Criminal Complaint and Affidavit — United States v. Cindi Ellis Denton (S.D. Fla.)

Record facts

U.S. District Court for the Southern District of Florida · No. 0:21-mj-06149-PMH · Doc. 1 · 2021-03-16 · Docket on CourtListener

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Case 0:21-mj-06149-PMH   Document 1   Entered on FLSD Docket 03/16/2021   Page 1 of 15

AFFIDA VIT
1, Sarah Conlon, being Grst duly sworn, hereby depose and state as follows:
INTRODUCTION AND AGENT BACKGROUND
l make this Aftsdavit in support of a criminal com plaint charging CIN DI ELLIS
DENTON (ûVDENTON'' or bûDefendanf'), with wire fraud, bank fraud, and attempt and conspiracy
to commit wire fraud and bank fraud, in violation of l 8 U.S.C. jj l 343, 1344, 1349, and 2, from
on or about June 1 , 2020, to at least on or about September 30, 2020, in the Southern District of
Florida, and elsewhere (the tû-l-arget Offenses'').
Defendant has participated in a conspiracy and scheme to obtain by fraud m illions
Of dollars in forgivable loans through the Paycheck Protection Program (t1PPP'') and other
government programs. Defendant committed the Target Offenses with a person now cooperating
with the investigation (IICHS 2'') and others. Defendant obtained a fraudulent PPP loan for her
own company, Emerald Jade Solutions, Inc. (ûçEmerald Jade''), with CHS 2 providing falsified
documents and submitting the application on Defendant's behalf in exchange for a kickback from
the loan proceeds. To intlate the size of these PPP loans, and the corresponding kickbacks, the
conspirators relied on a variety of false statements, including by subm itting falsified bank
statements and payroll tax forms. For example, the conspirators used nearly identical versions of
the same fabricated bank statements, recycled in the PPP applications for m ultiple com panies, with
m inor changes.
The conspirators in the scheme planned or prepared at least 90 fraudulent
Based on the evidence investigators have reviewed
applications, most of which were submitted.
to date, CHS 2, Defendant, and their co-conspirators applied for PPP Ioans that are together worth
more than $34 m illion, with at Ieast approximately 42 of those loans approved and funded for a
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total of approximately $17.6 million.Certain of those loan recipients then wired a kickback of
25% of the fraudulent Ioan proceeds, to an account
varying amounts, often approximately
controlled by CHS 2.
l am a Special Agent with the United States Department of the Treastlty, lnternal
Revcnue Service, Criminal Investigation ('kIRS-CI'') and have been employed in this capacity since
November 20 l 8. l am presently assigned to the M iam i Field Office. M y dutics as a Special Agent
include the investigation of possible criminal violations of the lnternal Revenue Code (Title 26 of
the United States Code), the Bank Secrecy Act (Title 3 1 of the United States Code), and the Money
Laundering Statutes (Title 1 8 of the United States Code). I graduated from the Criminal
Investigator Training Program at the Federal Law Enforcement Training Center in M arch 2019
and the Special Agent Investigative Techniques program at the National Criminal lnvestigation
Training Academy in June 20l 9. ln these two programs, I studied a variety of Iaw enforcement
tactics and criminal investigator techniques relating to tax and financial crimes. Since becoming
an IRS-CI Special Agent, I have personally investigated and assisted in investigations relating to
the lnternal Revenue Laws and financial crimes.Recently, I have been assigned to work with the
U.S. Department of Justice and other Iaw enforcement partners, including the Federal Bureau of
Investigation and the Small Business Administration Office of Inspector General, to investigate
possible fraud associated with the stim ulus and economic assistance programs created by the
federal government in response to the COVID-l9 pandemic.
The facts in this Affidavit come from my personal observations, my training and
experience, and information obtained from other mem bers of 1aw enforcement and from witnesses.
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This Affidavit is intended to show merely that there is suftscient probable cause and does not set
forth all of my knowledge about this matter. 1
PROBABLE CAUSE
The Pavcheck Protection Prozram
6. 
