Criminal Complaint — No. 6:21-mj-04044 (Dkt. 1, W.D.N.Y.)

Summary

A criminal complaint filed March 19, 2021 in United States v. Michael Rech, Case No. 21-MJ-4044, in the U.S. District Court for the Western District of New York, sworn by Alan Roth, Special Agent with the Internal Revenue Service-Criminal Investigation. It charges that between about April 2020 and about February 2021 Rech devised a scheme to fraudulently obtain three (3) Paycheck Protection Program loans in violation of Section 1343, and committed money laundering under Sections 1956(a)(1)(B)(ii) and 1957. The affidavit states that two PPP loans to Guardian totaling $127,500 were disbursed in April of 2020 and withdrawn in structured cash transactions below $10,000. Magistrate Judge Marian W. Payson attested the complaint by telephone.

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Case 6:21-mj-04044-MWP Document1 Filed 03/19/21 Page 1 of 21

AO 91 (Rev. 02/09) Criminal Complaint

United States District Court

for the

Western District of New York

United States of America
V.
Case No. 21-MJ-4044
MICHAEL RECH,

Defendant

CRIMINAL COMPLAINT

I, Alan Roth, Special Agent with the Internal Revenue Service-Criminal Investigation, the complainant in this
case, state that the following is true to the best of my knowledge and belief:

Between in or about April 2020 and in or about February 2021, in the Western District of New York, the defendant
did devise a scheme to fraudulently obtain three (3) Paycheck Protection Program loans, in violation of Title 18,
United States Code, Section 1343 and did commit money laundering in violation of Title 18, United States Code,
Sections 1956(a)(1)(B)(ii) and 1957.

This Criminal Complaint is based on these facts:

SEE ATTACHED AFFIDAVIT OF IRS-CI SPECIAL AGENT ALAN ROTH.
& Continued on the attached sheet. <—

hi
a4

Complainant's signature

ALAN ROTH, Special Agent, IRS-CI

Printed name and title

Affidavit and Criminal Complaint submitted electronically
by email in .pdf format. Oath administered, and contents
and signature, attested to me as true and accurate
telephonically pursuant to Fed.R.Crim. P. 4.1 and 4(d) on:

Date: __ March 19 , 2021 (Varian W. Payson

Judge’s signature

MARIAN W. PAYSON
City and State: Rochester, New York UNITED STATES MAGISTRATE JUDGE


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AFFIDAVIT IN SUPPORT OF CRIMINAL COMPLAINT

STATE OF NEW YORK_)
COUNTY OF MONROE ) SS.:
CITY OF ROCHESTER _ )

I, ALAN ROTH, being duly sworn, depose and say:

INTRODUCTION AND AGENT BACKGROUND

1. Iama Special Agent of Internal Revenue Service-Criminal Investigation (“IRS-
CI’), having been duly appointed on January 20, 2008 and, as much, am a Federal Law
Enforcement Officer within the meaning of Rule 41(a) of the Federal Rules of Criminal
Procedure, that is, a Government agent engaged in the enforcement of the criminal laws of
the United States. Your Affiant’s responsibilities include the investigation of possible criminal
violations of the Internal Revenue Laws (Title 26, United States Code), the Bank Secrecy Act
(Title 31, United States Code), the Money Laundering Control Act (Title 18, United States

Code), and related offenses.

2. I received a Bachelor’s degree in Business Administration with a major in
Finance. I received extensive training in financial investigative techniques and in the law of
search and seizure under the Fourth Amendment, having undergone 26 weeks of training at
the Federal Law Enforcement Training Center, and at several in-service training seminars
dealing with financial investigative techniques and Money Laundering and Bank Secrecy Act

violations.

3. During the course of my employment with IRS-CI, I have conducted and

assisted on several criminal investigations involving tax fraud, money laundering and the

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illegal structuring of financial transactions. These investigations focused on individuals

deriving income from both legal and illegal sources.

4, This affidavit is being submitted for the purpose of establishing probable cause
to believe that Michael Rech (““RECH”) has committed violations of Title 18, United States
Code, Section 1343 (wire fraud) and Title 18 United States Code, Sections 1956(a)(1)(B)(ii)

and 1957 (money laundering) (collectively “TARGET OFFENSES”).

