it didn't require any information from a CPA, correct?
A.
Correct.
Q.
It could have been blank, right?
A.
Correct.
Q.
In fact, it could have had a fake CPA number and Cross
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
River wouldn't check, right?
A.
Correct.
Q.
In theory, right?
A.
Initially, no.
Q.
Hopefully not, but -- okay. It was -- it accepted
applications without a CPA name or information, right?
A.
Correct.
Q.
Partially because some people file without CPAs, right?
A.
Correct.
Q.
And partially because you know you're getting copies and
you don't have that information?
A.
Correct.
MR. ETRA: Let's go to Exhibit J -- I'm sorry -- not
J-3.
(Pause in proceedings.)
BY MR. ETRA:
Q.
Putting up 22-6, which is the package of materials that
were DocuSigned. You see that, sir?
A.
Yes.
Q.
Now, this indicates that it's not just the 2483 and a note
but several other documents, right?
A.
Correct.
Q.
That was Cross River's option to include additional
documents that the borrower had to sign, right?
A.
Correct.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
What was the reasoning in including additional documents
for Cross River? Do you recall?
A.
I don't recall.
Q.
Okay.
MR. ETRA: All right. Let's go to the 2483
application, which is Bates 59.
BY MR. ETRA:
Q.
And just to close the loop, because I had asked you and you
wanted to see it, do you see the NAICS code here?
A.
Yes.
Q.
Do you see that it starts with a two?
A.
Uh-huh.
Q.
And the one in the tax return, or the purported tax return,
started with a six. You recall that?
A.
Yes.
Q.
So no one took the NAICS code from the tax return and put
it on this application, right?
A.
Correct.
MR. ETRA: Let's go to the --
BY MR. ETRA:
Q.
You'll agree with me that the 2483 Form doesn't say not to
include payments to 1099ed workers in the payroll, correct?
A.
Correct.
Q.
And when it talks about employees, it doesn't say:
"Employees only means W-2," correct?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Correct.
Q.
Okay.
MR. ETRA: Let's go to Document 1006 --
BY MR. ETRA:
Q.
Before I do that, do you have -- do you use the term
"working capital" in your business?
A.
Not personally, no.
Q.
You don't know what the term means?
A.
Not personally, no.
Q.
Okay.
MR. ETRA: Let's go to Page 00067.
Sorry. I've got the wrong Bates. I apologize.
(Pause in proceedings.)
BY MR. ETRA:
Q.
Is this one of the documents that the applicant had to
DocuSign for the loan?
A.
Yes.
Q.
It's a settlement sheet. Can you explain what a settlement
sheet is.
A.
I don't recall. Sorry.
Q.
Okay. Well, it's in evidence, so I'll just read it. It
says the amount of the loan, HM management is the payer, and it
says: "Working Capital." Do you see that?
A.
Yes.
Q.
But you don't know what working capital is, right?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
I don't. I'm sorry.
Q.
You don't know whether that goes beyond the authorized uses
of the loan?
A.
I don't.
Q.
In the 4506-T that you talked about before --
MR. ETRA: Let's go to that one as well.
BY MR. ETRA:
Q.
This is a form that by signing it the signer is basically
authorizing the taxpayer here -- which is HM Management,
right --
A.
Yes.
Q.
-- is authorizing your company to go to the IRS and get all
the actual filed returns, correct?
A.
Correct.
Q.
And in this case, did HM Management agree to sign it?
A.
Yes.
Q.
Okay. Thereby giving you guys access to all of the
returns?
A.
Correct.
MR. ETRA: No further questions, Your Honor.
THE COURT: All right. Any redirect?
MS. JIMENEZ: Yes.
REDIRECT EXAMINATION
BY MS. JIMENEZ:
Q.
Mr. Lord, your -- do your responsibilities at Cross River
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Bank include anything relating to PPP loans?
A.
Yes.
Q.
What do you do relating to PPP loans?
A.
I'm currently -- since the application stage is over, it's
mostly dealing with forgiveness.
Q.
Do you manage PPP loans that were previously funded? Is
that part of your responsibilities?
A.
Yes. But again, it's mostly in the forgiveness stage.
Q.
Right. At this point, there are no -- there are no loans
being funded, right?
A.
Correct. It ended in May of '21.
Q.
And I think you indicate you received training on what the
portal for Cross River Bank provided in 2021; is that right?
A.
Correct.
Q.
Did you receive training on whether the -- on the way the
portal looked to applicants in 2021?
A.
Yes.
Q.
Did you yourself have responsibility for producing the
records to the Government in this case?
A.
Yes.
Q.
You yourself did?
A.
I did, yes.
Q.
All right. And so the portal information that Cross
River -- or the way the portal looked to applicants in 2021 by
Cross River, was that available as a document to produce to the
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Government at this time?
A.
It's -- we have like an internal kind of -- a knowledge
base that we have. So it's screenshots but not in a way they
can really be presented.
Q.
Now, the screenshots that you were asked about, did you
testify that they included information that the applicant was
supposed to supply about employees -- number of employees?
