Court filing

Statement of Offense — United States v. Elias Eldabbagh

Filed April 8, 2022 in U.S. v. Eldabbagh; one of 4 filings from this case.

Record facts

Court	U.S. District Court for the District of Columbia
Filed	2022-04-08

U.S. District Court for the District of Columbia · No. 1:21-cr-00523-TNM · Doc. 30 · 2022-04-08 · Docket on CourtListener

Full text

Case 1:21-cr-00523-TNM Document 30 Filed 04/08/22 Page 1of15

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA,
Vv. Criminal No. 1:21-CR-523-TNM
ELIAS ELDABBAGH,
Defendant.

STATEMENT OF OFFENSE

The United States of America, by and through its attorney, the United States Attorney for
the District of Columbia, and the defendant, ELIAS ELDABBAGH (hereinafter,
“ELDABBAGH)”), agree and stipulate to the facts presented below. These facts are presented for
the purpose of demonstrating there is a factual basis for ELDABBAGH?’s guilty plea pursuant to
Federal Rule of Criminal Procedure 11, and do not represent all of the evidence that could have
been presented at a trial. At all times relevant to this Statement of Offense:

Entities

l. Alias Systems, LLC, was a Virginia Limited Liability Company formed by
ELDABBAGH in Virginia on August 31, 2018 and controlled by ELDABBAGH.

2. COMPANY | was a business consulting company based in Washington, D.C.
COMPANY | had no affiliation with Alias Systems, LLC.

Persons

3) Defendant ELIAS ELDABBAGH (“ELDABBAGH7”) was a resident of Arlington
Virginia and Washington, DC.

4. C.S. was a resident of the Reno, Nevada area and Fair Oaks, California area. C.S.

was never employed by or affiliated with Alias Systems, LLC.
Case 1:21-cr-00523-TNM Document 30 Filed 04/08/22 Page 2 of 15

By R.S. was the Chairman of the Board and Co-Founder of COMPANY 1. R.S. was
never employed by or affiliated with Alias Systems, LLC.

6. D.M. was the President of COMPANY |. D.M. was never employed by or affiliated
with Alias Systems, LLC.

7. C.C. was a Partner of COMPANY 1. C.C. was never employed by or affiliated with
Alias Systems, LLC.

Bank Accounts

8. US Bank Account #9292 was held in the name of Alias Systems, LLC, and
ELDABBAGH.

9. E*Trade Accounts #1226, #6025, #1941, #1960, #7562, #2256, and #1952 were
financial accounts held in the name of ELIAS ELDABBAGH.

10. Morgan Stanley Account #0816 and #0817 were financial accounts held in the
name of ELIAS ELDABBAGH.

Il. Webull Financial #8010 was a financial account held in the name of ELIAS
ELDABBAGH.

12. Robinhood #0177 was an investment account held in the name of ELIAS
ELDABBAGH.

13. Citibank #7483 was a financial account held in the name of ELIAS
ELDABBAGH.

14. Tastyworks #2616 was a financial account held in the name of ELIAS

ELDABBAGH.
Case 1:21-cr-00523-TNM Document 30 Filed 04/08/22 Page 3 of 15

The Small Business Administration

5) The United States Small Business Administration (“SBA”) was an executive
branch agency of the United States government that provided support to entrepreneurs and small
businesses. The mission of the SBA was to maintain and strengthen the nation’s economy by
enabling the establishment and viability of small businesses and by assisting in the economic
recovery of communities after disasters.

The Paycheck Protection Program

16. The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was a federal
law enacted in or around March 2020 and designed to provide emergency financial assistance to
the millions of Americans suffering the economic effects caused by the COVID-19 pandemic. One
source of relief provided by the CARES Act was the authorization of billions in forgivable loans
to small businesses for job retention and certain other expenses, through a program referred to as
the PPP.