5. The information contained in this affidavit is based upon my personal
knowledge and observation, my training and experience, conversations with and information
from other law enforcement officers, and my review of documents and records related to this

investigation.

6. Because this affidavit is being submitted for the limited purpose of establishing
probable cause to secure a criminal complaint, I have not included each and every detail of
the investigation. Rather, I have set forth only those facts that I believe are necessary to

establish probable cause that RECH committed the TARGET OFFENSES.

OVERVIEW OF COVID-19 PANDEMIC, CARES ACT,
AND PAYCHECK PROTECTION PROGRAM

7. The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was
signed into law on March 27, 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.

8. 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

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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.

9. To obtain a PPP loan, a qualifying business must submit a PPP loan
application, which is signed by an authorized representative of the business. The PPP loan
application requires the business (through its authorized representative) to acknowledge the
program rules and make certain affirmative certifications to be eligible to obtain the PPP loan.
One such certification requires that the applicant (through its authorized representative)
affirm that “[t]he [PPP loan] funds will be used to retain workers and maintain payroll or
make mortgage payments, lease payments, and utility payments; I understand that if the funds
are used for unauthorized purposes, the federal government may pursue criminal fraud
charges.” 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. The payroll expense figure is used to calculate the amount of

money the small business is eligible to receive under the PPP.

10. A PPP loan application is received and processed by a participating institution,
then transmitted for further review to the Small Business Administration (“SBA”) to assess
the applicant’s eligibility. 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.
Data from the application, including information about the applicant, the applicant’s payroll
expenses, and the total amount of the loan is transmitted by the lender to the SBA in the

course of processing the loan.

11. | PPP loan proceeds must be used by the business on certain permissible

expenses to include payroll costs, interest on mortgages, rent, and utilities. The PPP allows
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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 (usually eight weeks
of receiving the proceeds) and uses a certain amount of the PPP loan proceeds, at least 75%,

on payroll expenses.

DEFENDANT AND RELEVANT PARTIES

MICHAEL RECH

12. RECH is a resident of North Chili, New York. Financial records; Internet
Service Provider (“ISP”) records; New York State Department of Labor (“NYS DOL”)
records; Internal Revenue Service (“IRS”) tax records, refuse collected, and surveillance

conducted all place RECH at 5 HILLTOP in North Chili.

GUARDIAN OF HUMANITY, INC.

13. Guardian of Humanity, Inc. (“GUARDIAN”) is a nonprofit corporation that
was incorporated in Arizona on or about November 16, 2017. As detailed in this affidavit,
RECH is the Director, President, and CEO of GUARDIAN and controls the finances of

GUARDIAN.

ECLIPSE ADVISORS, LLC

14. ‘Eclipse Advisors, LLC (“ECLIPSE”) is a limited liability company that was
organized in Arizona on or about August 8, 2013. As detailed in this affidavit, RECH is the

sole member of ECLIPSE and controls the finances of ECLIPSE.

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OTHER PARTIES

15. | WebBank is a federally insured financial institution with headquarters in Utah.

WebBank is an approved SBA lender and funded one PPP loan to GUARDIAN.

16. PayPal, Inc. (“PayPal”) participates in the PPP as an entity that originates PPP
loans. Small businesses seeking PPP loans can apply through PayPal using an online
platform. PayPal originates the PPP loans and partners with various banks, including
WebBank, to fund and disburse the PPP loans. PayPal received one PPP loan application on

behalf of GUARDIAN that was ultimately funded by WebBank.

17. | ReadyCap Lending, LLC (“ReadyCap”) is an approved non-bank SBA lender
and received one PPP loan application on behalf of GUARDIAN. ReadyCap funded one

PPP loan to GUARDIAN.

18. Citizens Bank, N.A. (“Citizens Bank”) is a federally insured financial
institution with headquarters in Rhode Island. Citizens Bank is an approved SBA lender.
Citizens Bank received one PPP loan application on behalf of ECLIPSE. Citizens Bank

funded one PPP loan to ECLIPSE.