The Coronavirus Aid, Relief, and Economic Security ('LCARES'') Act was a federal
Iaw enacted in or around M arch 2020 and designed to provide emergency financial assistance to
the m illions of Americans who are suffering the economic effects caused by the COVlD-19
pandemic. One source of relief provided by the CARES Act was the authorization of forgivable
loans to small businesses forjob retention and certain other expenses, through a program referred
to as the Paycheck Protection Program (%iPPP'').
In order to obtain a PPP Ioan, a qualifying business submit-ted a PPP loan
application, which was signed by an authorized representative of the business. The PPP loan
application required 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. ln the PPP Ioan application (Small Business Administration ('$SBA'') Form 2483), the small
business (through its authorized representative) was required to provide, among other things, its:
(a) average monthly payroll expenses; and (b) number of employees. These figures were used to
calculate the amount of money the small business was eligible to receive under the PPP. In
addition, businesses applying for a PPP Ioan were required to provide documentation confirming
their payroll expenses.
1 
The conduct and charges described in this Affidavit are part of a Iarger investigation that
is being conducted in this District and elsewhere. As a result, not aIl numbered sources and
anonymous individuals and entities are described in every filing. I have included in this Affsdavit
only those individuals and entities I have deemed necessary to explain the particular facts set forth
here.
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A PPP Ioan application was processed by a participating lender. If a PPP Ioan
application was approved, the participating lender funded the PPP Ioan using its own monies.
W hile it was the participating lender that issued the PPP loan, the loan was l 00% guaranteed by
the SBA. Data from the application, including information about the borrower, the total amount
of the loan, and the Iisted number of employces, was transm itted by the lender to the SBA in the
course of processing the Ioan.
PPP loan proceeds were required to be used by the business on certain permissible
expenses payroll costs, interest on mortgages, rent, and utilities. The PPP allowed the interest
and principal on the PPP loan to be entirely forgiven if the business spent the loan proceeds on
these expense items within a designated period of time and used a defined portion of the PPP loan
proceeds on payroll expenses.
Financial Institutions
1 0. 
This Affsdavit references tsnancial institutions that are headquartered in the United
States and insured by the Federal Deposit Insurance Corporation, including Bank l , Bank 3, Bank
5, Bank 6, and Bank 7.
The Scheme to Obtain Fraudulent PPP Loans
On or about May l3, 2020, Phillip J. Augustin (ûiAugustin'') and CHS 2 worked
together to submit a fraudulent PPP loan application on behalf of a company owned by Augustin.
Augustin submitted a PPP loan of $84,5 l 5 to a federally insured bank (hereinafter ûûBank 3''),
through a third-party company processor (hereinafter 'sBank Processor 1'1). The application
included bank statements that are clear forgeries, and CHS 2 has adm itted that the application was
based on docum ents that he falsified for Augustin.
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12. 
Following the success of that initial fraudulent PPP application, Augustin and CHS
2 began to work on obtaining more and larger PPP loans for Augustin's associates and others,
generally for several hundred thousand dollars for each Ioan, up to as much as approximately $1 .24
m illion.
On June 25, 2020, investigators arrested CHS 2 and another person now
cooperating with the investigation (SSCHS 3'') and executed search warrants at their residences.
Following their arrests, CHS 2 and CHS 3 chose to cooperate with the investigation in the hope of
obtaining favorable consideration in connection with their pending charges. CHS 2 was
interviewed on that day, and has continued to cooperate with the investigation after obtaining
counsel. CHS 3 has also been interviewed numerous times and has continued to cooperate with
the investigation after obtaining counsel. M ost of the statements related herein have been
corroborated by records obtained from third parties or recovered from CHS 2's and CHS 3's
respective electronic devices.
