Court filing
Information — United States v. Eric Shibley (Dkt. 41-1, W.D. Wash. No. 2:20-cr-00174)
Filed October 26, 2020 in Shibley; one of 139 filings from this case.
Record facts
| Court | U.S. District Court for the Western District of Washington |
|---|---|
| Filed | 2020-10-26 |
U.S. District Court for the Western District of Washington · No. 2:20-cr-00174-JCC · Doc. 41-1 · 2020-10-26 · Docket on CourtListener
Full text
Declaration of SA Moran in Support of Motion for
Protective Order to Restrain Certain Forfeitable Property - 1
U.S. v. Shibley, CR20-174-JCC
UNITED STATES ATTORNEY
700 STEWART STREET. SUITE 5220
SEATTLE, WASHINGTON 98101
(206) 553-7970
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The Hon. John C. Coughenour
UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE
UNITED STATES OF AMERICA,
Plaintiff,
v.
ERIC SHIBLEY
Defendant.
NO. CR20-174-JCC
DECLARATION OF FEDERAL
BUREARU OF INVESTIGATION
SPECIAL AGENT KATHLEEN
MORAN IN SUPPORT OF MOTION
FOR ENTRY OF A PROTECTIVE
ORDER RESTRAINING CERTAIN
FORFEITABLE PROPERTY
I, KATHLEEN MORAN, declare and say:
I.
TRAINING AND EXPERIENCE
1.
I am a Special Agent of the Federal Bureau of Investigation ("FBI")
currently assigned to the white-collar crime squad in the Seattle Field Division. I have
been employed as a Special Agent of the FBI since May 2005. I have received basic
federal law enforcement training, including the training at the FBI Academy, as well as
other specialized federal law enforcement training. I have investigated violations of
federal statutes governing various types of white collar crime, including wire fraud, mail
fraud, bank fraud, securities fraud, money laundering, and theft of government and public
money.
Case 2:20-cr-00174-JCC Document 41-1 Filed 10/26/20 Page 1 of 23
Declaration of SA Moran in Support of Motion for
Protective Order to Restrain Certain Forfeitable Property - 2
U.S. v. Shibley, CR20-174-JCC
UNITED STATES ATTORNEY
700 STEWART STREET. SUITE 5220
SEATTLE, WASHINGTON 98101
(206) 553-7970
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2.
The information in this declaration is based on my own investigation, my
conversations with other law enforcement officers who have engaged in various aspects
of this investigation, and my review of reports written by other law enforcement officers
involved in this investigation. It does not, however, contain every detail known to be
about the investigation.
II.
PURPOSE OF DECLARATION & PROPERTY TO BE RESTRAINED
3.
I make this declaration in support of a motion for entry of a protective order
that would allow the United States to maintain custody of, or otherwise restrain, property
seized pursuant to five forfeiture warrants pending resolution of this criminal case. Some
of the property (identified in paragraphs 3D and 3E, below) was seized pursuant to dual
civil and criminal forfeiture warrants, so probable cause to forfeit the property in the
criminal proceeding has already been determined; for completeness, this declaration
addresses all of the seized property (collectively, the “Subject Property”):
A.
$49,500.86 in U.S. funds, seized on or about May 29, 2020 from Navy
Federal Credit Union account #******7528, held in the name of Eric R.
Shibley MD PLLC;
B.
$100,000.00 in U.S. funds, seized on or about May 29, 2020 from Wells
Fargo account #******2378, held in the name of ES1 LLC;
C.
$804,816.63 in U.S. funds, seized on or about May 27, 2020 from Wells
Fargo account #******3536, held in the name of The A Team Holdings
LLC;
D.
$114,440.00 in U.S. funds, seized on or about June 30, 2020 from Verity
Credit Union account #***5390, held in the name of Dituri Construction
LLC; and
E.
$114,743.59 in U.S. funds, seized on or about June 30, 2020 from Verity
Credit Union account #***5320, held in the name of SS1 LLC.
Case 2:20-cr-00174-JCC Document 41-1 Filed 10/26/20 Page 2 of 23
Declaration of SA Moran in Support of Motion for
Protective Order to Restrain Certain Forfeitable Property - 3
U.S. v. Shibley, CR20-174-JCC
UNITED STATES ATTORNEY
700 STEWART STREET. SUITE 5220
SEATTLE, WASHINGTON 98101
(206) 553-7970
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4.
On or about May 27, May 29, and June 30, 2020, the Subject Property was
seized during execution of seizure warrants at banking institutions determined to have
accounts owned and/or operated by Defendant ERIC SHIBLEY (“Shibley”). These
warrants were issued on the grounds that there is probable cause to believe that the
accounts contain proceeds of violations of 18 U.S.C. § 1343 (Wire Fraud), or property
traceable to such property, and/or pursuant to 18 U.S.C. § 981(a)(1)(A) and 18 U.S.C. §
984, on the grounds that there is probable cause to believe that they are property involved
in violations of 18 U.S.C. § 1957 (Money Laundering) or traceable to such property. The
May 27 and May 29, 2020 civil forfeiture warrants were issued by the U.S. District Court
for the District of Columbia, Case Numbers SZ20-033, SZ20-039, and SZ20-040; the
assets identified in Paragraphs 3A – 3C were seized pursuant to those warrants. The June
25, 2020 dual civil and criminal forfeiture warrants were issued by the U.S. District Court
for the Western District of Washington, Case Numbers MC20-052 and MC20-053; the
assets identified in Paragraphs 3D – 3E were seized pursuant to those warrants.
5.
On June 29, 2020, the United States filed a Complaint against Shibley for
Violations of 18 U.S.C. §§ 2, 1343 (Wire Fraud) and 1344 (Bank Fraud). See MJ20-
0385-MLP, filed in the U.S. District Court for the Western District of Washington, Dkt.
No. 1.
6.
After the Subject Property was seized, the FBI initiated administrative
forfeiture proceedings against it pursuant to 18 U.S.C. § 983 - with the exception of the
$804,816.63 in U.S. funds identified in Paragraph 3C, which was not subject to
administrative forfeiture, as detailed further below. In FBI’s administrative forfeiture
proceedings, Shibley made two separate claims: first, to the funds in Paragraph 3B,
above, which he submitted on July 28, 2020; and, second, to the funds in Paragraphs 3D -
E, which he submitted on August 25, 2020. Shibley made no claim to the funds
identified in Paragraph 3A, above. Shibley was not required to make a claim to the funds
identified in Paragraph 3C, above, because those funds were not subject to administrative
forfeiture.