19. Canandaigua National Bank & Trust (“Canandaigua National Bank”) is a

federally insured financial institution with headquarters in New York.

OVERVIEW OF THE PPP SCHEME

20. The government is investigating wire fraud and money laundering violations
committed by RECH. There is probable cause to believe that beginning in or about April

2020, to in or about February 2021, RECH fraudulently obtained three PPP loans.

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Specifically, RECH submitted three false and misleading PPP loan applications and

supporting documentation to SBA approved lenders.

21. The first PPP loan was in the name of ECLIPSE and the second PPP loan was
in the name of GUARDIAN. RECH misrepresented the number of employees, amount of
payroll, and ownership and/or management on the applications. The loan applications were
submitted via the internet using wire communications. Reliance on the false and misleading
information caused the PPP loan proceeds to be disbursed by the lenders to GUARDIAN
and ECLIPSE. RECH successfully obtained the proceeds from the two PPP loans totaling
$127,500 in April of 2020. The PPP loan proceeds disbursed to GUARDIAN were sent via
interstate wire. RECH subsequently withdrew the proceeds of both PPP loans in currency in

structured transactions below $10,000 in order to avoid federal reporting requirements’.

22. A third PPP loan in the name of GUARDIAN was recently applied for and
funded by an SBA approved lender. The PPP loan proceeds in the amount of $150,000 were
disbursed on or about February 18, 2021. The proceeds of this PPP loan were deposited to a
bank account in the name of GUARDIAN. The entirety of those funds was promptly
transferred to an account in the name of ECLIPSE at a different financial institution. A
portion of the PPP loan proceeds was subsequently withdrawn from the ECLIPSE bank
account in currency in structured transactions below $10,000 in order to avoid federal

reporting requirements.

' Pursuant to Title 31, United States Code, Section 5313(a), and regulations there under, including 31 C.F.R.
Sections 103.22, 103.27 and 103.28, domestic financial institutions (including but not limited to banks, Money
Service Businesses (MSB), and issuers, sellers or redeemers of money orders) are generally required to prepare
and submit a report, known as a Currency Transaction Report (CTR), for each deposit, withdrawal, exchange
of currency or other payment or transfer, by, through, or to such financial institution which involves a
transaction in currency of more than $10,000 with the Internal Revenue Service within fifteen days following
the date of the transaction.

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FIRST TWO SBA PPP LOANS

23. In April 2020, RECH applied for two fraudulent PPP loans on behalf of the
two entities he controls. RECH successfully obtained PPP loan proceeds based on fraudulent

information as follows:

Business Lending Institution | Loan Amount Approximate Date of
Name Amount Disbursed | Loan Application
GUARDIAN | WebBank / PayPal | $37,500 $37,500 April 27, 2020
ECLIPSE Citizens Bank $90,000 $90,000 April 26, 2020

24. Records were obtained from WebBank, PayPal, and Citizens Bank. The
records show that both PPP loan applications were submitted via the internet using interstate
wire communications. The internet submissions originated in New York and were received

and/or processed by the lender’s computer servers located outside of New York.

25. Both PPP loan applications were submitted to the lenders from Internet
Protocol (“IP”) address 172.101.154.241. Charter Communications, Inc. is an internet,
telephone, and cable service provider. Records from Charter Communications, Inc. report
that IP address 172.101.154.241 was assigned to an account in the name of RECH with
service at the 5 HILLTOP. The PPP loan application for GUARDIAN submitted to PayPal
would have been processed by computer servers located in Arizona, Nevada, or Utah. PayPal
does not use computer servers located in New York. The PPP loan application for ECLIPSE

submitted to Citizens Bank was received by computer servers located in Rhode Island.