MR. ETRA: Objection. Leading.
THE COURT: I'll allow it. Overruled.
THE WITNESS: I do not recall if that was one of the
specific screenshots. There were screenshots of the
application flow, but I don't recall if it's start to finish or
which ones it specifically states.
BY MS. JIMENEZ:
Q.
And was it the case that there were specific ones that you
did have some recollection about?
A.
Yes. The -- kind of the basic information ones.
Q.
Was it basic information to provide number of W-2
employees?
A.
I don't recall if that was one of the screenshots. It was
primarily like business name, the NAICS code, and kind of I
think ownership.
Q.
Did you testify that the term "employees" was defined as
W-2 employees?
A.
I don't recall if there's -- if we have an actual
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
screenshot that shows that listed. I remember that being part
of the application, but I don't know if we have a specific
screenshot of that section.
Q.
You're talking about screenshots. But in the portal at the
time, did it indicate W-2 employees?
A.
Yes.
Q.
All right. And you were asked about whether the
eligibility changed. Did the eligibility change at any point
as to whether or not the payroll amount for a business claiming
employees -- did it ever change as to whether you could include
independent contractors -- payments to independent contractors?
A.
No.
Q.
Did that aspect of the loan application system ever change?
A.
No. Because 1099s could file -- they could file for PPP
loans themselves.
Q.
The --
MS. JIMENEZ: Can we go to Exhibit 21-1, please.
No -- sorry. 21-2.
BY MS. JIMENEZ:
Q.
Mr. Lord, when someone logs into your portal at the time,
in 2021, did you indicate, sir, whether or not someone could
actually -- well, did you indicate at what point in time the
applicant can submit documents supporting their loan
application?
MR. ETRA: Objection. Leading and lack of personal
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
knowledge.
THE COURT: Overruled. I'll allow it.
THE WITNESS: At the top of the application flow, when
they're looking at it, there was kind of tabs for this stage,
and the final tab was document upload.
BY MS. JIMENEZ:
Q.
Document upload. What does that mean?
A.
That was a stage in which they would -- it would prompt
them to upload the relevant documents for their business.
Q.
And can an applicant submit the information first and
submit their documentation later at another point in time,
based on the way that Cross River Bank had the portal set up?
A.
They can enter in the information, but it's not -- the
application isn't submitted.
Q.
Is the application considered complete before the
documentation is uploaded and supplied?
A.
No. It's incomplete until documents are provided.
Q.
Incomplete -- okay. But does that mean that -- can there
be a transmission -- an electronic transmission from the
applicant inputting the information before documents are
uploaded?
MR. ETRA: Objection. Leading.
THE COURT: Overruled. I'll allow it.
THE WITNESS: This is showing an electronic record of
loan application. This is only propagated when the full loan
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
application is submitted. But like on the -- I think
January 18th, to where it said: "Aged," and there was no
further information, that was an example of when they could
enter in information into the portal but not complete the
application. So there was evidence that they had started like
putting their name, business information, whichever one it was,
and then had left the application to be incomplete and not
followed through with it.
BY MS. JIMENEZ:
Q.
So did Cross River Bank capture in its system someone
entering some information on that occasion, January 18?
A.
Yes. In the form of the -- the Salesforce page of
January 18th.
Q.
Okay. But then, specifically with respect to the
January 19th, 2021, file that you have, did that reflect
information provided and records submitted all at once on that
date?
A.
Yes.
Q.
All right.
MS. JIMENEZ: Can we take a look at Government
Exhibit 21, just Page 10574.
BY MS. JIMENEZ:
Q.
I think you were --
MS. JIMENEZ: I'm sorry. Could we switch to the ELMO.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
BY MS. JIMENEZ:
Q.
I think you were asked about this record, and it's very
small for me anyway.
MS. JIMENEZ: That's blurry. Is this on autofocus?
BY MR. ETRA:
Q.
All right. The -- there's some notations on the left-hand
side of this record. Do you see that?
A.
Yes.
Q.
What are those notations?
A.
So those are recent items. That's kind of like the view
history of whichever user was accessing the page at the time.
Q.
All right. Does that indicate whether those documents were
uploaded, where it says: "IRS 940 HM Management and
Development LLC tax return"?
A.
Right. So those were -- we can only view documents that
were uploaded.
Q.
Okay. And so, based on the way that your system was set
up, would those documents have to have been uploaded
January 19th, 2021, and submitted -- or rather uploaded
whenever, but submitted January 19th, 2021?
A.
Correct.
Q.
And then below the 940 it indicates "2020 K-1 Tax Return
1065." Do you see that?
A.
Yes.
Q.
For that same transmission, January 19th, 2021, is that
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
when that document would have been transmitted to Cross River?
A.
Yes.
Q.
All right. Now, for the March 12 application, was Cross
River's portal the same at that point in time, meaning that you
needed to upload your documents and everything goes in one
transmission to Cross River?
A.
Yes.
Q.