Based on the evidence investigators have reviewed so far, CHS 2 and Augustin
collectively coordinated applications for Ixlàlà loans that are together worth more than $34 million
dollars. The evidence also shows many more PPP Ioans were attempted but rejected by banks or
their partners, or were planned and prepared, but not submitted before CHS 2's arrest. The
evidence suggests that all
Defendant's loan application.
or nearly aII of those loan applications were fraudulent, including
Investigators have obtained many other PPP loan applications that CHS 2 has
admitted he submitted as pal4 of this scheme, based on falsified docum ents, and have also obtained
draft documents used or intended to be used in those applications or others. These applications all
follow the same pattern of fraud many with obviously counterfeit February 2020 bank
Page 5 of 14
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statements, and al1 with fabricated IRSForms 94 1 (titled, kcEmployer's Quarterly Federal Tax
Return-') with the same indicia of fraud found in Augustin's initial application but generally with
even larger innated payroll numbers, thus yielding much Iarger loans.2 CHS 2 has explained to
investigators that the figures in the Forms 94 1 were the product of a form ula that allowed him to
start with a target loan amount, and then -iback into'' the payroll figures on the form. He explained
how he used figures that would produce an average monthly payroll for 2019 that, when multiplied
by 2.5, would yield the requested loan amount. In turn, the number of employees reported was
chosen based on fsctional payroll figures, chosen to avoid an average employee salary that might
raise suspicion.
1 6 .
CHS 2 has also explained that he tried to use bank statements showing that the
company had a large balance. Because so few companies had such a statem ent, and likely also
because it was easier than keeping track of their true statements, CHS 2 repeatedly submitted near-
replicas of the same falsified bank statements.
statement each from Bank l , Bank 6, and Bank 7.
changed only the account num ber and the account holder's name and address, such that each
In particular, CHS 2 appears to have recycled one
In recycling a statement, CHS 2 generally
version of the statement had identical figures and line items throughout the statem ent.
A review of records for bank accounts controlled by CHS 2 at Bank 5 confirmed
CHS 2's adm issions that he received numerous kickbacks, often of approximately 25% of the
amount of the Ioans, and that he regularly wired Augustin a share of that kickback in the early
stages of the scheme. CHS 2 explained that they were doing so many loans by the end of M ay that
2 
Some loan applications also included voided checks that appear to be falsified, such as a
purported check from a bank (KiBank 55-) that appears to have been produced on a computer and,
as the subject line of an email transmitting the voided check read, ticonverted to PDFg,1'' rather
than a scan of an authentic check.
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he changed course, instead wiring larger lump sums, collecting Augustin's shares of the kickbacks
for multiple Ioans in one wire.
lnvestigators are still receiving and analyzing records, but based on a preliminary
analysis, as of August 3 1 , 2020, investigators had identified a total of approxim ately $2,367,765.82
in transfers to CHS 2's accounts from entities that each obtaincd a sizablc PPP loan and that were
identified in the PPP Gles seized from CHS 2's and another co-conspirator's residences, as
described below or from individuals associated with those entities.
l9. 
The PPP Ioans identified above as implicated in the foregoing kickback payments
to CHS 2 represent only a fraction of the overall scheme. ln executing search warrants at the
respective residences of CHS 2 and CHS 3, federal agents found stacks of paper printed out and
organized by entity, containing an iiintake form,'' fabricated Forms 94 l , or both for each entity.
The intake fonns contained Gelds for the information needed to fabricate the documents and f5ll
out other aspects of the PPP application: identif#ing information about the owner and company,
as well as bank account information for receiving the loan. A section at the end marked ûûBELOW
IS OFFICE USE ONLY'' included blank fields for the kiNumber of Employeesg,l'' itM onthly
Payroll Expensel,l'' and SSSBA Loan Pre-Approval Amount.'' Between CHS 2's and CHS 3's
residences, investigators seized paper files for PPP Ioan applications for approximately 80 different
entities.
20. 
Data obtained from the SBA showed additionalPPP loan applications from
had been referred to CHS 2 by
additional entities that text message and email records show
members of the conspiracy.
According to CHS 3, he met DENTON through unrelated business ventures in early
2020. CHS 3 subsequently contacted DEN TON regarding the PPP conspiracy described above.
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The Fraudulent PPP Loan Disbursed to DEN TON 'S Comnanv: Emerald Jade Solutions. Inc.