26. |The PPP applications both report that ECLIPSE and GUARDIAN have an

address of 5 HILLTOP. The applications made the following false representations:

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Business Primary | Average Monthly | Number of
Contact Payroll Employees
GUARDIAN | RECH $15,000 4
ECLIPSE RECH $36,000 ” 10-50

27. PayPal and Citizens Bank received multiple fraudulent IRS Forms 941,
Employer’s Quarterly Federal Tax Returns, to support the payroll expenses reported on the

PPP loan applications. The Forms 941 made the following false representations:

Business Time period Number of Wages, tips, Federal
employees and other income tax
who compensation withheld...
received
wages...
ECLIPSE April, May, June 3 $75,000 $7,500
2019
GUARDIAN | April, May, June 3 $75,000 $7,500
2019
ECLIPSE July, August, 3 $75,000 $7,500
September 2019
GUARDIAN July, August, 3 $75,000 $7,500
September 2019
ECLIPSE October, 4 $95,000 $9,500
November,
December 2019
GUARDIAN October, 4 $95,000 $9,500
November,
December 2019
ECLIPSE January, 4 $95,000 $9,500
February, March
2020
GUARDIAN January, 4 $95,000 $ 60
February, March
2020

* The application breaks the figure into “Average monthly salaries, wages, commissions to
employees” of $30,000; “Average monthly payments for vacation, parental, family,
medical, or sick leave” of $3,000; and “Average monthly allowance for dismissal or
separation” of $3,000.

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28. With the exception of January, February, March 2020, the Forms 941 for
GUARDIAN and ECLIPSE for each respective time period report identical figures for the
number of employees; wages, tips and other compensation; and federal income tax withheld.
All the Forms 941 report 5 HILLTOP as the business’ address and are signed by RECH with
the title of “manager.” As set forth below, records from IRS and NYS DOL establish that
the statements regarding payroll expenses and number of employees made on the PPP

applications and the Forms 941 are false.

29. Both PPP loan applications state either “no” or “false” to the following
question: “Is the Applicant or any owner of the Applicant an owner of any other business, or
have common management with, any other business?” These responses on the PPP loan
applications are false since RECH is the owner and/or manages both GUARDIAN and
ECLIPSE. The PPP loan application for GUARDIAN reports that RECH is “Director” and
100% owner of GUARDIAN. The PPP loan application for ECLIPSE reports that RECH is
the manager of ECLIPSE. As discussed later in this affidavit, records from Arizona
Corporation Commission, Internal Revenue Service, and financial institutions report that

RECH has ownership and/or manages GUARDIAN and ECLIPSE.

THIRD SBA PPP LOAN

30. | Records were obtained from SBA regarding a third PPP loan. The records
show that a PPP loan in the name of GUARDIAN was applied for through ReadyCap. The
records further show that GUARDIAN falsely reported on the PPP loan application that it
has average monthly payroll expenses of $60,000. As set forth below, records from IRS and

NYS DOL establish that the statement regarding payroll expenses is false.

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31. On March 3, 2021, your Affiant spoke with a representative of ReadyCap. The
representative stated that GUARDIAN applied for a PPP loan and loan proceeds of $150,000
were disbursed to GUARDIAN on or about February 18, 2021 based on the false loan

application.

32. On March 3, 2021, your Affiant spoke with a representative of Canandaigua
National Bank. The representative stated that Canandaigua National Bank account x2739 in
the name of GUARDIAN received a $150,000 deposit from ReadyCap on or about February
19, 2021. As detailed later in this affidavit, RECH is the sole signer on account x2739. The
representative further stated that two checks were subsequently drawn on account x2739. The
first check in the amount of $50,000 payable to ECLIPSE cleared on or about February 21,
2021. The second check in the amount of $100,000 payable to ECLIPSE cleared on or about
February 26, 2021. The representative stated that both checks were negotiated at Citizens
Bank. The representative further stated that ReadyCap tried to reverse the $150,000 deposit

but was unsuccessful since the funds had already been removed from account x2739.

33. On March 3, 2021, your Affiant spoke with a representative of Citizens Bank.
The representative stated that two checks were recently deposited in Citizens Bank account
x8144 in the name of ECLIPSE. As detailed later in this affidavit, RECH is the sole signer
on account x8144. A $50,000 check from Canandaigua National Bank account x2739 was
deposited on or about February 22, 2021. A $100,000 check from Canandaigua National
Bank account x2739 was deposited on or about February 25, 2021. As detailed later in this
affidavit, $57,000 was subsequently withdrawn from Citizens Bank account x8144 in currency

in transactions less than $10,000 in order to avoid federal reporting requirements.

