Court filing

Government's Memorandum in Aid of Sentencing — United States v. Elias Eldabbagh

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. 40 · 2022-04-08 · Docket on CourtListener

Summary

The government's memorandum in aid of sentencing in United States of America v. Elias Eldabbagh, Case No. 21-CR-523-TNM, in the U.S. District Court for the District of Columbia, filed August 18, 2022 as Document 40. It states that the defendant pleaded guilty on April 8, 2022 to one count of wire fraud under 18 U.S.C. § 1343 and one count of monetary transactions in criminally derived funds under 18 U.S.C. § 1957. The government alleges 29 fraudulent Paycheck Protection Program and Economic Injury Disaster Loan applications claiming more than $31 million, with an actual loss of $2,385,000. It reports that the plea agreement fixed offense level 31 with a range of 135 to 168 months, while the Probation Office calculated offense level 34 and 188 to 235 months. It asks for 168 months of incarceration, restitution of $2,452,050 and a forfeiture money judgment. The memorandum is 34 pages.

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Full text

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA

: CASE NO. 21-CR-523-TNM
ELIAS ELDABBAGH,

:
Defendant.

GOVERNMENT’S MEMORANDUM IN AID OF SENTENCING

The United States, by and through the undersigned counsel, respectfully submits its
Memorandum in Aid of Sentencing. As described herein, the Defendant has committed a
deplorable crime by seeking to exploit a once-in-a-century global health crisis for his own greed.
The Defendant filed 29 fraudulent applications claiming more than $31 million in Paycheck
Protection Program (“PPP”) loans and Economic Injury Disaster Loan (“EIDL”) funds, resulting
in the theft of $2,385,000 from these two critical federal programs designed to address the worst
economic impacts of the COVID-19 pandemic. To execute his fraud, the Defendant used numerous
stolen identities and stolen tax returns and financial records from a legitimate company. The
Defendant then laundered the proceeds of his fraud through more than a dozen bank accounts as
well as crypto-currency – executing more than 9,000 transactions in at least 43 different
cryptocurrencies. The Defendant used the stolen relief funds to make speculative financial
investments and to buy a Tesla and pay personal expenses such as rent, dog boarding, food, ride
shares, attorney’s fees electronics and clothing from boutique clothing stores. The Defendant
treated the PPP and EIDL programs as his personal piggy bank. His frauds showed a shocking
level of greed and disregard for the purpose of these funds, allocated for the most vulnerable
Americans and to ameliorate the devastating economic impacts of the COVID-19 pandemic.
The Defendant pleaded guilty on April 8, 2022, to one count of wire fraud in violation of
Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 1 of 34

18 U.S.C. § 1343 and one count of engaging in monetary transactions in criminally derived funds,
commonly known as expenditure money laundering, in violation of 18 U.S.C. § 1957. By plea
agreement, the parties agreed that the final offense level is 31, resulting in a guidelines range of
135 to 168 months’ imprisonment. Plea Agreement ¶ 5. The United States Probation Office
disagreed with the parties’ Guidelines’ calculations and calculated the offense level to be 34, PSR
¶ 82, and the advisory guidelines range to be 188 to 235 months’ imprisonment, PSR ¶ 170. Based
on the foregoing, the government respectfully requests that the Court sentence the Defendant to a
sentence of 168 months’ incarceration at the high end of the parties agreed-upon Guidelines range,
three years of supervised release, restitution in the amount of $2,452,050, and a forfeiture money
judgment.
I.
The Defendant’s PPP and EIDL Fraud
a. Background of the PPP and EIDL programs

In March 2020, the CARES Act authorized billions in forgivable loans to small businesses
for job retention and certain other expenses, through a program referred to as the Paycheck
Protection Program (“PPP”). Qualifying businesses with certain payroll expenses could obtain
forgivable PPP loans to be used by the business for permissible expenses—payroll costs, interest
on mortgages, rent, and utilities. Later legislation permitted borrowers to take a “second draw”
PPP loan under the same general terms. 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.