Case 2:20-cr-00174-JCC Document 41-1 Filed 10/26/20 Page 3 of 23
Declaration of SA Moran in Support of Motion for
Protective Order to Restrain Certain Forfeitable Property - 4
U.S. v. Shibley, CR20-174-JCC
UNITED STATES ATTORNEY
700 STEWART STREET. SUITE 5220
SEATTLE, WASHINGTON 98101
(206) 553-7970
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7.
The determination that there is probable cause for forfeiture of the funds
identified in Paragraphs 3D – E in the criminal case was made by The Honorable
Michelle L. Peterson, U.S. Magistrate Judge, on June 25, 2020. See 20-mc-52-MLP.
The Honorable G. Michael Harvey, U.S. Magistrate Judge, made determinations that
there is probable cause for civil forfeiture of the funds identified in Paragraphs 3A – C;
however, there has not yet been a determination that there is probable cause for forfeiture
of these funds in the criminal case. Accordingly, pursuant to 18 U.S.C. § 983(a)(3), the
United States is required either to file a civil judicial forfeiture action against the funds
identified in Paragraphs 3A – C or to allege its forfeiture in this criminal case and take
steps to maintain custody of it by October 26, 2020. The motion and this declaration
submit that there is probable cause for the continued restraint of all of the Subject
Property for criminal forfeiture.
8.
At this time, the United States is pursuing the Subject Property’s criminal
forfeiture and has given notice of this intent in the Indictment. See Dkt. No. 31, pp. 17 –
19. This declaration is submitted to provide facts stating the requisite probable cause for
the Subject Property’s continued restraint for the duration of the criminal case, including
the criminal ancillary forfeiture process.
9.
Currently, the Subject Property is in the custody of the United States
Marshals Service.
III.
SUMMARY OF PROBABLE CAUSE
10.
I have been involved in the investigation that led to the criminal charges in
this case, and I am familiar with the relevant evidence. The charges arise from a joint
investigation conducted by the FBI, the Small Business Administration (“SBA”), and
other federal law enforcement partners into false and misleading pretenses Shibley made
on COVID-19 relief loan applications he made in the names of his businesses –
including, among others: a $100,000 loan to Eric R Shibley, MD, PLLC; loans of
$563,500 and $114,900 to Dituri Construction, LLC; loans of $95,750 and $100,000 to
ES1, LLC; loans of $820,000 and $114,900 to SS1, LLC; and a $960,000 loan to The A
Case 2:20-cr-00174-JCC Document 41-1 Filed 10/26/20 Page 4 of 23
Declaration of SA Moran in Support of Motion for
Protective Order to Restrain Certain Forfeitable Property - 5
U.S. v. Shibley, CR20-174-JCC
UNITED STATES ATTORNEY
700 STEWART STREET. SUITE 5220
SEATTLE, WASHINGTON 98101
(206) 553-7970
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Team Holdings LLC. Shibley obtained such loan proceeds as a result of his material
misrepresentations about monthly payroll expenses, employees, and revenues of his
business entities and his personal probation status. As a result of Shibley’s scheme, he
was unjustly enriched. Accordingly, the Subject Property was seized from bank accounts
associated with his business entities pursuant to federal forfeiture seizure warrants.
IV.
FACTS ESTABLISHING PROBABLE CAUSE
11.
I respectfully submit, as explained further below, there is probable cause to
believe that the Subject Property is proceeds of Wire Fraud, in violation of 18 U.S.C.
§ 1343, and/or Bank Fraud, in violation of 18 U.S.C. § 1344, and/or is property involved
in Money Laundering, in violation of 18 U.S.C. § 1957, or property traceable to such
property. Therefore, the Subject Property is forfeitable under 18 U.S.C. § 981(a)(1)(C)
by way of 28 U.S.C. § 2641(c), 18 U.S.C. § 982(a)(1) and 18 U.S.C. § 982(a)(2).
A. The Paycheck Protection Program
12.
The Coronavirus Aid, Relief and Economic Security (“CARES”) Act is a
federal law enacted in or around March 2020 and designed to provide emergency
financial assistance to the millions of Americans who are suffering the economic effects
caused by the COVID-19 pandemic. Dkt. No. 1, ¶ 3. One source of relief provided by
the CARES Act was the authorization of up to $349 billion in forgivable loans to small
businesses for job retention and certain other expenses, through a program referred to as
the Paycheck Protection Program (PPP). In or around April 2020, Congress authorized
over $300 billion in additional PPP funding. Id.
13.
In order to obtain a PPP loan, a qualifying business must submit a PPP loan
application, which is signed by an authorized representative of the business. Id. ¶ 4. The
PPP loan application requires the business (through its authorized representative) to
acknowledge the program rules and make certain affirmative certifications in order to be
eligible to obtain the PPP loan. Id. In the PPP loan application, the small business
(through its authorized representative) must state, among other things, its: (a) average
monthly payroll expenses; and (b) number of employees. Id. These figures are used to
Case 2:20-cr-00174-JCC Document 41-1 Filed 10/26/20 Page 5 of 23
Declaration of SA Moran in Support of Motion for
Protective Order to Restrain Certain Forfeitable Property - 6
U.S. v. Shibley, CR20-174-JCC
UNITED STATES ATTORNEY
700 STEWART STREET. SUITE 5220
SEATTLE, WASHINGTON 98101
(206) 553-7970
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calculate the amount of money the small business is eligible to receive under the PPP. Id.
In addition, businesses applying for a PPP loan must provide documentation showing
their payroll expenses. Id.
14.
A PPP loan application must be processed by a participating financial
institution (the lender). Id. ¶ 5. If a PPP loan application is approved, the participating
financial institution funds the PPP loan using its own monies, which are 100% guaranteed
by the SBA. Id. Data from the application, including information about the borrower,
the total amount of the loan, and the listed number of employees, is transmitted by the
lender to the SBA in the course of processing that loan. Id.
15.