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OTHER RECORDS

ARIZONA CORPORATION COMMISSION
34. | Records from Arizona Corporation Commission report that RECH and C.F.
are the Directors of GUARDIAN. RECH signed the Articles of Incorporation as the
Incorporator. Annual Reports for GUARDIAN were filed with Arizona Corporation
Commission for 2018 (filed on or about October 15, 2018), 2019 (filed on or about October
2, 2019), and 2020 (filed on or about October 2, 2020). The Annual Reports report that RECH
is “President/CEO” of GUARDIAN and bear the electronic signature of RECH. 5

HILLTOP is listed as the address for RECH and C.F.

35. Records from Arizona Corporation Commission report that RECH is the sole
member of ECLIPSE. The Articles of Organization state that the member(s) will manage

ECLIPSE and is signed by RECH.

INTERNAL REVENUE SERVICE

36. As previously detailed, IRS Forms 941, Employer’s Quarterly Federal Tax
Returns, were submitted to the PayPal and Citizens Bank to support the payroll expenses
reported on the PPP loan applications. Records for ECLIPSE and GUARDIAN were
requested from IRS the years 2019 and 2020. IRS has no record of ECLIPSE or GUARDIAN

filing any tax returns, including Forms 941, for 2019 or 2020.

37. Records obtained from IRS report that GUARDIAN was granted tax exempt
status under Internal Revenue Code Section 501(c)(3) on or about June 26, 2018. The IRS
determination letter was sent to “GUARDIAN OF HUMANITY, INC. C/O MICHAEL

RECH” at 5 HILLTOP. An IRS Form 990, Return of Organization Exempt from Income

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Tax, for GUARDIAN was filed for 2018 with the IRS on or about March 6, 2019. The Form
990 reports GUARDIAN ’s address as 5 HILLTOP and is signed by RECH with the title of

“officer.”

38. | Records obtained from IRS report that RECH filed a federal income tax return

for the year 2019. The tax return reports wage, salary, tips, etc. income of $0.

NEW YORK DEPARTMENT OF LABOR

39. |New York requires employers to report their payroll and pay unemployment
insurance contributions. Employers report this on New York Form NYS-45, Quarterly
Combined Withholding, Wages Reporting and Unemployment Insurance Return. General
business employers are required to begin reporting payroll and pay unemployment insurance
contributions when remuneration exceeds $299. Non-profit employers are required to begin
reporting payroll and pay unemployment insurance contributions when remuneration
exceeds $999. Records for ECLIPSE and GUARDIAN were requested from NYS DOL.
NYS DOL has no records for or returns filed for ECLIPSE or GUARDIAN. As previously
detailed, IRS Forms 941, Employer’s Quarterly Federal Tax Returns, were submitted to the
lenders to support the payroll expenses reported on the PPP loan applications. The payroll
reported on the PPP loan applications and the Forms 941 far exceed the thresholds requiring

the filing of Forms NYS-45 with NYS DOL.

RECIEPT AND DISPOSITION OF PPP LOAN PROCEEDS

40. As set forth below, the proceeds of the two initial PPP loans were deposited to
accounts in the name of ECLIPSE at Citizens Bank and GUARDIAN at Canandaigua
National Bank. A review of the records from Citizens Bank and Canandaigua National Bank

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reveal that ECLIPSE and GUARDIAN did not have transactions consistent with the business
enterprises claimed in the PPP loan applications. The records do not show any payments
consistent with payroll being made from the accounts. Prior to receiving the proceeds of the
PPP loans, the accounts engaged in minimal transactions. Once the proceeds of the PPP
loans were deposited to the accounts, almost all of the funds were promptly withdrawn in
currency in a series of transactions below $10,000. A review of a personal bank account in
RECH’s name at Citizens Bank shows subsequent deposits of cash to fund payments to credit

cards and utility companies.

CANANDAIGUA NATIONAL BANK —- ACCOUNT x2739 —- GUARDIAN

41. Records obtained from Canandaigua National Bank report that account
number x2739 was opened in the name of GUARDIAN on or about July 5, 2019. RECH is
the sole signer on account x2739, and the records report RECH’s title as “Director.” The

signature card and statements report GUARDIAN’s address is 5 HILLTOP.