All right. So for March 12, 2021 --
MS. JIMENEZ: Are we not seeing my documents?
Okay. Yes, we are.
BY MS. JIMENEZ:
Q.
All right. For March, down here, it indicates -- I guess
when it says: "Created by" -- "on January 18th, 2021," what
does that mean?
A.
That is whenever -- I think it's the -- whenever the page
is created in Salesforce, but I'm not positive. That was kind
of through a different system that we weren't --
Q.
Okay. So for the March 12th, 2021 application, are the
records listed on the left-hand side of this record?
A.
I'm sorry. Could you repeat the question?
Q.
Yes. For the March 12th, 2021 application here, are the
records listed on the top left corner of this record?
A.
I'm not --
Q.
Let me ask you this: For the March 2021 application, was
there a 1065 tax return provided?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Yes.
Q.
Was there a Form 940 provided?
A.
Yes.
Q.
Was there a driver's license provided?
A.
Yes.
Q.
And the way the Cross River portal was set up, were those
documents required to be uploaded and transmitted all at once
with the application information on March 12th, 2021?
A.
Yes.
MS. JIMENEZ: Can we go to 22-1, please.
And I'm sorry. Back to the table.
Thank you.
BY MS. JIMENEZ:
Q.
All right. So then this is the beginning of the -- is this
the beginning of the record that you have for that transmission
of March 12th, 2021, from the applicant to Cross River Bank?
A.
Yes.
Q.
Would you have been able to receive those documents in the
mail?
A.
No.
Q.
Would you have been able to receive those documents at some
other point in time?
A.
No.
THE COURT: Ms. Jimenez, how much more time do you
think you need? Do we need to bring this witness back
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
tomorrow?
MS. JIMENEZ: I mean, I have maybe five -- ten minutes
maximum.
THE COURT: All right. All right, then.
BY MS. JIMENEZ:
Q.
All right. A 1065 tax return was provided with this
application, the March 12th, 2021 application, right?
A.
Yes.
Q.
And did you indicate that that is one -- the tax return,
the income tax return, is one of the records that you require
for the application?
A.
Yes.
Q.
Are you aware whether for a partnership earnings of a
partner can be included toward payroll?
A.
I'm not sure.
Q.
The --
MS. JIMENEZ: Can we pull up the 1065-T -- I'm
sorry -- the 4506-T. That is with 22-6, please.
Could we go down toward the bottom of that.
I'm sorry. One second. Let me go back for a moment
to 22 -- the -- 22-3. I'm sorry.
BY MS. JIMENEZ:
Q.
All right. The bottom of this return, the signature -- you
were asked questions about the preparer. Do you see that?
A.
Yes.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Is it reasonable for the bank to believe that the tax
preparer information provided was real?
MR. ETRA: Objection. We're not allowed to ask
standard of care. They shouldn't be allowed to ask standard of
care.
THE COURT: Sustained.
BY MS. JIMENEZ:
Q.
Did the bank accept this income tax return as a real income
tax return?
A.
Yes.
Q.
Did the bank have any indication that -- well, let me ask
you this: If the bank had reason to believe that the
preparer's information was forged, and that the applicant's
accountant was unaware that this was being submitted with his
signature, and that it had false wage information, what would
Cross River do with that information?
MR. ETRA: Objection. Leading.
THE COURT: Overruled. I'll allow it.
THE WITNESS: They would not have accepted the loan.
MS. JIMENEZ: Okay. Now let's go to the 4506-T,
please.
Okay. Let me give you the number.
22-6, toward the bottom.
Okay. Here. Stop here.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
BY MS. JIMENEZ:
Q.
You testified that with this signature Mr. Sheppard is
allowing you to turn to the IRS and get his tax return
information; is that right?
A.
Correct.
Q.
Did Cross River Bank go to the IRS and obtain tax return
information for Mr. Sheppard or his business HM Management and
Development?
A.
Not that I'm aware of.
Q.
Did you -- did you tell the applicant -- did you tell
Mr. Sheppard that you had not gotten any information from the
IRS?
A.
No.
Q.
So Mr. Sheppard didn't know that you didn't know; is that
right?
MR. ETRA: Objection.
THE COURT: Sustained.
THE WITNESS: Correct.
THE COURT: There's no need to answer that question.
THE WITNESS: Yes.
THE COURT: There's no need to answer the question,
sir.
BY MS. JIMENEZ:
Q.
Did you provide any information to Mr. Sheppard to let him
know whether or not you were going to obtain any records from
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
the IRS?
A.
No.
MS. JIMENEZ: No further questions.
THE COURT: All right. Is Mr. Lord excused?
MS. JIMENEZ: Yes.
THE COURT: On behalf of the Defendant?
MR. ETRA: Your Honor, request under case law -- new
material came up in redirect. We'd like permission to recross.
THE COURT: The request is denied.
Thank you, Mr. Lord. You are excused, sir.
(Witness excused.)
THE COURT: Ladies and Gentlemen -- go ahead, sir.
You are free to go. Thank you.
