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Government's Sentencing Memorandum — United States v. Cindi Ellis Denton (S.D. Fla.)

Filed September 24, 2021 in U.S. v. Denton; one of 12 filings from this case.

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Court	U.S. District Court for the Southern District of Florida
Filed	2021-09-24

U.S. District Court for the Southern District of Florida · No. 0:21-cr-60171-RS · Doc. 41 · 2021-09-24 · Docket on CourtListener

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
BROWARD DIVISION

CASE NO. 21-60171-CR-RS

UNITED STATES OF AMERICA

vs.

CINDI ELLIS DENTON,

Defendant.
__________________________________/

GOVERNMENT’S SENTENCING MEMORANDUM
The United States of America, by and through its undersigned counsel, hereby submits this
Sentencing Memorandum as to Defendant Cindi Denton (the “Defendant”). The Defendant is
presently set for sentencing before the Court on October 1, 2021 for her conviction by guilty plea
to one count of conspiracy to commit wire fraud, in violation of Title 18, United State Code,
Section 371. The offense stems from the Defendant’s receipt of a fraudulent Paycheck Protection
Program (“PPP”) loan of $491,310 on behalf of her company, Emerald Jade Solutions, Inc.
(“Emerald Jade”).
For the reasons set forth herein, the United States respectfully recommends that the Court
sentence the Defendant to a term of imprisonment of 18 months, to be followed by three years of
supervised release.1 A sentence of 18 months’ imprisonment represents the bottom of the
applicable range of the United States Sentencing Guidelines (the “Guidelines”) as calculated by