PPP loan proceeds must be used by the business on certain permissible
expenses, payroll costs, interest on mortgages, rent and utilities. Id. ¶ 6. The PPP allows
the interest and principal on the PPP loan to be entirely forgiven if the business spends
the loan proceeds on these expense items within a designated period of time and uses at
least a certain percentage of the PPP loan proceeds on payroll expenses. Id.
16.
The PPP is overseen by the SBA, which is headquartered at 409 3rd Street
SW, Washington, DC 20416, and has authority over all loans. Individual PPP loans,
however, are issued by private approved lenders (most commonly, banks and credit
unions), who receive and process PPP application and supporting documentation, and the
make loans using the lenders’ own funds. All PPP loan application packages are also
sent to the SBA at its headquarters in Washington, DC. To date, over 4,900 lending
institution have participated in the PPP.
B. The Economic Injury Disaster Relief Program
17.
The Economic Injury Disaster Loan (“EIDL”) program was an SBA
program that provided low-interest financing to small businesses, renters, and
homeowners in regions affected by declared disasters. Dkt. No. 31, ¶ 5.
18.
The CARES Act authorized the SBA to provide EIDLs of up to $2 million
to eligible small businesses experiencing substantial financial disruption due to the
COVID-19 pandemic. Id. ¶ 6. In addition, the CARES Act authorized the SBA to issue
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Declaration of SA Moran in Support of Motion for
Protective Order to Restrain Certain Forfeitable Property - 7
U.S. v. Shibley, CR20-174-JCC
UNITED STATES ATTORNEY
700 STEWART STREET. SUITE 5220
SEATTLE, WASHINGTON 98101
(206) 553-7970
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advances of up to $10,000 to small businesses within three days of applying for an EIDL.
Id. The amount of the advance was determined by the number of employees the
applicant certified having. The advances did not have to be repaid. Id.
19.
In order to obtain an EIDL and advance, a qualifying business had to
submit an application to the SBA and provide information about its operations, such as
the number of employees, gross revenues for the 12-month period preceding the disaster,
and cost of goods sold in the 12-month period preceding the disaster. Id. ¶ 7. In the case
of EIDLs for COVID-19 relief, the 12-month period was that preceding January 31,
2020. Id. The applicant also had to certify that all of the information in the application
was true and correct to the best of the applicant’s knowledge. Id.
20.
EIDL applications were submitted directly to the SBA. Id. ¶ 8. The amount
of the loan, if the application was approved, was determined based, in part, on the
information provided by the applicant about employment, revenue, and cost of goods, as
described above. Id. Any funds issued under an EIDL or advance were issued directly
by the SBA. Id. EIDL funds could be used for payroll expenses, sick leave, production
costs, and business obligations, such as debts, rent, and mortgage payments. Id. If the
applicant also obtained a loan under the PPP, the EIDL funds could not be used for the
same purpose as the PPP funds. Id.
21.
The government has obtained records relating to at least 20 EIDL and PPP
loan applications submitted to the SBA and SBA-approved lenders on behalf of various
Shibley Entities. In total, the loan applications sought more than $3.3 million in loan
funds.
C. Eric Shibley and related entities
22.
Shibley is a citizen of the United States. According to information obtained
in the investigation, Shibley’s office address is 4700 36th Ave. SW, Seattle, Washington.
The investigation has revealed that Shibley resides at this address as well. According to
public records, Shibley is a medical doctor. According to records available on the
Washington State Department of Health website, the status of Shibley’s license to
Case 2:20-cr-00174-JCC Document 41-1 Filed 10/26/20 Page 7 of 23
Declaration of SA Moran in Support of Motion for
Protective Order to Restrain Certain Forfeitable Property - 8
U.S. v. Shibley, CR20-174-JCC
UNITED STATES ATTORNEY
700 STEWART STREET. SUITE 5220
SEATTLE, WASHINGTON 98101
(206) 553-7970
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practice medicine is identified as “summary suspension” due to allegations of
unprofessional conduct.
23.
According to records from the Anacortes Municipal Court, located in
Anacortes, Washington, Shibley pled guilty to a Violation of a No Contact Order, a
criminal misdemeanor under Washington State law, on December 13, 2018 and was
sentenced to a jail term of 364 days, with 334 days suspended, a $5,000 fine, and two
years’ probation. The case number is AC17582. Shibley is currently on probation until
December 13, 2020. An agent spoke with Shibley’s Probation Officer on or about May
26, 2020, and she confirmed Shibley remains on probation through December 13, 2020.
V.
THE SUBJECT PROPERTY
A.
Subject Property A: $49,500.86 in U.S. funds, seized on or about May 29,
2020 from Navy Federal Credit Union account #******7528, held in the name of
Eric R. Shibley MD PLLC.
24.
Shibley is the Registered Agent for Eric R Shibley MD PLLC, which was
formed in Washington State on or about December 12, 2012.
25.
On April 15, 2020 and April 25, 2020, Shibley digitally signed separate
applications in support of a $100,000 PPP loan for Eric R Shibley MD PLLC and
submitted them to TCF National Bank, which is an SBA Approved Lender that has
participated as a PPP lender to small businesses. Chemical Bank is a division of TCF
National Bank. Both are FDIC-insured financial institutions.
26.
On both of his applications, Shibley answered “No” to Question 5 of the
application: “Is the Applicant (if an individual) or any individual owning 20% or more of
the equity of the Applicant subject to an indictment, criminal information, arraignment,
or other means by which formal criminal charges are brought in any jurisdiction, or
presently incarcerated, or on probation or parole?” The application notes that “If
questions (5) or (6) are answered ‘Yes,’ the loan will not be approved.” Because Shibley
is currently on probation until December 13, 2020, as provided above, there is probable
cause to believe this certification was false.
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Declaration of SA Moran in Support of Motion for
Protective Order to Restrain Certain Forfeitable Property - 9
U.S. v. Shibley, CR20-174-JCC
UNITED STATES ATTORNEY
700 STEWART STREET. SUITE 5220
SEATTLE, WASHINGTON 98101
(206) 553-7970
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27.
Shibley’s two loan applications also provided EIN numbers and represented
that the business had multiple employees and an average monthly payroll of $40,000.
The loan applications, however, contained substantive differences:
a.