17. | To obtain a PPP loan, a qualifying business must have submitted a PPP loan
application, which was signed by an authorized representative of the business. The applicant of a
PPP loan was required to acknowledge the program rules and make certain affirmative
certifications in order to be eligible to obtain the PPP loan. In the PPP loan application, the
applicant must state, 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 loan must have
provided documentation showing their payroll expenses. To qualify for eligibility, businesses that

applied for a PPP loan needed to be in operation as of February 15, 2020.
Case 1:21-cr-00523-TNM Document 30 Filed 04/08/22 Page 4 of 15

18. A PPP loan application must have been processed by a participating financial
institution (the lender). If a PPP loan application was approved, the participating financial
institution funded the PPP joan using its own monies, which were 100% guaranteed by the Small
Business Administration (“SBA”). Data from the application, including information about the
borrower, the total amount of the loan, and the listed number of employees, was transmitted by the
lender to the SBA in the course of processing the loan.

19. PPP loan proceeds must have been used by the business for 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 certain percentage of the PPP
loan proceeds on payroll expenses.

20. In or around December 27, 2020, the Economic Aid to Hard-Hit Small Business,
Nonprofits and Venues Act provided additional funding for the PPP and extended the application
deadline to March 31, 2021. The act enabled borrowers to take a second draw PPP loan under the
same general terms as their first PPP loan up to a maximum loan amount of $2 million. The act
reopened the program to borrowers who did not previously receive a first draw PPP loan. To be
eligible for a second draw, borrowers had to employ no more than 300 employees, demonstrate a
25% reduction in gross receipts during a calendar quarter in 2020, and have expended the full
amount of their initial PPP loan. Allowable expenses were expanded to include worker protection
costs related to COVID-19, uninsured property damage costs caused by looting or vandalism
during 2020, and certain supplier costs and expenses for operations. The expansion applied

retroactively to first draw PPP loans that had not been forgiven by the SBA.
Case 1:21-cr-00523-TNM Document 30 Filed 04/08/22 Page 5 of 15

The Economic Injury Disaster Loan Program

21. An Economic Injury Disaster Loan (“EIDL”) was an SBA-administered loan
designed to provide assistance to small businesses that suffer substantial economic injury as a
result of a declared disaster. An EIDL helped businesses meet necessary financial obligations that
could have been met had the disaster not occurred. It provided relief from economic injury that the
disaster caused and permitted businesses to maintain a reasonable working capital position during
the period that the disaster affected.

Dar EIDL funds were issued directly from the United States Treasury and applicants
applied through the SBA via an online portal. The EIDL application process collected information
concerning the business and the business owner, including information as to the gross revenues
for the 12 months prior to the disaster; the cost of goods sold; and information as to any criminal
history of the business owner. Applicants electronically certified that the information provided was
accurate and they were warned that any false statement or misrepresentation to the SBA or any
misapplication of loan proceeds may result in sanctions, including criminal penalties.

23. In March 2020, due to the COVID-19 pandemic, the SBA issued an EIDL
declaration. The declaration made EIDL loans available nationwide to small businesses to help
alleviate economic injury that COVID-19 caused. EIDL loans were usually limited to a maximum
amount of $2 million. However, during the COVID-19 pandemic, EIDL loans were limited for a

period of time to $150,000.
Case 1:21-cr-00523-TNM Document 30 Filed 04/08/22 Page 6 of 15

Theft of Identifying Information

24. In approximately December 2018, ELDABBAGH stole the identification card and
social security card of C.S., who was known to ELDABBAGH and living with him at that time.

25. In or between February 2020 and April 2020, ELDABBAGH stole corporate
income tax and employment tax returns and other sensitive corporate documents from Company
1, which documents also contained personal identifying information of R.S., D.M., and C.C.

The Defendant’s PPP Loan and EIDL Fraud Scheme

26. Between at least July 2020 and May 2021, in the District of Columbia and
elsewhere, ELDABBAGH knowingly devised, intended to devise, and participated in a scheme
and artifice to fraudulently obtain more than $31 million, in connection with materially false
applications for PPP and EIDL funds, with the intent to defraud and with knowledge of the
scheme’s fraudulent nature (“the Wire Fraud Scheme” and/or the “scheme to defraud”).