We will adjourn for the evening. Recall tomorrow we
will begin at 9:30, and it will be a full day until five
o'clock p.m.
Please remember that you're not to discuss this case
with anyone, nor permit anyone to speak with you. Everything
learned about the case is learned within the courtroom.
If you'll place your juror notebooks in the jury room.
And if you'll plan on being prompt, so we can get started right
at 9:30.
Have a pleasant evening. I'll see you at that time.
COURT SECURITY OFFICER: All rise for the jury.
(Jury not present, 5:07 p.m.)
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
THE COURT: All right. Go ahead and have a seat.
I am quite concerned about the progress of this case.
We have now completed five and a half days of trial and have
only completed eight witnesses. And my concern is that, given
the days that were requested, and the days that were given to
you based on that request, that we are not going to be able to
complete this case on Tuesday, December 12th.
Recall that I am not able to address this case on the
7th or the 8th. I'm out of the district. And I can give you
the 11th and the 12th, but we have many matters that are set on
the 13th, 14th, and 15th. And we have another case on the 18th
that is a non-jury trial that is expected to begin on that
date, and then I'm out of the district.
So I can give you -- based on the trial schedule, if
we're not able to finish this on December 12th, I would see if
the jurors are available to come back on January 8th, and
that's where we are. And let me say that you have asked for
the time. I gave you the time and --
MS. JIMENEZ: Your Honor, the Court did ask the
Government how much time we expected the case to take, and we
indicated 10 days. That is correct. At no point did the
Defense tell the Government or advise the Court that they had
extensive multi-binder, multi-hour cross-examination of
witnesses that were going to essentially double the time that
it would take to try this case.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
At no point did the Defense advise the Government of
that information, or I would certainly have requested at least
twice as much time of this Court. I had no idea that that was
going to happen.
THE COURT: Well, how much more time do you anticipate
and how many witnesses do you have?
MS. JIMENEZ: Your Honor, the Government has
approximately 11 more witnesses.
I mean, it's -- I mean, we've all been at the same
trial. I don't think that -- the Government's direct
examination has taken half as long as the cross-examinations in
this case. And again, at no point did the Defense indicate
that to the Government or to the Court.
MS. WEINTRAUB: Judge, that's not even a proper
argument to --
MS. JIMENEZ: These binders showed up when the first
witness was going to be cross-examined.
MS. WEINTRAUB: Imagine that we did our homework and
are trying to protect our client's rights.
Also, please understand, Your Honor, that we
stipulated to admit documents that, God, I wished we didn't and
I didn't want to. And the admission of those documents today
is a perfect example why I should never, ever do that, and my
instincts are right. Because had I not admitted and stipulated
to an admission of the Cross River document, it still wouldn't
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
be here. This man had no competence to testify whatsoever
about those documents. And I'm actually insulted that I'm
being reprimanded by the Government for cross-examining their
witnesses. Heaven for Betsy.
THE COURT: It is the Government's burden.
The Government has 11 more witnesses? Is that
correct, Ms. Jimenez?
MS. JIMENEZ: It could be 12.
THE COURT: Then I will ask the courtroom deputy to
see if the jurors are available. Should we not conclude on
December 12th, we'll bring back the jury on Monday,
January 8th, and use that week. I don't have January 12th. We
have many other cases that are set that day. But I can give
you the 8th, 9th, 10th, and 11th, that Monday through Thursday,
and then we'll see how far we get.
MS. WEINTRAUB: Judge, respectfully, we object.
THE COURT: Well, of course. I understand. But
there's just so many days that I have to give to you.
MS. WEINTRAUB: Judge, it's -- it's through no fault
of the Defendant, obviously. And it is completely prejudicial
now, in the middle of what I'm going to say I believe are
well-taken cross-examinations and very fruitful for the
Defense, to now take a month's break. That's very troubling.
You know, we want to strike while the iron is hot. I hate to
say something like that, but it's true.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
THE COURT: Well, I can't tell you how to try your
case. But Ms. Jimenez, if that's what you need -- and
certainly the Defendant is entitled to cross-examine these
witnesses, and I've ruled on objections that are before the
Court -- then that's what I can provide you. And I believe
that the Eleventh Circuit has told the trial courts that: "You
are to schedule the trials at the time that's available," and
that's the time that's available.
MS. JIMENEZ: It's extremely prejudicial to the
Government's case to give this jury a month between -- you
know, just essentially breaking up the Government's case in
half. It is extremely prejudicial to the Government. The
latter part of the trial will be spent on the Defense, I
assume. So the most prejudice here is to the Government, and
the Government has the burden in this case.
THE COURT: Well, I understand it would be
inconvenient to --
MS. JIMENEZ: It's not the inconvenience.
THE COURT: -- to the Government and certainly to the
Defendant, but at this point my concern is having enough trial
days for this case. And at the calendar call, I gave you the
days you requested. Binders or no binders, the witnesses
have -- certainly were subject to cross-examination and
redirect. And you've taken -- both sides have taken full
advantage of that ability.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
So we will see what the jurors' schedule calls for.