According to California's Secretary of State website, Emerald Jade was established
as a California corporation on or about December 1 l , 2013. DENTON is Iisted as the company's
Chief Financial Officer and Director. Emerald Jade has not made any fslings with the California
Secretary of State since 20 1 9 and its status is Iisted as ttsuspended-' on California's Secretary of
State website. The mailing address of Emerald Jade included on California's Corporations
Division website is the same address that appeared on DENTON'S California Department of M otor
Vehicles records at the time DENTON subm itted, or caused the submission of, the PPP loan
application for Emerald Jade.3
On or about June l , 2020, DENTON sent CHS 3 a completed version of the kiintake
form'' from DENTON'S email address of 'kcindi@emeraldjadesolutions.com.'' Under the Personal
Information heading, DENTON included her social security number and date of birth, and
DENTON used the email address Stcindi@emeraldjadesolutions.com'' and the phone number 949-
633-2618 (DENTON also used both this email address and this phone number to communicate
with CHS 3 in connection with the fraudulent PPP Ioan for Emerald Jade).
24. 
On or about June 2, 2020, a PPP loan application package on behalf of Emerald
Jade was electronically submitted to Bank 3 through Bank Processor 1 . lnternet protocol (b%IP'')
session records from Bank Processor l for the Ioan application show that a computer with an IP
address (ending in l 70) associated with CHS 2's residence in Broward County, Florida, logged
into the Emerald Jade loan account on or about June 2, 2020. The session records also reveal four
additional Iogins by the same IP address (ending in 170) on the same day, and two Iogins on or
3 
DENTON updated her records with the California Department of M otor Vehicles in
August 2020; the updated address on DENTON 'S Department of M otor Vehicles record is the
address in which DENTON currently resides in Eastvale, California.
Page 8 of 14
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about June 3. 2020 by a computer with an IP address (ending in l 52) associated with DENTON'S
residence. The session records show three additional Iogins by the IP address (ending in l 52)
associated with DENTON'S residence. Records for DENTON 'S account at Bank 7 show that
DENTON also used the IP address ending in l 52 to access DENTON'S account online and conduct
online transfers.
The loan application package included, among other documents: (1 ) four purported
Forms 941 for each quarter of 2019 in the name of Emerald Jade; (2) a purported company bank
statement for Emerald Jade from Bank 7; and (3) a Borrower Application Form for a PPP loan
request of $491 ,310 for Emerald Jade based upon a purported average monthly payroll of $196,524
for 24 employees (the 'ûPPP Application Form'').
26. 
The purported Forms 94 I subm itted with Emerald Jade's PPP loan application
package show quarterly payroll of over $589,574.04 each quarter, for 24 employees. That
quarterly payroll fsgure yielded the PPP Ioan application's ûûAverage M onthly Payroll'' figure of
$1 96,524, which determined the $491 ,3l 0 amount of the Ioan. Each Form 94l was signed by hand
with the name élcindi Denton'' as the company owner, and also listed ûûcindi Denton'' as the
' designee and as a 'ipaid Preparer,'' although DENTON is not a paid tax preparer.4
company s
The purported Forms 94 l subm itted with Emerald Jade's PPP loan application
package follow the same style and pattern, including the indicia of fraud, as the many other Forms
94 l that CHS 2 acknowledged that he helped create and subm it in the course of the scheme, as
CHS 2 adm itted during interviews with Iaw enforcement that CHS 2 signed many of the
Form s 941 included in the PPP applications. The signature on Emerald Jade's Forms 94l included
with its PPP applications resembles a signature that CHS 2 identified as one that CHS 2 forged.
Page 9 of 14
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described above.s The purported Forms 94 l included the contact information and identifiers that
DENTON had included on the tûintake form'' that DENTON emailed to CHS 3.
M oreover. lRS records show that Emerald Jade did not, in fact, file any Forms 94 l
for any quarter of 20 l 9 or the first quarter of 2020. Likewise, State of California Labor and
W orkforce Development Agency records demonstrate that Emerald Jade has not filed to withhold
California employment taxes for 2018, 20l 9, or Quarters 1 and 2 of 2020.