42. — Records for account x2739 show that from the account opening on or about July
5, 2019 through April 28, 2020, the only transactions were a $100 currency deposit and three (3)
electronic transactions with the description “PAYPAL VERIFYBANK...” totaling $0.38. The
balance of account x2739 on April 28, 2020 was $100. The $37,500 PPP loan proceeds funded
by WebBank was deposited to account x2739 on April 29, 2020. The deposit was in the form of
an interstate wire transfer originating from WebBank’s account at Zions Bankcorporation, N.A.
Zions Bankcorporation, N.A. is headquartered in Utah. Based on my training and experience
along with my review of the bank records for GUARDIAN that show little to no financial

transactions prior to the deposit of the PPP loan proceeds, it is your affiant’s belief that

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GUARDIAN is a non-operational company as it does not appear to generate any sources of
income or business expenses. Additionally, the PPP loan proceeds were obtained under false
pretenses as outlined above and are proceeds of a specified unlawful activity (“SUA”), namely

wire fraud in violation of Title 18, United States Code, Section 1343.

43. Records for account x2739 further show that $37,300 in fraudulently obtained PPP
loan proceeds, which are proceeds of a SUA, namely wire fraud, were subsequently withdrawn
in currency by RECH ina series of transactions in amounts below $10,000 in an attempt to avoid
the CTR reporting requirements, which is all in violation of Title 1956(a)(1)(B)(@ii). The table

below summarizes the currency withdrawals:

Date Amount
05/01/2020 — Friday $ 9,000
05/05/2020 — Tuesday $ 9,000
05/07/2020 — Thursday $ 9,000
05/12/2020 — Tuesday $ 9,000
05/20/2020 — Wednesday | $ 1,300
TOTAL $37,300

As previously stated, RECH has sole signatory authority for account x2739. Records from
Canandaigua National Bank confirm that RECH conducted the currency withdrawals on

May 1, 2020; May 5, 2020; May 7, 2020; and May 12, 2020.

44. The aforementioned transactions and a $15 fee were the only transactions for
account x2739 from the account opening on or about July 5, 2019 through July 22, 2020. The
balance of account x2739 as of July 22, 2020 was $285. The fact that RECH immediately
withdrew the entire amount of the PPP loan proceeds in cash further supports your affiant’s belief
that GUARDIAN is a non-operational company and RECH obtained the PPP loan proceeds

under false pretenses.

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45. As previously discussed, your Affiant spoke with a representative of Canandaigua
National Bank on March 3, 2021. The representative stated that account x2739 received a
$150,000 deposit from ReadyCap on or about February 19, 2021. The deposit is in the form of
an Automated Clearing House (“ACH”) deposit. The PPP loan proceeds deposited from
ReadyCap were obtained under false pretenses as outlined above and are proceeds of a SUA,
namely wire fraud, in violation of Title 18, United States Code, Section 1343.

46. |RECH subsequently utilized the fraudulently obtained PPP funds, which
represent proceeds of a SUA, namely wire fraud, deposited to the bank account of
GUARDIAN, to conduct two monetary transactions in excess of $10,000 in violation of Title
18 U.S.C § 1957. Specifically, two checks were subsequently drawn on account x2739 and
negotiated at Citizens Bank. The first check in the amount of $50,000 payable to ECLIPSE
cleared on or about February 21, 2021. The second check in the amount of $100,000 payable
to ECLIPSE cleared on or about February 26, 2021.

CITIZENS BANK — ACCOUNT x8144 — ECLIPSE

Records obtained from Citizens Bank report that account number x8144 was opened
in the name of ECLIPSE on or about September 9, 2013. RECH is the sole signer on account
x8144. Statements from February 1, 2016 to August 31, 2020 report ECLIPSE’s address is 5

HILLTOP.