27. |ELDABBAGH filed false and fraudulent applications for PPP loans and EIDL
funds in the name of Alias Systems, LLC, using the stolen identities of C.S., R.S., C.C., and D.M.,
who had no knowledge of the applications and did not authorize the use of their identifying
information in support of the applications. In total, ELDABBAGH submitted at least 25 fraudulent
applications seeking more than $30,430,230 in PPP funds and at least four fraudulent applications
seeking $950,000 in EIDL funds for a total attempted loss of $31,380,230.47 that he was not
entitled to receive. In support of some of these fraudulent applications, ELDABBAGH submitted
identifying information of C.S., R.S., C.C., and D.M. and tax returns and payroll records that were
stolen from COMPANY | and fraudulently altered to appear to be tax returns and payroll records

of Alias Systems, LLC.
Case 1:21-cr-00523-TNM Document 30 Filed 04/08/22 Page 7 of 15

As part of his scheme to defraud, ELDABBACH filed the following false and fraudulent

PPP and EIDL applications:

$ 31,380,230.47

Case 1:21-cr-00523-TNM Document 30 Filed 04/08/22 Page 8 of 15

28.

Actual Loss

Based upon the false and fraudulent applications, the defendant caused the actual

loss of $2,385,000 from the following false applications:

LOAN
DATE | TYPE NAME LENDER AMOUNT

$ 2,385,000.00

Wires in Furtherance of the Scheme
29. On or about the dates set forth below, in the District of Columbia and elsewhere,

the defendant, ELIAS ELDABBAGH, for the purpose of executing and attempting to execute

the scheme to defraud, transmitted and caused to be transmitted by means of wire

communication in interstate commerce, the following writings, signs, signals, pictures, and

sounds:

Case 1:21-cr-00523-TNM Document 30 Filed 04/08/22 Page 9 of 15

DATE

DESCRIPTION

January 27, 2021

An interstate wire signal originating from the District of Columbia to
Lendio constituting a false and fraudulent PPP loan application in the
name of Alias Systems, LLC for $1,170,000.

January 28, 2021

An interstate wire signal originating from the District of Columbia to
Harvest Small Business Finance, LLC constituting a false and
fraudulent PPP loan application in the name of Alias Systems, LLC for
$1,170,000.

February 5, 2021

An interstate wire signal originating from the District of Columbia to
Newtek Small Business Finance constituting a false and fraudulent PPP
loan application in the name of Alias Systems, LLC for $1,120,000.

February 8, 2021

An interstate wire signal originating from the District of Columbia to
Zions Bank constituting a false and fraudulent PPP loan application in
the name of Alias Systems, LLC for $1,710,425.

February 12, 2021

An interstate wire signal originating from the District of Columbia to
ReadyCap Lending constituting a false and fraudulent PPP loan
application in the name of Alias Systems, LLC for $1,115,000.

Monetary Transactions in Criminally Derived Proceeds

30. On or about the dates listed below, in the District of Columbia, the defendant,

ELIAS ELDABBAGH, did knowingly engage and attempt to engage in the following monetary

transactions by, through, and to a financial institution, affecting interstate commerce, in

criminally derived property of a value greater than $10,000, such property having been derived

from a specified unlawful activity, that is, the proceeds of the Wire Fraud Scheme, in violation of

Title 18, United States Code, Section 1343, each such monetary transaction constituting a

separate count of this Indictment:

Case 1:21-cr-00523-TNM Document 30 Filed 04/08/22 Page 10 of 15

DATE MONETARY TRANSACTION

$45,000 wire transfer from US Bank account #9292 to Robinhood

August 12,2020 | count #0177

August 24, 2020 $68,129.48 check from US Bank account #9292 to Tesla Motors Inc.