The original application listed Eric R Shibley MD PLLC’s EIN as
46-1599052 and with his application, Shibley provided the IRS Form 147C, EIN
Verification Letter verifying the 46-1599052 EIN. However, Shibley’s second
application listed Eric R Shibley MD PLLC’s EIN as 46-1598805.
b.
To support the loan amount, Shibley’s original application
represented that Eric R Shibley MD PLLC had an average monthly payroll of $40,000
and 5 employees. However, the second application stated that Eric R Shibley MD PLLC
had an average monthly payroll of $40,000 and 6 employees.
28.
With the application, Shibley provided a voided check and asked that the
loan funding be wired to Navy Federal Credit Union checking account #******9972.
29.
On or about May 7, 2020, TCF National Bank approved the PPP loan file
for Eric R Shibley MD PLLC and subsequently deposited $100,000 in loan funds to
Navy Federal Credit Union checking account #******9972 in the name of Eric R
Shibley MD PLLC. The memo for the transaction was “Chem Bank loan SACH.” As
noted above, Chemical Bank is a branch of TCF National Bank. The balance in the
account prior to the credit was $1,231.47.
30.
Based on information from Navy Federal Credit Union, that same day, on
or about May 12, 2020, the entire amount, $100,000, was moved from account
#******9972 to account #******7528, the account from which Subject Property A was
seized. Prior to the transfer, the balance in account #******7528 was $5.86. After the
transfer, the balance in the account was $100,005.86.
31.
On or about May 27, 2020, an SBA-OIG agent, posing as a representative
of another bank from which Shibley obtained a PPP loan, asked Shibley whether he was
on any type of parole or probation for the violation of no-contact order described above.
The agent also explained that, if Shibley was currently on probation, that was
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Declaration of SA Moran in Support of Motion for
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U.S. v. Shibley, CR20-174-JCC
UNITED STATES ATTORNEY
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SEATTLE, WASHINGTON 98101
(206) 553-7970
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disqualifying. Shibley denied he was on probation for the violation. Based on
information obtained from Shibley’s Probation Officer, Shibley’s representation was
false.
32.
According to Navy Federal Credit Union records, as of May 28, 2020, at
least $49,500.86 remained in account #******7528. Navy Federal Credit Union reported
that after the PPP funding was moved into this account, on or about May 28, 2020,
Shibley came into the Tacoma branch and withdrew $50,000 from the account.
33.
On or about May 29, 2020, law enforcement officers executed the civil
forfeiture seizure warrant and seized $49,500.86, all of the funds remaining in Navy
Federal Credit Union account #******7528.
34.
Based on these facts, I submit there is probable cause to believe Subject
Property A is forfeitable and should be restrained until the conclusion of this case, as
alleged in the Indictment. See Dkt. No. 31 at p. 17.
B.
Subject Property B: $100,000.00 in U.S. funds, seized on or about May 29,
2020 from Wells Fargo account #******2378, held in the name of ES1 LLC.
35.
Shibley is the Registered Agent for ES1 LLC, which was formed in
Washington State on or about October 25, 2012.
36.
Similar to Subject Property A, above, on or about April 15, 2020 and April
25, 2020, Shibley digitally signed separate applications in support of a $100,000 PPP
loan for ES1 LLC and submitted them to TCF National Bank.
37.
To support the loan amount, Shibley’s original application represented that
ES1 LLC had an average monthly payroll of $40,000 and 5 employees. However, the
second application stated that ES1 LLC had an average monthly payroll of $40,000 and 6
employees. With the application, Shibley provided a voided check and asked that the
loan funding be wired to Wells Fargo account #******9124.
38.
On both applications, Shibley answered “No” to Question 5 of the
application: “Is the Applicant (if an individual) or any individual owning 20% or more of
the equity of the Applicant subject to an indictment, criminal information, arraignment,
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Declaration of SA Moran in Support of Motion for
Protective Order to Restrain Certain Forfeitable Property - 11
U.S. v. Shibley, CR20-174-JCC
UNITED STATES ATTORNEY
700 STEWART STREET. SUITE 5220
SEATTLE, WASHINGTON 98101
(206) 553-7970
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or other means by which formal criminal charges are brought in any jurisdiction, or
presently incarcerated, or on probation or parole?” The application notes that “If
questions (5) or (6) are answered ‘Yes,’ the loan will not be approved.” As described
above, evidence obtained in the investigation demonstrates that there is probable cause to
believe this certification was false, as Shibley is currently on probation until December
13, 2020, as described above. This denial appears consistent with other known denials by
Shibley, discussed previously.
39.
According to records provided by TCF National Bank, on or about May 11,
2020, TCF National Bank approved the PPP loan file for ES1 LLC and issued the loan.
40.
According to records and information provided by Wells Fargo and TCF
National Bank, once approved, the $100,000 in loan funds was issued to Wells Fargo
business account #******9124 in the name of ES1 LLC and deposited on or about May
15, 2020. The memo for the transaction was “Chem Bank loan S ACH.” As noted
above, Chemical Bank is a branch of TCF National Bank. The balance in the account
prior to the credit was $2,742.50
41.
Based on information obtained from Wells Fargo, on or about May 21,
2020, the entire $100,000 was moved from account #******9124 to account
#******2378, which is the account from which Subject Property B was seized. Prior to
the transfer, the balance in account #******2378 was $5,761.08. After the transfer, the
balance in account #******2378 was $105,761.08. After the PPP funding was moved
into account #******2378, $2,000.00 was transferred out of the account.
42.
Wells Fargo records reflect that, as of May 26, 2020, at least $103,761.08
remained in account #******2378.
43.
On or about May 29, 2020, law enforcement officers executed the civil
forfeiture seizure warrant and seized $100,000 from the Wells Fargo ESI LLC account
#******2378.
Case 2:20-cr-00174-JCC Document 41-1 Filed 10/26/20 Page 11 of 23
Declaration of SA Moran in Support of Motion for
Protective Order to Restrain Certain Forfeitable Property - 12
U.S. v. Shibley, CR20-174-JCC
UNITED STATES ATTORNEY
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44.
Based on these facts, I submit there is probable cause to believe Subject
Property B is forfeitable and should be restrained until the conclusion of this case, as
alleged in the Indictment. See Dkt. No. 31 at p. 17.
C.