1 The United States is also seeking forfeiture of $377,883.91 and restitution, consistent with the Plea
Agreement [ECF No. 33 ¶¶ 13, 17]. On September 17, 2021, the United States filed an unopposed Motion
for Preliminary Order of Forfeiture [ECF No. 39]. The Defendant has also agreed to pay a special
assessment of $100 [ECF No. 33 ¶ 5].
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the United States Probation Office (“Probation”) in the draft of the Presentence Investigation
Report, disclosed August 27, 2021 [ECF No. 37] (the “PSR”), to which the government has no
objection. Furthermore, the sentence recommended herein by the United States will provide
punishment for the offense of conviction that is sufficient, but not greater than necessary, to
accomplish the purposes of sentencing set forth in 18 U.S.C. § 3553(a).
I.
FACTUAL BACKGROUND
In early 2020, as the COVID-19 pandemic spread across the country and disrupted
everyday life, causing illness, death and economic distress, the U.S. government assembled relief
programs to help those whose livelihoods were jeopardized. One of those programs was the PPP.
Against this backdrop, the Defendant and her co-conspirators participated in a scheme to obtain
by fraud millions of dollars in forgivable loans through the PPP, and have done so by Ross Charno
(referenced in the Information as “Individual 1”), James Stote (referenced in the Information as
“Individual 2”) and others. The Defendant obtained a fraudulent PPP loan for her own company,
Emerald Jade, with Stote providing falsified documents and submitting the application on the
Defendant’s behalf in exchange for a kickback from the loan proceeds. To inflate the size of these
PPP loans, and the corresponding kickbacks, the conspirators relied on a variety of false
statements, including by submitting falsified bank statements and payroll tax forms.
A.
The CARES Act
In March 2020, in response to the many challenges presented by the pandemic, Congress
passed the CARES ACT, Pub. L. 116-136, which created the PPP. The PPP authorized $349
billion in forgivable loans to small businesses to be used for payroll, mortgage interest, rent/lease
payments, or utilities. In April 2020, Congress authorized an additional $310 billion for PPP
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funding. These funds were designed to address the unprecedented crisis facing Americans—
especially business owners whose livelihoods were threatened by the public health emergency.
PPP funds were designed as a lifeline.
The program was designed to provide funds quickly and easily to qualifying individuals.
PPP loans were not dispensed through any government bureaucracy; funds were distributed by
banks who had existing relationships with many of the people in need. To apply, individuals
submitted an application to a participating financial institution along with supporting
documentation as to the business’s payroll expenses. The supporting documentation requirement
was minimal, and could be satisfied with one years’ worth of the company’s tax records. If a PPP
loan application was approved, the participating financial institution funded the PPP loan using its
own monies, which were 100% guaranteed by the Small Business Administration (“SBA”).
B.
Overview of Defendant’s Conduct
A more detailed recitation of the facts relating to the scheme are detailed in the Information
(ECF No. 20), Defendant’s factual proffer statement (ECF No. 34), and the PSR (ECF No. 37).
Beginning in May 2020 through in or around at least June 2020, the Defendant conspired
with Charno, Stote, and others to obtain by fraud a PPP loan on behalf of Emerald Jade, a
California corporation that the Defendant established in 2013.
In furtherance of the conspiracy, the Defendant caused the submission of a PPP loan
application on behalf of Emerald Jade that the Defendant knew contained materially false and
fraudulent representations, including both the number of employees that Emerald Jade had during
each quarter of 2019 and the amount of wages paid by Emerald Jade during each quarter of 2019.
Specifically, on June 2, 2020, Stote submitted at Defendant’s request, four (4) signed and dated
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four Internal Revenue Service (“IRS”) Forms 941 (titled, “Employer’s Quarterly Federal Tax
Returns”), that is, one for each quarter of 2019 (collectively, the “Forms 941”), each of which
falsely represented that Emerald Jade had 24 employees and paid $589,574.04 in quarterly wages,
tips, and other compensation, during each quarter of 2019. In fact, Emerald Jade had two
employees.
In addition to the Forms 941, Stote submitted at Defendant’s request, an electronically
signed PPP loan application form on behalf of Emerald Jade, which falsely represented that
Emerald Jade had 24 employees and an average monthly payroll of $196,524.
Bank Processor 1 approved and funded a PPP loan for Emerald Jade in the amount of
$491,310. Thereafter, the Defendant paid kickbacks to Charno in the amount of $98,262.
II.
PROCEDURAL HISTORY
On March 16, 2021, the Defendant was charged by complaint with conspiracy to commit
wire fraud and bank fraud, in violation of Title 18, United States Code, Section 1349, wire fraud,
in violation of Title 18, United States Code, Section 1343, and bank fraud, in violation of Title 18,
United States Code, Section 1344 [ECF No. 1]. Following waiver of indictment, on June 21, 2021,
the Defendant was charged in an Information with conspiracy to commit wire fraud, in violation
of Title 18, United States Code, Section 371 [ECF No. 20]. The Defendant pleaded guilty before
this Court to the Information pursuant to a written plea agreement on July 22, 2021 [ECF No. 31].
Sentencing is presently scheduled for October 1, 2021.
Case 0:21-cr-60171-RS Document 41 Entered on FLSD Docket 09/24/2021 Page 4 of 13

III.
SENTENCING GUIDELINES CALCULATIONS
As explained below, the United States submits that the Defendant’s Total Offense Level is
15. At Criminal History Category I, this produces an advisory Guidelines range of 18-24 months
of imprisonment pursuant to the Sentencing Table in Chapter 5, Part A of the Guidelines.
A.
The PSR Correctly Computes the Offense Level

As set forth in the PSR, Probation computes the Total Offense Level at 15 (PSR ¶ ¶ 44-
55). The United States concurs with the Offense Level computation in the PSR, which is as
follows:
Base Offense Level, § 2B1.1(a)(2)
6
Loss greater than $250,000 but less than $550,000, § 2B1.1(b)(1)(C)

12
Acceptance of Responsibility and Timely Notification § 3E1.1(a) and (b)
(3)
Total Offense Level
15

The Defendant has filed objections to the PSR, arguing that a mitigating or minimal role
adjustment is appropriated pursuant to USSG § 3B1.2(a) [ECF No. 38]. The Defendant also seeks
a downward variance and/or departure.
A. Defendant is Not Entitled to a Mitigating Role Adjustment.