And on our end, I'll work with Liz and see what we can do on --
I already know on the 13th I can give you 10:30 to twelve, and
then three to five because I already know that we have matters.
The 14th we have from ten to four. And on the 15th
from 1:30 to five. We have a matter in the morning. And then,
as I stated, there's another case that we've already gone
through a calendar call and they are already scheduled for the
18th.
MS. JIMENEZ: Well, if it's a non-jury trial, I mean,
they potentially could be moved.
THE COURT: Well, that's why I'll work with the
courtroom deputy and see what the parties say in terms of their
witnesses and their availability. But I just don't know, even
if I give you these days, whether these jurors are going to be
available. We only asked the jurors up until the 12th. We had
to accommodate one of the jurors because that was his schedule.
And we'll see. I don't know what to say, other than we'll try
to work on our end to try to reshuffle matters and see if the
jurors are even available.
MS. WEINTRAUB: Judge, I'd be remiss -- I don't want
to be accused of not speaking up when, for one -- you know, I
don't want the Court to say why didn't I tell you. So I'm
going to say that I do expect that we have a Defense case.
THE COURT: Well, then it makes sense to bring the
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
jury back in January when we have more time.
MS. WEINTRAUB: Judge -- Judge, we strenuously would
object to that.
THE COURT: Well, I understand. I can only give you
what I have on my calendar.
MS. WEINTRAUB: Well, I hate to join the
Defense [sic], but for the non-jury trial, I would just urge
the Court to reschedule that, so that we can finish our
criminal case. I mean, again -- I don't know if that's a
criminal trial. I assume it is not.
THE COURT: No, it's not.
MS. WEINTRAUB: I assume it's civil, but --
THE COURT: Well, that would only give you -- it's
only going to give you two days.
MS. WEINTRAUB: That would do it, I think. I believe
that the Government will rest its case by Tuesday, the end of
business, based on what I know.
MS. JIMENEZ: Well...
THE COURT: Well, let me see. I'll ask Liz to speak
to the jurors about the 13th, 14th, and 15th. I'm not
certain -- there are some matters that we need to work on on
our end. And then, in terms of the 18th and 19th, that would
be -- that would be depending upon the other attorneys.
And then, once we get to the 19th, if we're still not
done, then we would bring the jurors back. So I'll ask Liz to
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
ask the jurors about January 8th.
MS. MARTINEZ: Your Honor, I just -- for case
management, I just would like to ask the Defense what is their
estimate of the Defense case.
MS. WEINTRAUB: Two days.
MS. MARTINEZ: Including my cross-examination?
MS. WEINTRAUB: Two days.
MS. MARTINEZ: Okay. Your Honor, I think the parties
can try -- both sides -- to be aware of the time requirements.
So in other words, I think both sides can make an effort to
move things quicker, and that it would not be unfair to either
side for us to try to do that.
I'm just expressing a willingness for the United
States to do that, and I'm requesting for the Defense to do the
same. Having -- I mean, having tried cases for 30 years, there
are times where there is no need to repeat the same question on
cross multiple times.
MS. WEINTRAUB: I've tried a couple of cases, too,
Judge. And --
THE COURT: All right. Well, you are each experienced
and you're doing what you feel you need to do on behalf of the
Government and the Defendant. So I'm not pointing fingers.
I'm merely stating the obvious, and that is that we are running
out of days available.
So I will see you tomorrow at 9:30. You don't need to
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
move your items because it is a hearing by Zoom. And then I
will see -- we'll see about the 13th, 14th, and 15th, and as
well as the 18th and 19th. And if we cannot get done, then we
will ask the jurors about January 8th through the 11th.
MS. WEINTRAUB: Judge, I'm not sure what you're
saying. Are you saying that you are going to adjourn after
Tuesday?
THE COURT: After Tuesday?
MS. WEINTRAUB: You're going to ask the jury if they
can --
THE COURT: If they have the time available. I don't
know what their schedule is. I only asked them until
December 12th.
MS. WEINTRAUB: Okay. Two other things, Judge. One
is we wanted to make a very quick proffer on the recross
because it's becoming a pattern with the Government to
introduce something new, which is not permitted. And then the
reason that it's not permitted is because there is recross.
And we have the cases to cite to the Court about recross,
when -- from the Eleventh Circuit.
When material new activities are brought out on
redirect, the confrontation clause of the Sixth Amendment
mandates the opposing party be given the right of recross on
those new matters. And that's Ross, 33 F.3d at 1518, Eleventh
Circuit --
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
THE COURT: And what was the new matter?
MS. WEINTRAUB: I'm sorry?
THE COURT: What was the new matter raised on
redirect?
MR. ETRA: May I, Your Honor? The new matter was the
form -- one of the many Salesforce documents on the right-hand
side lists documents, which it says: "Recent items," which
obviously means that the reader read.