29. 
The purported company bank statement for Emerald Jade submitted with its PPP
loan application package, which was submitted in electronic format as a PDF, is a clear forgery.
First, it purports to be a February 2020 bank statem ent from Bank 7,' however, based upon bank
records from Bank 7, the statement for the actual Emerald Jade Bank 7 account is dissimilar from
the PDF statement attached to the PPP application. Second, according to the PDF f5le iûproperties,''
the February 2020 statement was created using i'PDFFILLER,'' a program used to edit electronic
PDF files, and was klmodified using i'I-ext.'- The metadata shows the f5le was created on or about
M ay 30, 2020 and modified on or about June 2, 2020. Third, the statement is a recycled version
As noted above, DENTON was Iisted as both owner and paid preparer. Dozens of other
Form s 94l subm itted in this scheme evidence the same error. CHS 2 has adm itted that these
documents share that feature because he misunderstood the form, and he (or someone following
his instructions) prepared the Forms 94 1 at issue. The content of the forms also indicate
falsification. Emerald Jade submitted four identical 94l s the forms include wage Ggures that are
identical down to the penny in reported figures). They also evidence a pattern of payroll spending
that is likely false: each of the quarters shows significant increases from the first to second to third
month of the quarter. For each identical form, the same figures are reported for the tax liability
incurred in the Grst month of each quarter, the same figure for the second m onth of each quarter
(increased substantially from the first month), and the same figure for the third month of the quarter
(increased substantially from the second month). The result is that the company reports a perfectly
repeating cycle of ascending payroll costs within each quarter. CHS 2 has explained that this was
due to a formula he used, allocating different percentages of the quarterly payroll tax liability to
each m onth of each quarter.
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of the same falsifsed Bank 7 statement used in other fraudulent applications submitted as part of
this schem e.
The PPP Application Form required the borrower to electronically initial and/or
sign (via Docusign, as explained below)a number of Sicertifications,'' including'. (1) that the
applicant business was in operation on February l 5, 2020 and had employees to whom it paid
salaries/payroll taxes or paid independent contractors, as reported on Formts) 1099; (2) that the
funds would be used to retain workers, maintain payroll, or make modgage/interest/lease/utility
payments as specified by the PPP rule and that unauthorized use could result in charges for fraud;
and (3) that the information provided in the application, including in supporting documents, was
'itrue and accurate in aII material respects,'' and that making false statements could result in
crim inal charges.
Based on the false and fraudulent representations made in the PPP Application
Form and supporting documents, Bank Processor 1 approved the PPP loan application for Emerald
Jade. As explained in greater detail below, Bank 3 wired approximately $49 l ,310 in loan proceeds
to Emerald Jade on or about June 3, 2020.
R ecords Show that D EN TON  Viewed and Sizned the Ppp Application Form
In connection with this investigation, law enforcement obtained records from
Docusign pursuant to 1 8 U.S.C. j 2703(d). Based on a review of the records, law enforcement
believes DENTON signed the PPP application for Emerald Jade using Docusign.
Specifically, the Docusign records show that, on June 2, 2020, at 9:42:25 a.m .,
Bank Processor l sent the PPP Application Form to the Docusign user 'ûcindi Denton'' at the email
address ikcindi@emeraldjadesolutions.com.''6 As mentioned above, DENTON used the email
6 
Based on information provided by CHS 3, the application was created by CHS 2.
Page 1 1 of 14
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address ikcindi@emeraldjadesolutions.com'' to communicate with CHS 3 in connection with the
fraudulent PPP loan for Em erald Jade.
Based upon these records from Docusign, it is reasonable to infer that DENTON
viewed the PPP Application Form on or about June 2, 2020 at 9:42:43 a.m ., and DENTON signed
the PPP Application Form on or about June 2, 2020 at 9:43:33 a.m .