The Defendant’s role in the offense to which she has accepted responsibility and pleaded
guilty does not warrant any mitigating role adjustment. The Defendant is being sentenced for
participating in a conspiracy to defraud the PPP program in which the Defendant caused the
submission of a fraudulent PPP loan application for her own company and received (and spent)
the proceeds of the fraudulent PPP loan. Her role in that offense is not minor. Rather, the
Defendant was central to the relevant conduct for which she is being held accountable. The
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Defendant was the one who received the proceeds of the fraudulent loan for her company and paid
a portion of those proceeds as kickbacks to her co-conspirators. While Stote, Charno, and others
working with them orchestrated and carried out the scheme, the Defendant ultimately is the person
who said yes to the fraud that her co-conspirators were offering. Put differently, but for the
Defendant’s role in the offense, the Defendant’s fraudulent PPP loan would not have existed.

The Defendant argues that her role should be viewed relative to the overall conspiracy and
the roles of Stote and Charno [ECF No. 38 at 2-4]. This is legally incorrect for at least two reasons.
First, the Defendant is not being held responsible for the entire loss resulting from the overall
conspiracy. This conspiracy involved over 90 fraudulent PPP loans and caused an intended loss
in the tens of millions of dollars. However, the Defendant is being held accountable only for the
role that she played as to her own loan and the resulting loss she directly caused therefrom. As the
Eleventh Circuit has explained, a defendant “cannot show that she is entitled to a role adjustment
by pointing to the broader scheme for which she was not held accountable. We only consider that
she played an essential role in the relevant conduct that was attributed to her.” United States v.
Milton-Browner, 496 F. App’x 979, 981 (11th Cir. 2012). Second, the fact that the Defendant had
a less significant role than the other participants does not entitle her to a mitigating role adjustment.
In other words, the fact that the Defendant did not have an aggravating role in the offense is not
grounds for a mitigating role. See id. at 982 (“the fact that [defendant] had a less significant role
than the other participants does not entitle her to a role adjustment.”) Based on the facts and of
this case, Probation correctly determined that no upward or downward role adjustment is warranted
for the Defendant.

Finally, as the Guidelines note, determining whether to apply a mitigating role is heavily
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dependent upon the facts of the particular case, and the Court should consider a list of non-
exhaustive factors set forth in Application Note 3(C) to § 3B1.2. One of those factors weighs
against a reduction for a mitigating role, in that the Defendant stood to benefit from the criminal
activity, and did benefit, having received the entirety of the fraudulent loan proceeds. This is not
a case where the Defendant performed certain tasks for others for which she did not benefit, nor is
the Defendant substantially less culpable than other participants whose primary role was applying
for and receiving a fraudulent PPP loan for themselves.

In sum, there is no legal or factual basis to apply a mitigating role adjustment under §
3B1.3. Accordingly, the Court should adopt the Guidelines computation recommended by United
States and Probation as set forth in the PSR.
IV.
CONSIDERATION OF SENTENCING FACTORS UNDER 18 U.S.C. § 3553(A)
Title 18, United States Code, Section 3553(a), enumerates several factors that the Court
shall consider in sentencing a defendant. As addressed in turn below, the 3553(a) factors relevant
to the Defendant support the sentence recommended by the United States.
A.
Nature and Circumstances of the Office
This was a serious offense. In 2020, as the COVID-19 pandemic spread across the country
causing illness, death and economic distress, the government created PPP loans to help small
business owners and their employees whose livelihoods were jeopardized. The Defendant took
advantage of the program by submitting a false application claiming to have employees and payroll
that did not exist. Her application was supported by false tax forms and a fictitious bank statement.
The Defendant’s willful participation in this serious criminal conduct warrants a sentence of
imprisonment within the advisory Guidelines range. The United States’ recommended sentence
Case 0:21-cr-60171-RS Document 41 Entered on FLSD Docket 09/24/2021 Page 7 of 13