And on redirect -- no one had gone through this part
of the document before. On redirect, the prosecutor asked the
witness: "Doesn't this show that these documents were
submitted at this time," which doesn't make any sense if you
read the document and look at the form.
So it's an argument about the submission of the
returns and other documents in January that had not been used
that I was not able to counter on.
MS. JIMENEZ: Your Honor, the witness was
cross-examined extensively about that document and was not
asked about the very things that were in the top of the
document on the left-hand side.
MS. WEINTRAUB: That's right. Was not asked until
they asked it on redirect.
MS. JIMENEZ: But the witness was shown the document
for the purpose of trying to establish that those documents
could not have possibly been submitted on that day, or there's
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
no indication that they were submitted on that day, when they
were as plain as day on the upper left corner of the document.
And so I was simply pointing out to the witness what was not
asked of him on cross-examination.
MS. MARTINEZ: In a document that was in evidence.
MR. ETRA: Because --
MS. JIMENEZ: That the witness was asked about on
cross-examination.
MR. ETRA: Because I would need my head examined to
ask about this. Because if you read what's shown it's obvious
that this came later. The dates of the documents are later.
It's simply the way these forms read that whoever was pulling
up these documents had opened up these forms.
One of the documents referenced doesn't even involve
my client. It involves something called RSM or something. It
just has nothing to do with the case. They took that --
THE COURT: All right.
MR. ETRA: -- feature of this document form and made
an argument on redirect that I'm not able to deal with.
THE COURT: Whether matters were brought up for the
first time on redirect that would allow the Defendant to be
entitled to a recross is a preserved issue at this time.
Are there any other issues that we need to address at
this time?
MS. WEINTRAUB: We'd like to know the witnesses for
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
tomorrow, Judge.
THE COURT: Yes. If we could have the lineup,
Ms. Jimenez.
MR. ETRA: Yes. Jeffrey Graff. Nelia Palancar. I
think Mr. Graff is going to be a somewhat lengthy witness, Your
Honor.
THE COURT: Do you believe we'll only get through two
witnesses?
MS. JIMENEZ: Yes.
MS. WEINTRAUB: Judge, I think then we will be sitting
with a half a day. I mean --
THE COURT: Is there a third witness that you
anticipate to the extent that you don't --
MS. JIMENEZ: Oh, I'm sorry. We have Maria Ataca,
Jeffrey Graff, Nelia Palancar.
THE COURT: All right.
MS. WEINTRAUB: Judge, I just want to warn the Court
that tomorrow when they call Jeffrey Graff to the stand there
is the issue -- the 404 issue. So I just want to bring it to
the Court's attention now that, again, I don't believe -- the
issue that the Government has noticed for 404(b) is an INS form
that this witness will not say that Eric Sheppard forged his
name. But the Government nevertheless keeps putting that out
there and putting it in pleadings, even though we've spoken
with him also and he says the opposite.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
I just want to advise the Court in advance, so that
when the Court is listening to the testimony, the Court will be
able to, I hope at sidebar, before they're allowed to elicit
that evidence -- I hope that we'll be able to be heard.
THE COURT: Well, is the Government intending to
elicit that testimony about a false INS form?
MS. JIMENEZ: Your Honor, the Court has ruled on this
testimony. There was extensive briefing on both sides. There
are three documents, and the witness will talk about the fact
that at some point in 2019 he asked to be removed as the
manager -- as the listed manager on the Sunbiz record for
several companies.
And the reason that that came about is he was alerted
by an attorney that the Defendant hired of Mr. Graff being the
sponsor on a visa application, and the documents were forwarded
to Mr. Graff. He will say that those -- that the
representations made, one, in the engagement letter of the law
firm, and the documents submitted for the visa application, he
did not -- he was unaware. He didn't authorize that he'd be
the sponsor of this visa application nor did he sign the
documents.
And we went over this extensively in the briefing,
where Mr. Graff -- because the Defense made the argument, well,
he -- you know, Mr. Sheppard didn't actually -- or the witness
can't say that Mr. Sheppard actually forged Documents 2 and 3.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
And Mr. -- and Mr. Graff would say that, yes, he recognizes the
Defendant's handwriting on one of the forged documents, the
engagement letter.
And as to the other two, the documents were signed
with his name without his permission, without his
authorization. And that the Defendant's office, which consists
of two and a half people -- the half being a part-time
worker -- are individuals who would not be engaging a law firm
or submitting visa sponsorships without the direction and
authorization of the Defendant. And so this was poured over in
the briefing and the Court ruled on the 404(b) motion.
MS. WEINTRAUB: Judge, I would have expected, though,
that you would have seen a lot of evidence about forgeries and
the way that Mr. Sheppard directs people to forge documents.
You haven't seen any of that yet. And I would submit to the
Court that you don't have any basis or that there is no basis
to even entertain allowing this into evidence at this point.
(Court reporter interruption.)
MS. WEINTRAUB: Or allowing it into evidence at this
point.
Additionally, Your Honor, the signature that is at
issue, I wish -- Chris, can you pull it up?