Records Confirm DEN TON 'S Receipt of the PPP Loan and Further Demonstrate DEN TON 'S
Knowinz Participation in the Fraud
part of its investigation, Iaw enforcement obtained bank records as well as
communications between CHS 3 and DENTON, including text messages and emails provided by
CHS 3 to law enforcement.
Bank records show that Emerald Jade had an account at Bank 7 ending in *7366
('iBank 7 *7366'*). Customer information for the Bank 7 *7366 account shows that DENTON was
the sole signatory on the account and identifies DENTON 'S title as 'ksecretary.'' Based on my
review, the signature on this account appears to match the signature on the PPP Ioan application.
On or about June 2, 2020, CHS 3 sent a text message reminding DENTON to check
her email and DENTON responded, 
do. Thank 
Later that day, from the
cindi@emeraldjadesolutions.com account, DENTON forwarded an email to CHS 3 with the
subject, ilYour PPP funds are on the way.''
The next day, the Bank 7 *7366 account received via bank wire approximately
$49 1 ,310 in loan proceeds from Bank 3 as a result of Emerald Jade's fraudulent PPP Ioan
application.
3 9. On or about June 4, 2020, DENTON wired an approximately $98,262 kickback
payment, which equaled approximately 20 percent of the proceeds of Emerald Jade's PPP loan,
from the Bank 7 *7366 account to an account at Bank 7 controlled by CHS 3. Two weeks Iater,
Page 12 of 14
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on or about June l 6, 2020, DENTON sent CHS 3 an invoice purporting to show that Emerald Jade
owed CHS 3 $98,000 for consulting services. CHS 3 has told Iaw enforcement that DENTON told
him he needed to sign the document and that he recognizes the number as the kickback payment
that DENTON made to him for the Ioan.
Based on my review of the bank records discussed above, DENTON has spent a
significant amount of the remaining PPP loan proceeds. Between on or about June 4, 2020 and on
or about June 26, 2020, in addition to the wire to CHS 3, DENTON sent additional wires totaling
approximately $175,860, including a $1 50,000 wire to a personal checking account at Bank 7
ending in 6999. M oreover, it does not appear that any of the proceeds of the PPP loan were used
for legitimate business expenses or payroll related expenditures to any employee other than
DENTON herself.
Law enforcement observed video surveillance from Bank 7 that shows DENTON
conducting cash withdrawals at a Bank 7 location on or about June 4, 2020 and June 8, 2020. The
cash withdrawals were each in the amount of $9,900.
,4 Recorded Call wlth CHS 3 Contlrms DEN TON 'S A-at/w/'ltz Participation in the Fraud
As part of the investigation, and at law enforcem ent's direction, CHS 3 placed a
controlled call to DENTON on or about July 2, 2020, by calling the ntlmber he had previously
used to text m essage with DENTON . During the call, DENTON said that DENTON used the PPP
loan funds to pay 'kbills,'' including ûûcredit cards and cars and rents and a1I that kind of stuff
.'' CHS
3 asked DENTON how many employees were included on Emerald Jade's PPP application.
DENTON stated, %:W e only have one paid employee.'-CHS 3 responded, kkl understand that but
you know that we bullshitted and said you had, like, 20, so you gotta help me here.'' DENTON
replied, :tOh, God . . . I don't know how to do that, l don't know what you want me to do.''
Page 13 of 14
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()I)N-I-()N
(-f)N (7 l .t.! S I ()N
Fl.J RTH E R Yt)lJ R A FF l 4 N ' T SAY ETH NAU, f xv HT.
Cx
Sarah (
..,t)n10n
S pcc i al z'Ngen t
IItS-C l
Attestcd to by the applicant in accordancc
yvi th the rcquircnlcnts of Fcd. R. C-rin'l. P . 4 . l
by . ' Ae. o11 tllis 1(. y of Mlarch, 202 1 ,
at 
)v -#.z. sz-
)
HONORA LE PATRICK M . IIUNT
UNITED STATES M AGISTRATE JUDGE
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Our copy

gov.uscourts.flsd.588994.1.0.pdf

Original

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