47. Records for account x8144 reflect minimal transactions from January 2019
through May 3, 2020. The activity consists of fee rebates and currency deposits totaling $30.
The balance of account x8144 on May 3, 2020 was $45. The $90,000 PPP loan proceeds funded
by Citizens Bank was deposited to account x8144 on May 4, 2020. The deposit is in the form of

an Automated Clearing House (‘““ACH”) deposit.
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48. Based on my training and experience along with my review of the bank records
for ECLIPSE that show little to no financial transactions prior to the deposit of the PPP loan
proceeds, it is your affiant’s belief that ECLIPSE is a non-operational company as it does not
appear to generate any sources of income or business expenses. Additionally, the PPP loan
proceeds deposited to Citizens Bank in April of 2020 were obtained under false pretenses as
outlined above and are proceeds of a SUA, namely wire fraud, in violation of Title 18, United

States Code, Section 1343.

49. —_ Records for account x8144 further show that $90,000 in fraudulently obtained PPP
loan proceeds, which are proceeds of a SUA, namely wire fraud, were subsequently withdrawn
in currency by RECH ina series of transactions in amounts below $10,000 in an attempt to avoid
the CTR reporting requirements, which is all in violation of Title 1956(a)(1)(B)(@ii). The table

below summarizes the currency withdrawals:

Date Amount
05/05/2020 — Tuesday $ 9,000
05/06/2020 — Wednesday | $ 9,000
05/07/2020 — Thursday $ 9,000

05/08/2020 — Friday $ 9,000
05/09/2020 — Saturday $ 4,000
05/12/2020 — Tuesday $ 9,000

05/13/2020 — Wednesday | $ 4,500
05/13/2020 — Wednesday | $ 4,500
05/14/2020 — Thursday $ 9,000

05/15/2020 — Friday $ 9,000
05/19/2020 — Tuesday $ 4,500
05/20/2020 — Wednesday | $ 9,500
TOTAL $90,000

RECH conducted the aforementioned withdrawals. RECH has sole signatory authority for

account x8144. New York State Department of Motor Vehicles issued RECH a Client

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Identification Number 265961626. This is the same identification number listed in the
Citizens Bank records for the individual that conducted the withdrawals. The fact that RECH
immediately withdrew the entire amount of the PPP loan proceeds in cash further supports

your affiant’s belief that ECLISPE is a non-operational company.

50. As previously discussed, your Affiant spoke with a representative of Citizens
Bank. The representative stated that two checks were recently deposited in Citizens Bank
account x8144 in the name of ECLIPSE. A $50,000 check from Canandaigua National Bank
account x2739 was deposited on or about February 22, 2021. A $100,000 check from
Canandaigua National Bank account x2739 was deposited on or about February 25, 2021.
As detailed above the two checks totaling $150,000 from Canandaigua National Bank
Account x2739 originated from the fraudulently obtained PPP loan RECH obtained through

ReadyCap, which represent proceeds of a SUA, namely wire fraud.

51. Records for account x8144 further show that $57,000 of the $150,000 in
fraudulently obtained PPP loan proceeds, which are proceeds of a SUA, namely wire fraud, were
subsequently withdrawn in currency by RECH in a series of transactions in amounts below
$10,000 in an attempt to avoid the CTR reporting requirements, which is all in violation of Title

1956(a)(1)(B)(ii). The table below summarizes the currency withdrawals:

Date Amount
02/25/2021 — Thursday $ 9,500
02/26/2021 — Friday $ 9,500
02/27/2021 — Saturday $ 9,500
03/01/2021 — Monday $ 9,500
03/02/2021 — Tuesday $ 9,500
03/03/2021 — Wednesday | $ 6,000
03/03/2021 — Wednesday | $ 3,500
TOTAL $57,000

17

Case 6:21-mj-04044-MWP Document 1 Filed 03/19/21 Page 19 of 21

As previously discussed, your Affiant spoke with a representative of Citizens Bank. The
representative stated that Citizens Bank would be freezing the $93,306.34 balance of account

x8144.