1 *
February 19, 2021 $100,000 wire transfer from US Bank account #9292 to E*Trade

account #1226

February 23, 2021

$100,000 wire transfer from US Bank account #9292 to Morgan
Stanley account #0816

$100,000 wire transfer from US Bank account #9292 to E*Trade

Maren | 2021 account #7562

March 2, 2021 $100,000 wire transfer from US Bank account #9292 to Citibank
account #7483

March 4, 2021 $100,000 wire transfer from US Bank account #9292 to Morgan
Stanley account #0817

March 4, 2021 $100,000 wire transfer from US Bank account #9292 to E*Trade
account #2256

March 4, 2021 $100,000 wire transfer from US Bank account #9292 to E*Trade
account #1960

March 4, 2021 $100,000 wire transfer from US Bank account #9292 to E*Trade
account #1952

March 8, 2021 $100,000 wire transfer from US Bank account #9292 to E*Trade

account #6025

Case 1:21-cr-00523-TNM Document 30 Filed 04/08/22 Page 11 of 15

March 8, 2021 $50,000 wire transfer from US Bank account #9292 to Webull
Financial account #8010
; * *
March 16, 2021 $140,000 wire transfer from E*Trade account #1226 to E*Trade
account #1941
April 5, 2021 $15,000 wire transfer from US Bank account #4531 to Tastyworks
account #2616

Transactions in Cryptocurrency Purchased with Proceeds

31. In or between January 1, 2021 through May 31, 2021, ELDABBAGH converted
at least $288,000 of proceeds from the wire fraud scheme from fiat currency into multiple
cryptocurrencies using multiple cryptocurrency exchanges. ELDABBAGH proceeded to
transfer cryptocurrency between multiple wallets and to conduct speculative trading activity
involving numerous cryptocurrencies on multiple exchanges to both conceal the source,
ownership, and control of the cryptocurrency and speculate on market fluctuations in the price of
cryptocurrencies.

32. In or between January |, 2021 through May 31, 2021, ELDABBAGH used
Primetrust to convert $185,550.49 of fraud proceeds into cryptocurrency on Binance’s
cryptocurrency platform. ELDABBAGH used the fraud proceeds to conduct over 7,450
transactions involving at least 26 different cryptocurrencies.

33. In or between January 1, 2021 through May 31, 2021, ELDABBAGH converted
$92,367.82 of fraud proceeds into cryptocurrency using Crypto.com. ELDABBAGH used the
fraud proceeds to conduct over 2,000 transactions involving at least 43 different
cryptocurrencies. In addition to speculative trading activity, fraud proceeds were used to

complete approximately $68,000 of purchases using a linked debit card including but not limited

1]
Case 1:21-cr-00523-TNM Document 30 Filed 04/08/22 Page 12 of 15

to rent, hotels, dog boarding, attorney fees, food, ride shares, electronics, and other personal
expenses.

34, In or between March 1, 2021 through May 31, 2021, ELDABBAGH converted $
10,779.00 of fraud proceeds into cryptocurrency using BlockFi. ELDABBAGH used the fraud
proceeds to conduct approximately 30 transactions involving at least 5 different
cryptocurrencies.

Use of Identifying Information

35, On or about the dates listed below, in the District of Columbia, the defendant,
ELIAS ELDABBAGH, did knowingly transfer, possess, and use, without lawful authority, a
means of identification of another person during and in relation to a felony violation enumerated
in 18 U.S.C. § 1028A(c), to wit, 18 U.S.C. § 1343, knowing that the means of identification
belonged to another actual person, each such transfer, possession, and use being a separate count

of this Indictment:

DATE IDENTIFICATION
January 27, 2021 Name of C.S.
January 28, 2021 Name of C.S.
January 28, 2021 Name of C.C.
January 28, 202] Name of D.M.
January 28, 2021 Name of R.S.
February 5, 2021 Name of C.S.
February 5, 2021 Name of C.C.
February 5, 2021 Name of D.M.
February 5, 2021 Name of R.S.
February 8, 2021 Name of C.S.
February 8, 2021 Name of C.C.