Subject Property C: $804,816.63 in U.S. funds, seized on or about May 27,
2020 from Wells Fargo account #******3536, held in the name of The A Team
Holdings LLC.
45.
The A Team Holdings LLC was formed in or about December 2018. The
business address listed on the “Certificate of Formation” is the current location of
Defendant Shibley’s medical practice.
46.
On or about April 12, 2020, Shibley digitally signed an application in
support of a $960,000 PPP loan for The A Team Holdings LLC and submitted it to Ready
Capital, which participated in the PPP as both a lender and a broker between borrowers
and other PPP lenders. Ready Capital served as a broker for PPP loans for Customers
Bank. As a broker, Ready Capital collected and provided loan applications to Customers
Bank for funding once approved. On or about April 15, 2020, Shibley submitted an
unsigned, amended application to Ready Capital.
47.
Ready Capital provided the government both the original and amended
SBA Form 2483 submitted with the package; the original bears the signature of Shibley.
To support the loan amount, both applications represented that The A Team Holdings
LLC had an average monthly payroll of $384,000 and 48 employees. With the
application, Shibley provided a voided check and asked that the loan funding be wired to
Wells Fargo account #******9116.
48.
Similar to Subject Property A and B, above, Shibley answered “No” on
both applications to Question 5: “Is the Applicant (if an individual) or any individual
owning 20% or more of the equity of the Applicant subject to an indictment, criminal
information, arraignment, or other means by which formal criminal charges are brought
in any jurisdiction, or presently incarcerated, or on probation or parole?” The application
notes that “If questions (5) or (6) are answered ‘Yes,’ the loan will not be approved.” As
Case 2:20-cr-00174-JCC Document 41-1 Filed 10/26/20 Page 12 of 23
Declaration of SA Moran in Support of Motion for
Protective Order to Restrain Certain Forfeitable Property - 13
U.S. v. Shibley, CR20-174-JCC
UNITED STATES ATTORNEY
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described above, evidence obtained in the investigation demonstrates that there is
probable cause to believe this certification was false, as Shibley is currently on probation
until December 13, 2020.
49.
According to records provided by Ready Capital, on or about April 23,
2020, Ready Capital approved the PPP loan file for The A Team Holdings LLC and
issued the loan note, which Shibley digitally signed. Records show that on or about April
30, 2020, Customers Bank, headquartered in Wyomissing, PA, issued a new loan note for
the $960,000, which Shibley digitally signed.
50.
According to records and information provided by Wells Fargo and Ready
Capital, once approved, the $960,000 in loan funds was issued to Wells Fargo checking
account #******9116 in the name of The A Team Holdings LLC.
51.
Wells Fargo records reveal that, as of May 26, 2020, at least $804,816.63
remained in account #******3536, the account from which Subject Property C was
seized.
a.
On or about May 4, 2020, the $960,000 in approved PPP loan funds
were deposited into Wells Fargo checking account #*****9116 in the name of The A
Team Holdings LLC. The memo for the transaction was “Customers Bank PPP funds.”
The balance in the account prior to the credit was $378.64.
b.
The same day the funds were deposited, the entire amount,
$960,000, was moved by online transfer from account #*****9116 to account
#******3536. Prior to the transfer, the balance in account #******3536 was $6,892.22.
After the transfer, the balance in the account was $966,892.22.
c.
On or about May 11, 2020, $7,648.59 was transferred from account
#******3536 account back to account #******9116. Three days later, on or about May
14, 2020, the same amount was transferred by ACH withdrawal to “Fay Servicing.”
Based on a search of publicly available information, Fay Servicing is believed to be a
mortgage servicing company. Also on or about May 14, 2020, another $4,427 was
withdrawn from account #******3536 at a Wells Fargo branch.
Case 2:20-cr-00174-JCC Document 41-1 Filed 10/26/20 Page 13 of 23
Declaration of SA Moran in Support of Motion for
Protective Order to Restrain Certain Forfeitable Property - 14
U.S. v. Shibley, CR20-174-JCC
UNITED STATES ATTORNEY
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SEATTLE, WASHINGTON 98101
(206) 553-7970
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d.
On or about May 26, 2020, Shibley withdrew $150,000 from
account #******3536. According to Wells Fargo records, the memo section for the
transaction states, “Teller cash to check.” According to a Physical Security Officer for
Wells Fargo, Shibley attempted to withdraw the entire $960,000 of PPP loan funds on
May 26, 2020; however, he was informed that he would have to withdraw smaller
amounts. Shibley informed the bank that he planned to return on or about May 28, 2020
to withdraw additional funds.
52.
As of on or about May 26, 2020, at least $804,816.63 remained in Wells
Fargo account #******3536 in the name of The A Team Holdings LLC.
53.
On or about May 27, 2020 law enforcement officers executed the civil
forfeiture seizure warrant and seized $804,816.63, all of the funds remaining in Wells
Fargo account #******3536.
54.
Based on these facts, I submit there is probable cause to believe Subject
Property C is forfeitable and should be restrained until the conclusion of this case, as
alleged in the Indictment. See Dkt. No. 31 at p. 17.
D.
Subject Property D: $114,440.00 in U.S. funds, seized on or about June 30,
2020 from Verity Credit Union account #***5390, held in the name of Dituri
Construction LLC.
55.
Dituri Construction LLC was formed in Washington State in or about
January of 2020. According to the initial report filed with the Washington Secretary of
State (“WA SOS”) for Dituri Construction LLC, the sole governor identified for the
entity was Thomas Dituri (Dituri) at the time of formation.
56.
According to state records, on or about October 22, 2019, Dituri was
arrested in Washington on state felony drug charges. He was arrested again on April 21,
2020, for failing to appear in the pending case that resulted from his October 2019 arrest.
Because Dituri was charged with a criminal felony on or about October 22, 2019, and has
pending felony charges, any companies in which he holds more than a 20 percent
ownership interest are not eligible to apply for PPP loans.
Case 2:20-cr-00174-JCC Document 41-1 Filed 10/26/20 Page 14 of 23
Declaration of SA Moran in Support of Motion for
Protective Order to Restrain Certain Forfeitable Property - 15
U.S. v. Shibley, CR20-174-JCC
UNITED STATES ATTORNEY
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SEATTLE, WASHINGTON 98101
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57.