52. As previously outlined, the PPP loan proceeds, which are proceeds of a SUA,
namely wire fraud, were deposited to Canandaigua National Bank account x2739 in the name of
GUARDIAN and Citizens Bank account x8144 in the name of ECLIPSE. The chart below
summarizes the PPP loan proceeds that were deposited, subsequently withdrawn in currency by
RECH in a series of transactions in amounts below $10,000 in an attempt to avoid the CTR
reporting requirements, which is in violation of Title 1956(a)(1)(B)(ii), and monetary

transactions conducted by RECH in excess of $10,000, which is in violation of Title 18 U.S.C

§ 1957.
Date Account(s) Amount | Description
04/29/2020- | Canandaigua National $37,500 PPP loan proceeds
Wednesday Bank x2739 deposited from WebBank

05/01/2020— | Canandaigua National $9,000 Cash withdrawal
Friday Bank x2739

05/04/2020-— | Citizens Bank x8144 $90,000 PPP loan proceeds
Monday deposited from Citizens
Bank

05/05/2020— | Canandaigua National $9,000 Cash withdrawal
Tuesday Bank x2739

05/05/2020-— | Citizens Bank x8144 $9,000 Cash withdrawal
Tuesday

05/06/2020 - Citizens Bank x8144 $9,000 Cash withdrawal
Wednesday

05/07/2020- | Canandaigua National $9,000 Cash withdrawal
Thursday Bank x2739

05/07/2020 - Citizens Bank x8144 $9,000 Cash withdrawal
Thursday

18

Case 6:21-mj-04044-MWP Document 1 Filed 03/19/21 Page 20 of 21

05/08/2020-— | Citizens Bank x8144 $9,000 Cash withdrawal
Friday

05/09/2020-— | Citizens Bank x8144 $4,000 Cash withdrawal
Saturday

05/12/2020- | Canandaigua National $9,000 Cash withdrawal
Tuesday Bank x2739

05/12/2020 - Citizens Bank x8144 $9,000 Cash withdrawal
Tuesday

05/13/2020-— | Citizens Bank x8144 $4,500 Cash withdrawal
Wednesday

05/13/2020-— | Citizens Bank x8144 $4,500 Cash withdrawal
Wednesday

05/14/2020-— | Citizens Bank x8144 $9,000 Cash withdrawal
Thursday

05/15/2020-— | Citizens Bank x8144 $9,000 Cash withdrawal
Friday

05/19/2020-— | Citizens Bank x8144 $4,500 Cash withdrawal
Tuesday

05/20/2020- | Canandaigua National $1,300 Cash withdrawal
Wednesday Bank x2739

05/20/2020-— | Citizens Bank x8144 $9,500 Cash withdrawal
Wednesday

02/19/2021 -— | Canandaigua National $150,000 | PPP loan proceeds
Friday Bank x2739 deposited from ReadyCap
On or about Canandaigua National $50,000 Check transfer of PPP loan
02/22/2021- | Bank x2739 / Citizens proceeds from x2739 to
Monday Bank x8144 x8144

On or about Canandaigua National $100,000 | Check transfer of PPP loan
02/25/2021-— | Bank x2739 / Citizens proceeds from x2739 to
Thursday Bank x8144 x8144

02/25/2021-— | Citizens Bank x8144 $9,500 Cash withdrawal
Thursday

02/26/2021-— | Citizens Bank x8144 $9,500 Cash withdrawal
Friday

02/27/2021 - | Citizens Bank x8144 $9,500 Cash withdrawal
Saturday

19


Case 6:21-mj-04044-MWP Document1 Filed 03/19/21 Page 21 of 21

03/01/2021- | Citizens Bank x8144 $9,500 Cash withdrawal
Monday

03/02/2021- | Citizens Bank x8144 $9,500 Cash withdrawal
Tuesday

03/03/2021-— | Citizens Bank x8144 $6,000 Cash withdrawal
Wednesday

03/03/2021-— | Citizens Bank x8144 $3,500 Cash withdrawal
Wednesday

CONCLUSION

53. Based on the forgoing, the undersigned respectfully submits that there is probable

cause to believe that RECH committed the TARGET OFFENSES.

ALAN ROTH
Special Agent
Internal Revenue Service

Affidavit submitted electronically by email in

.pdf format. Oath administered, and contents

and signature, attested to me as true and accurate
telephonically pursuant to Fed.R.Crim. P. 4.1 and 4(d)
on this 19 day of March, 2021.

(arian W Payson

MARIAN W. PAYSON
United States Magistrate Judge

20

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