of 18 months’ imprisonment, which is at the bottom of the Guidelines range, is sufficient but not
greater than necessary to accomplish this goal.
B.
History and Characteristics of the Defendant
The Defendant is a 63-year-old woman who owned and operated Emerald Jade between
2014 to 2018. [ECF No. 37 at ¶ 90]. Emerald Jade was a consulting and marketing company, and
the Defendant served as the Chief Financial Officer, Secretary, and sole Director. Id. The
Defendant is divorced and has three children. (Id. ¶ 73.) The Defendant has no criminal history
points. (Id. ¶ 58.)
The Defendant agreed to plead guilty before being indicted, and thus deserves credit for
accepting responsibility early and saving the government considerable resources in preparing for
grand jury and a trial. The sentence recommended by the United States reflects such acceptance
because it is within the Guidelines produced by the Offense Level that has been adjusted downward
by three levels for acceptance of responsibility pursuant to Section 3E1.1(a) and (b).
C.
Need for the Sentence to Afford Adequate Deterrence to Criminal
Conduct and Protect the Public from Further Crimes of the Defendant
The sentence in this case should address a need for both general and specific deterrence.
As to general deterrence, the Eleventh Circuit has explicitly stated that “general deterrence is an
important factor in white-collar cases, where the motivation is greed.” United States v. Hayes, 762
F.3d 1300, 1308 (11th Cir. 2014). As explained above, this case was motivated by greed at time
when millions of Americans were suffering from the economic impact of a global pandemic. As
the pandemic spread, so too did fraud related to the PPP program and other programs designed to
provide critical economic assistance—especially in the Southern District of Florida. The
government’s recommended sentence of imprisonment in this case is thus appropriate to provide
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both specific and general deterrence. Such a sentence will send a clear message to the Defendant
and other offenders that there are serious consequences for defrauding government pandemic relief
programs. Indeed, as the pandemic continues to impact small businesses, the PPP loan program
remains ongoing. Actors like the Defendant who seek to defraud these programs not only drain
the program of limited funding, they make it more difficult for administrators of government and
other relief programs to get aid to individuals that qualify for and need it. The Defendant’s
sentence will serve as a warning and deterrent to others inclined to exploit pandemic relief
programs.
Furthermore, a sentence at the bottom of the Guidelines range is sufficient to protect the
public from future crimes of this Defendant who has no prior convictions. With this sentence, the
government believes the risk of recidivism is low.
D.
Need for the Sentence to Avoid Unwarranted Sentencing Disparities
The sentence recommended by the United States will not create an unwarranted sentencing
disparity. There are two relevant points of comparison to avoid unwarranted sentencing
disparities: sentences associated with others convicted of PPP related fraud, and the sentences of
co-conspirators in this case. While a relatively small number of defendants have been sentenced
to date for offenses related to PPP fraud, judges of this Court and of other Districts have imposed
sentences with significant terms of imprisonment. See, e.g., United States v. Ioannis Kralievits,
Case No. 21-20157-CR-Altonaga (S.D. Fla. June 30, 2021) (sentencing cooperating defendant to
19-month term of imprisonment (following reduction pursuant to 5K1.1) in connection with two
fraudulent PPP loans totaling approximately $824,750); United States v. David Hines, Case No.
21-20011-CR-Cooke (S.D. Fla. May 12, 2021) (imposing 78-month term of imprisonment for
defendant responsible for a loss of $3.9 million resulting from multiple fraudulent PPP loans);
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United States v. Ganell Tubbs, 20-00193-CR-Miller (E.D. Ark.) (imposing 41-month term of
imprisonment for defendant responsible for loss of $1.9 million resulting from two fraudulent PPP
loans).
Four other conspirators in this scheme have been sentenced. On July 13, 2021, the court
sentenced co-conspirator Tiara Walker to one year and one day, three years of supervised release,
and ordered her to pay restitution and forfeiture. United States v. Walker, Case No. 20-cr-60159-
RAR (S.D. Fla., July 13, 2021). On July 27, 2021, co-conspirator Tonye Johnson was sentenced
by the court to 18 months in prison, three years of supervised release, and ordered him to pay
restitution and forfeiture. United States v. Johnson, Case No. 21-CR-60017-RKA (S.D. Fla.). On
September 24, 2021, the court sentenced Brian Arnold to time served, three years of supervised
release, including one year of home confinement, 600 hours of community service, and ordered
him to pay restitution and forfeiture. United States v. Arnold, No. 21-CR-20331 (S.D. Fla.).
Unlike defendants Walker and Johnson, the proceeds for Defendant Arnold’s fraudulent PPP loan
were immediately frozen before he could pay any kickbacks or otherwise spend the funds.
Defendants Walker, Johnson, and Arnold had no criminal history points; they each sought
fraudulent PPP loans for their own companies, for less than $500,000 each, and did not refer others
to the scheme.2 On July 30, 2021, the court sentenced Andre Clark to 33 months imprisonment,
three years of supervised release, and ordered him to pay restitution and forfeiture. United States
v. Clark, Case No. 21-CR-60029 (S.D. Fla.). Defendant Clark sought his own fraudulent PPP loan