On or about April 30, 2020 – nine days after Dituri’s arrest for failure to
appear – documents were filed with the WA SOS purporting to transfer ownership of
Dituri Construction LLC to Defendant Shibley, who proceeded to open new bank
accounts for Dituri Construction LLC at BECU Credit Union the same day.
58.
According to information provided by Dituri to law enforcement officers,
during the time he owned the company Dituri Construction did not have any employees,
and the sole source of revenue was approximately $1,000 Dituri earned for clearing out a
garage.
PPP Loan Applications for Dituri Construction LLC
59.
That same day, on or about April 30, 2020, Shibley digitally signed an
application package in support of a $563,500 PPP loan for Dituri Construction LLC and
submitted it to Celtic Bank, which is an SBA Approved Lender that has participated as a
PPP lender to small businesses and is an FDIC-insured financial institution. The
application identified Shibley as a 90 percent owner of the business.
60.
To support the loan amount, Shibley represented that Dituri Construction
LLC had an average monthly payroll of $225,400 and 49 employees. The loan
application stated that the company paid $392,000 in wages to 49 employees and
withheld no federal income taxes from those wages; it also reported that Dituri
Construction LLC owed $59,976 in federal taxes for the first quarter of 2020. The form
purported to be signed by Shibley and is dated April 28, 2020, two days before the PPP
loan application for Dituri Construction LLC was submitted to Celtic Bank.
61.
Shibley answered “No” to Application Question 5: “Is the Applicant (if an
individual) or any individual owning 20% or more of the equity of the Applicant subject
to an indictment, criminal information, arraignment, or other means by which formal
criminal charges are brought in any jurisdiction, or presently incarcerated, or on
probation or parole?” The application notes that “If questions (5) or (6) are answered
‘Yes,’ the loan will not be approved.” As described above, evidence obtained in the
investigation demonstrates that there is probable cause to believe this certification was
Case 2:20-cr-00174-JCC Document 41-1 Filed 10/26/20 Page 15 of 23
Declaration of SA Moran in Support of Motion for
Protective Order to Restrain Certain Forfeitable Property - 16
U.S. v. Shibley, CR20-174-JCC
UNITED STATES ATTORNEY
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SEATTLE, WASHINGTON 98101
(206) 553-7970
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false, as Shibley is currently on probation until December 13, 2020. This denial of his
probation status appears consistent with other known denials by Shibley, discussed
previously.
62.
Additionally, on his loan application, Shibley made several certifications
also revealed to be materially false, including, but not limited to:
a.
Shibley represented that Dituri Construction LLC was in operation
on February 15, 2020 and had employees for whom it paid salaries and payroll taxes or
paid independent contractors. However, as of February 2020, there is no evidence Dituri
Construction LLC had employees for whom it paid state payroll taxes.
b.
Shibley’s loan applications also contained internal discrepancies. In
one application to Ready Capital dated April 22, 2020, Shibley stated that Dituri
Construction LLC paid wages and compensation totaling $784,000 in the first quarter of
2020. However, as described above, in the loan application to Celtic Bank on or about
April 28, 2020, Shibley reported that Dituri Construction LLC paid approximately
$392,000 in wages and compensation during that period. Based on my training and
experience, these discrepancies suggest that the documents Shibley submitted with his
loan applications are falsified to support specific loan amounts sought in each application
and, moreover, that Shibley may have used the same business to apply for multiple PPP
loans.
c.
Shibley supplied the names of seven purported employees with what
he claimed to be the last four digits of each individual’s social security number and phone
number. However, further investigation revealed that none of the individuals actually
work or worked for Dituri Construction LLC. Based on my training and experience, this
suggests that Shibley is not operating an active business under the name of Dituri
Construction LLC and does not have employees, as Shibley represented.
63.
On or about May 4, 2020, Celtic Bank approved the full loan amount of
$563,500 and subsequently disbursed the loan funds to an account in the name of Dituri
Construction LLC at BECU Credit Union, which Shibley had opened on or about April
Case 2:20-cr-00174-JCC Document 41-1 Filed 10/26/20 Page 16 of 23
Declaration of SA Moran in Support of Motion for
Protective Order to Restrain Certain Forfeitable Property - 17
U.S. v. Shibley, CR20-174-JCC
UNITED STATES ATTORNEY
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SEATTLE, WASHINGTON 98101
(206) 553-7970
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30, 2020. Shibley had provided a voided check for this purpose with the PPP loan
package.
EIDL Loan for Dituri Construction LLC
64.
Shibley opened accounts at Verity Credit Union in the name of Dituri
Construction LLC on or about June 3, 2020, approximately four days before applying for
an EIDL loan for that entity.
65.
According to information provided by the SBA, on or about June 7, 2020,
Shibley applied for an EIDL for Dituri Construction LLC using the EIN assigned by the
IRS in January 2020. In the application, Shibley reported that Dituri Construction had 49
employees as of January 31, 2020; had $850,000 in gross revenue in the 12-month period
before January 31, 2020; and, had $600,000 in cost of goods sold in the same period.
a.
The government has obtained emails from Idaho Central Credit
Union (“ICCU”), another financial institution at which Shibley applied for a PPP loan on
behalf of Dituri Construction LLC, between a representative of ICCU and an individual
identifying himself as Shibley. On or about May 4, 2020, after the ICCU representative
requested 2019 and 2020 payroll records for Dituri Construction LLC, the individual
identifying himself as Shibley responded that “[t]here is no 2019 document for this
business, formation date is 01/02/2020.” Accordingly, because Dituri Construction LLC
was not purportedly formed until on or about January 2, 2020, all of the reported
earnings, sales, and employment levels on the EIDL loan for Dituri Construction LLC
had to have occurred in the 29 days between January 2, 2020 and January 31, 2020.
b.