Judge, it is the most feminine signature I have ever
seen. I hate to be so sexist, but I don't know what else to
say. It is written like a seventh-grade girl. There is no way
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
that that can be attenuated to Eric Sheppard.
And in speaking with this lawyer, it's pretty obvious
that it's the girl applicant who was submitting the documents
to the lawyer. And this evidence coming before the Court,
particularly -- particularly based on the record that's in
front of this jury, would be making it a feature of the case,
which 404 prohibits, and there's no relevance yet. I mean,
maybe by the end of their case, but I doubt it.
THE COURT: All right. Docket Entry 123 is the
Court's order with regard to the 404(b) issue. And the issue,
quite frankly, is properly preserved. And I'm not going to
entertain at sidebar any issue that the Court has already
addressed. I want to move this trial along and --
MS. WEINTRAUB: Judge -- Judge, if I might be heard
for just one more minute. I understand the Court wants to move
this trial along, and we have been doing whatever we can to
make sure that happens. At the same time, there is about a
three, on a one to 15, of evidence in this case against my
client, and this is going to put it way over the scale. When
the Court did the order, we had asked for an evidentiary
hearing. And I don't think the Court could have appreciated
the significance of the testimony that's about to come.
And I will do more one thing. I will advise the Court
as an officer of this court that I have spoken with Jeffrey
Graff twice personally with witnesses and he has not said what
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
he is telling the Government.
THE COURT: And to the extent that his testimony
reveals that that was not the case -- but in terms of asking
the Court to reconsider its ruling, I'm looking at the Court's
order. The Court relied upon the Barrington case, and the
Court specifically states that: "Conduct that tends to show
the Defendant knowingly used the means of identification of
another person without lawful authority in a prior instance is
relevant to his intent with respect to the charged conduct."
And --
MS. WEINTRAUB: Judge, the charged conduct of
forgery -- has the Court heard any evidence that he forged any
documents? I haven't. And I haven't heard any that he
directed anybody to do it. All I hear is the Government, in
opening statement, submitting that that's what they're going to
prove. I haven't seen it yet, and we're at day number six.
THE COURT: And to the extent that Mr. Graff's
testimony is inconsistent with what the Government has
proffered certainly is to their detriment, if they want to call
him and he testifies otherwise.
MS. WEINTRAUB: Judge, 404(b) is to build on top of a
case that they have already made a forgery. There is no case
of forgery to give 404(b) any --
THE COURT: Well, is there any -- does the Government
anticipate that Mr. Graff is going to testify with regard to
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
forgery of any of the documents in this case?
MS. JIMENEZ: Mr. Graff -- no, not as to the forgeries
in this case. He'll talk -- I mean, he worked at this company
for 20 years and will talk about, you know, his role at the
company and various things about the company.
There obviously will be individuals who will state
that as to these documents that have been put in evidence that
were submitted to the lenders -- that, you know, the tax
returns were forged and other documents that are going to come
in for the EIDL loans were forged.
MS. WEINTRAUB: We haven't even heard from the people
that claimed that they were forged. So how are they going to
put in similar act evidence, when you don't have the other part
of that? You don't have the act evidence yet.
Cupersmith hasn't testified. Nobody who's -- and the
banker hasn't testified. And those are the two people who are
going to claim forgery, except only one of them will be able to
say anything. And there's no evidence that it was at his
direction. So how do we have similar act evidence coming in?
Similar to what?
THE COURT: Ms. Weintraub raises a very good point.
MS. JIMENEZ: Well, it's certainly going to come in.
THE COURT: Well, but it hasn't come in.
MS. JIMENEZ: Right. I mean, well, the documents that
are forged are in.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
THE COURT: But what competent testimony has
established that there was any forgery?
MS. JIMENEZ: That has not come in yet.
THE COURT: That's right.
MS. MARTINEZ: Oh, Your Honor, we have put in tax
records from the IRS saying that these documents either did not
exist or that there was another true one that was not the one
that was submitted. So one hundred percent we have already
proven that the documents submitted were forged, were false,
were not the authentic documents.
MS. JIMENEZ: There is, for instance, a 2019 tax
return that is with the IRS records for HM-UP Development
Alafaya Trails, which is at least true in the sense that that's
the true one that was submitted to the IRS.
And there is a 2019 tax return in the HM-UP Alafaya
Trails PayPal second loan application, which is different, with
different figures, different dates, different signature of
Mr. Cupersmith. Mr. Cupersmith hasn't come in yet to testify
about the documents. One, we were waiting for the lenders to
be able to put in those records. And secondly, Mr. Cupersmith
is elderly, and I did not want to have him here on a day when I
wasn't sure I was going to be able to put him on, quite
frankly.
MS. WEINTRAUB: You know what, Judge? The fact that
he's elderly -- he's in his seventies. He's not in bad health.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
And my client's rights and custody is at stake. They have
two-year mandatory minimum -- four charges of two-year minimums
based on his testimony and what's going on in this courtroom,
and they're saying they should be allowed more leeway?