2 Notably, however, defendant Johnson tested positive for marijuana during the presentence investigation
and attempted to conceal his marijuana use from Probation by using a device to provide urine from someone
other than the test taker.
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and also referred other conspirators to the scheme, and he did so with a significant criminal
history.3
The intended loss amount of $491,310 attributable to the Defendant is an important
measure of her relative culpability as compared to co-conspirators in a scheme involving over 90
fraudulent loan applications and over $34 million in intended losses. That is, the co-conspirators
who led and organized the scheme and were involved in preparing or submitting even more
fraudulent loan applications will be responsible for a greater intended loss amounts, and a
correspondingly higher advisory Guidelines range under Section 2B1.1. A sentence of 18 months
for this Defendant, who is being held responsible only for the loss associated with her fraudulent
loan, will provide a consistent framework for future sentences of co-conspirators in this conspiracy
whose Guidelines correlate to the losses for which they are directly responsible.
V.
RESTITUTION & FORFEITURE
Restitution is mandatory in this case pursuant to 18 U.S.C. § 3663A(a)(1). As set forth in
the Plea Agreement [ECF No. 33 ¶ 17], the United States and the Defendant have agreed that the
Defendant owes restitution in the amount of $377,883.91, which represents the loss to Bank 1 as
a result of the Defendant’s participation in the conspiracy; $113,426.09 of the fraudulently
obtained monies were recovered by the victim bank. Restitution is owed joint and severally with
the Defendant’s co-conspirators charged in at least the following related cases: United States v.
Stote, 20-4215-MJ-JDG (N.D. Ohio); United States v. Charno, 20-4216-MJ-JDG (N.D. Ohio).
*

3 Based primarily on his referrals, Clark’s loss amount for sentencing purposes was between $3,500,000
and $9,500,000. However, unlike Defendant Garcia, Clark ultimately received little money from the
scheme, which the sentencing court found to be a significant factor at sentencing.
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CONCLUSION

For the forgoing reasons, the United States respectfully recommends that the Court
sentence the Defendant to a term of imprisonment of eighteen (18) months, to be followed by a
term of supervised release of three (3) years. The United States also requests that the Court order
restitution, forfeiture, and a special assessment, consistent with the Plea Agreement [ECF No. 33]
and the point and authorities discussed herein.

Respectfully Submitted,

JUAN ANTONIO GONZALEZ
ACTING UNITED STATES ATTORNEY

By: /s/ Lindsey Lazopoulos Friedman
LINDSEY LAZOPOULOS FRIEDMAN
Assistant United States Attorney
Fla. Bar NO. 091792
400 North Miami Avenue
Miami, FL 33131
Tel: (305) 961-9168
Fax: (954) 695-0651
Email: lindsey.friedman@usdoj.gov

JOSEPH S. BEEMSTERBOER
ACTING CHIEF, FRAUD SECTION

By: /s/ Philip B. Trout
PHILIP B. TROUT
Trial Attorney, Fraud Section
U.S. Department of Justice
1400 New York Ave NW
Washington, DC 20530
Tel: (202) 616-6989
Fax: (202) 514-3708
Email: philip.trout@usdoj.gov

Case 0:21-cr-60171-RS Document 41 Entered on FLSD Docket 09/24/2021 Page 12 of 13

13
CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on September 24, 2021, I electronically filed the foregoing
with the Clerk of the Court using CM/ECF.

/s/ Philip Trout

Trial Attorney

Case 0:21-cr-60171-RS Document 41 Entered on FLSD Docket 09/24/2021 Page 13 of 13

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Government's Sentencing Memorandum — United States v. Cindi Ellis Denton (S.D. Fla.)

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