Based on Shibley’s EIDL application, the SBA approved a relief
loan to Dituri Construction of $115,000. On or about June 19, 2020, $114,900 was
deposited by interstate wire, into Verity Credit Union account #****5400, held in the
name of Dituri Construction LLC. Based on information obtained from Verity Credit
Union, the wire transfers of the $114,900 in loan funds disbursed by the SBA to Dituri
Construction LLC, to Verity Credit Union account #****5400 originated in Kansas City,
Missouri. Verity Credit Union has no branches outside of Washington State. Based on
Case 2:20-cr-00174-JCC Document 41-1 Filed 10/26/20 Page 17 of 23
Declaration of SA Moran in Support of Motion for
Protective Order to Restrain Certain Forfeitable Property - 18
U.S. v. Shibley, CR20-174-JCC
UNITED STATES ATTORNEY
700 STEWART STREET. SUITE 5220
SEATTLE, WASHINGTON 98101
(206) 553-7970
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records obtained from Verity Credit Union, the balance in the account immediately prior
to the deposit was approximately $40, which had been deposited as a “New Account
Deposit” on or about June 3, 2020. On or about June 19, 2020, $114,440 was transferred
from that account to Verity Credit Union account #****5390, in the name of Dituri
Construction LLC. Prior to the transfer, the balance in account #****5390 was
approximately $5, which was deposited on or about June 3, 2020, as a “New Account
Deposit.”
66.
According to information provided by Verity Credit Union, on or about
June 22, 2020, four cashier’s checks for $20,000 each were drawn on Verity Credit
Union account #****5390 and made payable to Shibley. As of on or about June 23,
2020, approximately $34,445 remained in this account.
67.
On or about June 24, 2020, a representative of Verity Credit Union
informed the government that the bank had placed a freeze on the Dituri Construction
LLC account #****5390 and had placed a stop payment order on the four cashier’s
checks withdrawn from the account.
68.
Other evidence obtained in the investigation also shows that Shibley’s
assertions about Dituri Construction LLC’s operations were materially false.
a.
BECU has provided opening documents for Dituri Construction
LLC accounts opened by Shibley on or about April 30, 2020 – the same day that he
applied for a PPP loan for the entity. The opening documents identify Shibley as the 90
percent owner and sole signatory on the accounts and report that Dituri Construction LLC
has “Estimated Annual Sales/Revenue” of just $100,000 to $499,000. This is
inconsistent with the claim Shibley made to the SBA that Dituri Construction LLC had
gross revenues of $850,000 in 29 days in January 2020.
b.
Evidence obtained in the investigation reveals that Dituri
Construction LLC did not have employees. This is inconsistent with the claim Shibley
made to the SBA that the entity had 49 employees.
Case 2:20-cr-00174-JCC Document 41-1 Filed 10/26/20 Page 18 of 23
Declaration of SA Moran in Support of Motion for
Protective Order to Restrain Certain Forfeitable Property - 19
U.S. v. Shibley, CR20-174-JCC
UNITED STATES ATTORNEY
700 STEWART STREET. SUITE 5220
SEATTLE, WASHINGTON 98101
(206) 553-7970
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69.
On or about June 30, 2020, law enforcement officers executed a dual civil
and criminal forfeiture seizure warrant and seized $114,440 from Verity Credit Union
account #****5390, held in the name of Dituri Construction LLC.
70.
Based on these facts, I submit there is probable cause to believe Subject
Property D is forfeitable and should be restrained until the conclusion of this case, as
alleged in the Indictment. See Dkt. No. 31 at p. 17.
E.
Subject Property E: $114,743.59 in U.S. funds, seized on or about June 30,
2020 from Verity Credit Union account #***5320, held in the name of SS1 LLC.
71.
Shibley is the sole governor of SS1 LLC, which was formed in Washington
State on or about October 3, 2017.
72.
SS1 LLC was administratively dissolved on or about March 3, 2020
because the entity did not file an annual report that was due on or about October 31,
2019. On or about April 6, 2020, a Statement of Reinstatement was filed on behalf of
SS1 LLC, listing Shibley’s business address as the principal office and Shibley as the
sole governor. The EIN for SS1 LLC is not, however, registered with the Washington
Department of Revenue and does not appear to be associated with any such registered
entity. Additionally, the Washington Employment Security Department, which holds
records for state unemployment taxes, has no records related to SS1 LLC. This appears
to suggest that SS1 LLC does not operate with employees and has never paid any state
taxes.
PPP Loan for SS1 LLC
73.
On or about April 20, 2020, Shibley applied for a PPP loan of $820,000
from Harvest Small Business Finance LLC – which is an SBA Approved Lender and has
participated as a PPP lender to small businesses.
74.
The application identified Shibley as a 100 percent owner of the business
75.
Despite being made in SS1 LLC’s name, the application form identified the
EIN of another entity – SS1 (without the “LLC”), which is also not registered with the
Case 2:20-cr-00174-JCC Document 41-1 Filed 10/26/20 Page 19 of 23
Declaration of SA Moran in Support of Motion for
Protective Order to Restrain Certain Forfeitable Property - 20
U.S. v. Shibley, CR20-174-JCC
UNITED STATES ATTORNEY
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Washington Department of Revenue or the Washington Employment Security
Department.
76.
On or about April 21, 2020, a Statement of Correction bearing a signature
in Shibley’s name was filed with the WA SOS for SS1 LLC. According to the document,
the operating agreement for SS1 LLC incorrectly identified Charles Henry Stewart as
owning 50 percent of the entity, when, in fact, Shibley owned 100 percent.
77.
To support the loan amount, Shibley represented that SS1 LLC had an
average monthly payroll of $328,000 and 41 employees. He presented documentation
purportedly reflecting that, between January and March 2020, SS1 LLC paid $656,000 in
wages to 41 employees and withheld no federal income taxes from those wages and
reported that SS1 LLC owed $83,229 in federal taxes for the first quarter of 2020. The
documentation purported to be signed by Shibley and is dated April 22, 2020 – at least
two days after Shibley purportedly signed the PPP loan application. Additionally,
Shibley provided in his loan application documentation purported to reflect that, for
2019, SS1 LLC paid $538,000 in wages, tips, and other compensation. Similarly, the
documentation was signed by Shibley on or about April 22, 2020. This suggests that
these documents were fraudulently created to support the PPP loan application bearing
Shibley signature and dated April 20, 2020.
78.
Shibley answered “No” to Application Question 5: “Is the Applicant (if an
individual) or any individual owning 20% or more of the equity of the Applicant subject
to an indictment, criminal information, arraignment, or other means by which formal
criminal charges are brought in any jurisdiction, or presently incarcerated, or on
probation or parole?” The application notes that “If questions (5) or (6) are answered
‘Yes,’ the loan will not be approved.” As described above, evidence obtained in the
investigation demonstrates that there is probable cause to believe this certification was
false, as Shibley is currently on probation until December 13, 2020.