Case 1:21-cr-00523-TNM Document 30 Filed 04/08/22 Page 13 of 15

February 8, 2021 Name of D.M.
February 8, 2021 Name of R.S.
February 12, 2021 Name of C.S.

Destruction or Removal of Property to Prevent Seizure

36. On or about May 25, 2021, and shortly thereafter, Special Agents of IRS Criminal
Investigation executed a search warrant at ELDABBAGH’s residence and executed several
seizure warrants on, among other things, ELDABBAGH’s bank accounts and investment
accounts, including his E*Trade and Webull accounts. At or about that time, the Special Agents
provided ELDABBAGH a copy of those seizure warrants.

37. Thereafter, among other things, ELDABBAGH contacted E*Trade dozens of
times in an attempt to transfer funds and to add a purported second owner to the E*Trade accounts,
all in order to transfer the funds seized by the special agents. ELDABBAGH further initiated and
caused a transfer on or about May 27, 2021 of securities from the seized Webull account to a
financial account that was not seized by the Special Agents. ELDABBAGH further initiated
purchases on his Morgan Stanley debit cards, on or about May 26, 2021, knowing those purchases
would be drawn on his seized Morgan Stanley accounts.

38. From in or about May 2021 through in or about July 2021, including on or about
May 27, 2021, in the District of Columbia, ELDABBAGH, after the seizure of funds, equities,
and financial instruments from accounts in the name of ELDABBAGH by Special Agents of
IRS Criminal Investigation, who were authorized to make such seizures pursuant to seizure
warrants issued by a Magistrate Judge in the District of Columbia, did knowingly attempt to
transfer and obtain such seized funds, equities and financial instruments for the purpose of

preventing and impairing the Government’s lawful authority to continue holding said property
Case 1:21-cr-00523-TNM Document 30 Filed 04/08/22 Page 14 of 15

under its lawful custody and control, in violation of Title 18, United States Code, Section

2232(a).

MATTHEW M. GRAVES
UNITED STATES ATTORNEY
D.C. BAR NO. 481052

By: ‘Jeaere OW Coemoat—
LESLIE A. GOEMAAT>
MA Bar No. 676695
Assistant United States Attorney
Fraud Section
U.S, Attorney’s Office
555 4th Street, N.W., Room 5840
Washington, D.C. 20530
Office: 202-803-1608
Leslie.Goemaat@usdoj.gov

Case 1:21-cr-00523-TNM Document 30 Filed 04/08/22 Page 15 of 15

Defendant’s Acceptance
I have read this Statement of Offense and carefully reviewed every part of it with my
attorney. | am fully satisfied with the legal services provided by my attorney in connection with
this Statement of Offense and all matters relating to it. I fully understand this Statement of Offense
and voluntarily agree to it. No threats have been made to me, nor am I under the influence of

anything that could impede my ability to understand this Statempat of. Offenselly

Ziat| Vt CZ?

Date ELIAS ELDABBAGH
Defendant

Defense Counsel’s Acknowledgment
I am Defendant ELIAS ELDABBAGH’s attorney. | have reviewed every part of this
Statement of Offense with him. It accurately and completely sets forth the Statement of Offense

agreed to by the defendant and the Office of the United States Attorney for the District of

Columbia.
z[24} 2 A ME
Date Eugene Gorokhov

Attorney for Defendant

File and source

File: gov.uscourts.dcd.234590.30.0.pdf
Size: 662,287 bytes
SHA-256: d74642ed296fba49f5c8f2d6ffc27d2d32c6b953f4c838f0f2e26a4fab90aace
Our copy: gov.uscourts.dcd.234590.30.0.pdf
Original: storage.courtlistener.com

Statement of Offense — United States v. Elias Eldabbagh

Record facts

Full text

File and source

Related records