MS. JIMENEZ: I didn't say anything about leeway --
MS. WEINTRAUB: Judge, that's nothing to build on
and --
THE COURT: Ms. Weintraub, if there's a case that the
Defendant can provide to the Court that would require that the
Government, in terms of its order of presentation of witnesses,
present testimony of the use of someone's identification, or
forging a document before this extrinsic evidence is
admissible, then I'm --
MS. WEINTRAUB: Judge, it's common sense because
404(b) is similar act evidence.
THE COURT: Well, similar act evidence to the charged
offense.
MS. WEINTRAUB: That's not --
THE COURT: That doesn't mean necessarily that in
terms of the order of presentation that there needs to be
testimony or other evidence that establishes the charged
offense in this case, the aggravated identity theft counts,
before Mr. Graff's testimony is admissible.
MS. WEINTRAUB: Judge, what they're trying to do is
back-door the case. They're trying to prejudice the jury by
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
putting in all this -- now the jury is going to hear about a
forgery and an INS document, and all this extrinsic garbage
that has nothing to do with the charge before them, before they
even have the evidence on the charge before them.
THE COURT: But didn't you just tell the Court that
that's not how Mr. Graff is going to testify?
MS. WEINTRAUB: Judge, I don't know what he's going to
say anymore. I know what he told me, and I know what was said,
and I know what his lawyer, Mr. Wax, said. But I -- since then
the Government has spoken with him six times, and I've spoken
to him once, not to mention the bias that will be able to be
shown.
THE COURT: All right.
MS. WEINTRAUB: But Judge, it is so prejudicial.
THE COURT: Well, let me say that if there's case law
for the Court to consider -- I've considered the case law that
was presented by way of the motion and the response, and the
Court entered its order accordingly. If there is case law that
requires that the Government admit certain evidence before it's
allowed to introduce the extrinsic evidence under 404(b), then
I'm happy to consider it.
MS. WEINTRAUB: Judge, honestly -- and I've briefed
this. I have never seen a 404(b) case where the evidence
didn't come in first, and then the Court deals with: Is it
similar? It doesn't go to prove the four things, the identity,
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
the motive -- I mean, what is the Court going to analyze?
There is nothing to analyze if it shows motive or intent
because it's not proven in the case at bar yet.
MS. MARTINEZ: Your Honor, I could add that I do
believe that it has been already substantially proven. Let me
add a couple of points. Number one, we have already put in
evidence of false tax returns that were submitted. I put on
the IRS witness. We have put in all the loan documents. So
that's number one.
MS. JIMENEZ: The PPP loan documents.
MS. MARTINEZ: The PPP loan documents.
And -- because I'm focusing on that. I'm focusing on
the tax returns. Your Honor, there is no requirement that
evidence be direct. Evidence can be circumstantial. In this
case, the Defendant is clearly the one benefiting from every
single one of these loans.
So number one, there can be circumstantial evidence
already in the case that he has received at least these PPP
loans for his benefit at his application, and with them went
what has been already proven to be false IRS tax returns.
So -- and the case law and the jury instructions includes that
a defendant does not have to do every single act on his own. A
defendant can do acts by directing others or having others do
it for him.
So there is no requirement that we prove at any point
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
that his hand was on any forgery. The only requirement is that
he caused it to happen and that he benefited from it. And we
have already substantially proven that, certainly enough for
this evidence, which is actually, in my view, not extrinsic in
the least. It is inextricably intertwined. It is like the
narcotics cases, Your Honor, where somebody is completing the
story of how they know the defendant, the relationship to the
defendant, why their name is no longer on the forms. This is
actually inextricably intertwined evidence. We make the
argument --
THE COURT: All right. I've now reread the briefing.
And with regard to the cases that were cited, I believe that
the Court ruled correctly in ECF Number 123.
With regard to the limiting instruction, the Court has
already advised the parties that I will give a limiting
instruction with regard to the 404(b) evidence. If there's
additional case law for the Court to consider, then I'm happy
to do so.
At this point, we are going to adjourn for the
evening, and I'll see everyone here tomorrow at 9:30.
Have a pleasant evening.
COURT SECURITY OFFICER: All rise.
(Proceedings adjourned at 5:38 p.m.)
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
UNITED STATES OF AMERICA )
ss:
SOUTHERN DISTRICT OF FLORIDA
)
C E R T I F I C A T E
I, Yvette Hernandez, Certified Shorthand Reporter in
and for the United States District Court for the Southern
District of Florida, do hereby certify that I was present at,
and reported in machine shorthand, the proceedings had the 5th
day of December, 2023, in the above-mentioned court; and that
the foregoing transcript is a true, correct, and complete
transcript of my stenographic notes.
I further certify that this transcript contains pages
1 - 293.
IN WITNESS WHEREOF, I have hereunto set my hand at
Miami, Florida, this 25th day of February, 2025.
/s/Yvette Hernandez
Yvette Hernandez, CSR, RPR, CLR, CRR, RMR
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
yvette_hernandez@flsd.uscourts.gov
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