79.
Additionally, on his loan application, Shibley made several certifications
revealed to be materially false, including, but not limited to:
Case 2:20-cr-00174-JCC Document 41-1 Filed 10/26/20 Page 20 of 23
Declaration of SA Moran in Support of Motion for
Protective Order to Restrain Certain Forfeitable Property - 21
U.S. v. Shibley, CR20-174-JCC
UNITED STATES ATTORNEY
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SEATTLE, WASHINGTON 98101
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a.
Shibley certified that SS1 LLC was in operation on February 15,
2020 and has employees for whom it paid salaries and payroll taxes or paid independent
contractors. However, there is no evidence SS1 LLC had employees for whom it paid
state payroll taxes.
b.
Shibley also supplied the names of ten purported employees with
what he claimed to be the last four digits of each individual’s social security number and
phone number. However, further investigation revealed that none of the individuals
actually work for SS1 LLC. Based on my training and experience, this suggests that
Shibley is not operating an active business under the name of SS1 LLC and does not have
employees, as Shibley represented.
80.
On or about April 27, 2020, Harvest approved the full loan amount of
$820,000. Subsequently, the funds were disbursed to an account in the name of SS1 LLC
at BECU Credit Union that Shibley had opened on or about April 21, 2020 –
approximately one day after the signature date on the PPP loan application submitted to
Harvest. Shibley provided a voided check from the account to Harvest with the loan
application package.
81.
Based on my training and experience, additional evidence obtained from
BECU Credit Union, where Shibley directed Harvest to deposit the PPP loan proceeds,
demonstrates that SS1 LLC was not operating in a manner consistent with an existing,
operating business.
a.
As described above, Shibley only opened accounts in SS1 LLC’s
name the day after the date on the application bearing his signature for a PPP loan. The
accounts had little to no activity other than the receipt or withdrawal of the loan.
b.
Moreover, after the PPP loan funds were deposited into a checking
account in SS1 LLC’s name at BECU Credit Union, the entirety of the funds was
transferred to a savings accounts in SS1 LLC’s name the same day. Based on my
training and experience, such a transfer suggests an attempt to evade detection of the
funds in the account to which Shibley directed Harvest to deposit them initially.
Case 2:20-cr-00174-JCC Document 41-1 Filed 10/26/20 Page 21 of 23
Declaration of SA Moran in Support of Motion for
Protective Order to Restrain Certain Forfeitable Property - 22
U.S. v. Shibley, CR20-174-JCC
UNITED STATES ATTORNEY
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EIDL Loan for SS1 LLC
82.
Shibley opened accounts at Verity Credit Union in the name of SS1 LLC
on or about June 3, 2020, approximately four days before applying for an EIDL loan for
that business.
83.
According to information provided by the SBA, on or about June 7, 2020,
Shibley applied for an EIDL for SS1 LLC using the EIN assigned by the IRS on or about
April 20, 2020. In the application, Shibley reported that SS1 LLC had 41 employees as
of January 31, 2020; had $850,000 in gross revenue in the 12-month period before
January 31, 2020; and, had $600,000 in cost of goods sold in the same period.
a.
Based on Shibley’s EIDL application, the SBA approved a relief
loan to SS1 LLC of $115,000. On or about June 19, 2020, $114,900 was deposited by
interstate wire, into Verity Credit Union account #****5330, held in the name of SS1
LLC. Based on information obtained from Verity Credit Union, the wire transfers of the
$114,900 in loan funds disbursed by the SBA to SS1 LLC to Verity Credit Union account
#****5330 originated in Kansas City, Missouri. Verity Credit Union has no branches
outside of Washington State. Based on records obtained from Verity Credit Union, the
balance in the account immediately prior to the deposit was approximately $40, which
had been deposited as a “New Account Deposit” on or about June 3, 2020. On or about
June 19, 2020, after a deposit of approximately $303 into the account (of a cashier’s
check drawn on one of SS1 LLC’s BECU accounts), $114,743.59 was transferred from
that account to Verity Credit Union account #****5320, in the name of SS1 LLC. Prior
to the transfer, the balance in account #****5320 was approximately $5, which was
deposited on or about June 3, 2020, as a “New Account Deposit.”
b.
According to information provided by Verity Credit Union, on or
about June 22, 2020, three cashier’s checks for $20,000 each were drawn on Verity
Credit Union account #****5320 and made payable to Shibley. As of on or about June
23, 2020, approximately $54,742.59 remained in this account.
Case 2:20-cr-00174-JCC Document 41-1 Filed 10/26/20 Page 22 of 23
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On or about June 24,2020,
a representative
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informed the government that the bank had placed a freeze on the SSI LLC account
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#****5320 and had placed a stop payment order on the three cashier's checks withdrawn
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from the account.
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d.
On or about June 30, 2020, law enforcement officers executed a dual
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civil and criminal forfeiture seizure warrant and seized $114,743.59 from Verity Credit
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Union account #****5320, held in the name ofSSI
LLC.
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84.
Based on these facts, I submit there is probable cause to believe Subject
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Property E is forfeitable and should be restrained until the conclusion of this case, as
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alleged in the Indictment.
See Dkt. No. 31 at p. 17.
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85.
CONCLUSION
Based on the facts described above, there is probable cause to believe that
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all of the Subject Property is forfeitable as proceeds of Wire Fraud and Bank Fraud,
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and/or as property involved in or traceable to Money Laundering.
The Subject Property
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should, therefore, remain in the custody of the United States pending resolution of this
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criminal case, to include criminal ancillary forfeiture proceedings.
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I declare under penalty of perjury that the foregoing is true and correct.
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DATED this~day
of (JUroJx,r, 2020
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KAHLEEN
MORAN
FBI Special Agent
Declaration of SA Moran in Support of Motion for
Protective Order to Restrain Certain Forfeitable Property - 23
Us. v. Shibley, CR20-174-JCC
UNITED
STATES
ATTORNEY
700 STEWART
STREET. SUITE 5220
SEATTLE, WASHlNGTON 9810 I
(206) 553-7970
Case 2:20-cr-00174-JCC Document 41-1 Filed 10/26/20 Page 23 of 23File and source
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