An Economic Injury Disaster Loan (“EIDL”) is an SBA-administered loan designed to
assist small businesses that suffered substantial economic injury as a result of a declared disaster.
Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 2 of 34

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.
Both programs are described in detail in the Statement of Offense, ¶¶ 16-23.
b. The Fraud Scheme
Alias Systems, LLC, was a Virginia limited liability company (“LLC”) formed by the
Defendant on August 31, 2018, and controlled entirely by the Defendant. Alias Systems, LLC had
no other employees, no office-space, and its sole corporate bank account appeared to receive no
revenue.
From July 2020 through May 2021, the Defendant filed at least 25 fraudulent PPP loan
applications in the name of Alias Systems, LLC seeking $30,430,230 in PPP loan funds and at
least four EIDL applications seeking $950,000 in EIDL funds. See Statement of Offense ¶ 27.
These applications were entirely false, and the vast majority of the applications were made using
the stolen identity of C.S. as the purported owner of Alias Systems, LLC. The Defendant has
admitted to stealing the identification card and social security card of C.S. – a prior friend of the
Defendant’s – when C.S. was living with the Defendant. Id. at ¶ 25. In addition to the fraudulent
use of C.S.’s name and social security number, the Defendant provided a photo of C.S.’s
identification card – also previously stolen from C.S. – to the lenders. In these applications, the
Defendant falsely claimed that Alias Systems, LLC had 49 employees and large monthly payroll.
The amounts varied, slightly, by application, but included claims, for example, that Alias Systems,
LLC had 49 employees and $648,000 in monthly payroll (Second Draw ReadyCap application).
In support of these fraudulent applications, the Defendant used tax returns and payroll records
Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 3 of 34

stolen from COMPANY 1, a legitimate Washington, DC based consulting firm, and doctored them
to appear to be the tax returns and payroll records of Alias Systems, LLC. The Defendant has
admitted to stealing corporate income tax, employment tax, and other sensitive corporate
documents from COMPANY 1. Id. at ¶ 25. The exact mechanism by which the Defendant stole
these sensitive financial documents is still unknown.
c. Total Intended Loss
In total, the Defendant attempted to steal more than $31 million. Id. ¶ 25.
DATE
TYPE
NAME
LENDER
LOAN AMOUNT
7/4/2020
PPP
Alias Systems, LLC
Cross River Bank
$ 823,958.33
7/15/2020
PPP
Elias Eldabbagh
US Bank
$ 98,958.00
7/19/2020
PPP
Alias Systems, LLC
US Bank
$ 989,583.00
7/27/2020
PPP
Alias Systems, LLC
Cross River Bank
$ 957,292.00
7/29/2020
EIDL
Alias Systems LLC
SBA
$ 500,000.00
7/29/2020
PPP
Alias Systems, LLC
Funding Circle
$ 1,125,000.00
7/30/2020
EIDL
Vicker
SBA
$ 150,000.00
7/30/2020
EIDL
Kyle Dunbar
SBA
$ 150,000.00
7/30/2020
PPP
Alias Systems, LLC
BlueVine (Fundera)
$ 1,132,083.54
8/3/2020
PPP
Alias Systems, LLC
Sandy Spring Bank
$ 1,241,632.50
8/8/2020
PPP
Elias Eldabbagh
BlueVine (BFNYC)
$ 1,075,020.21
1/18/2021
EIDL
Elias Eldabbagh
SBA
$ 150,000.00
1/21/2021
PPP
Alias Systems, LLC
WebBank via PayPal
$ 937,500.00
1/24/2021
PPP
Alias Systems, LLC
Cross River Bank
$ 1,033,956.00
1/27/2021
PPP
Alias Systems, LLC
Lendio, Inc.
$ 1,170,000.00
1/27/2021
PPP
Alias Systems, LLC
ReadyCap Lending , LLC
$ 1,170,000.00
1/28/2021
PPP
Alias Systems, LLC
Harvest Small Business
Finance, LLC
$ 1,170,000.00
2/4/2021
PPP
Alias Systems, LLC
First Bank of the Lake
$ 1,595,091.41
2/5/2021
PPP
Alias Systems, LLC
Newtek Small Business
Finance, LLC
$ 1,120,000.00
2/8/2021
PPP
Alias Systems, LLC
Zions Bank
$ 1,710,425.00
2/8/2021
PPP
Alias Systems, LLC
BlueVine
$ 1,022,249.48
2/17/2021
PPP
Alias Systems, LLC
US Bank
$ 1,750,000.00
2/26/2021
PPP
Alias Systems, LLC
ReadyCap Lending , LLC
$ 1,115,000.00
Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 4 of 34

3/1/2021
PPP
Alias Systems, LLC
ReadyCap Lending , LLC
$ 1,620,000.00
3/11/2021
PPP
Alias Systems, LLC
US Bank
$ 1,640,000.00
3/13/2021
PPP
Alias Systems, LLC
TD Bank
$ 1,620,000.00
3/18/2021
PPP
Alias Systems, LLC
Itria Ventures, LLC
(BIZ2Credit)
$ 1,854,165.00
4/23/2021
PPP
Alias Systems, LLC
ReadyCap Lending , LLC
$ 1,020,817.00
5/17/2021
PPP
Alias Systems, LLC
Itria Ventures, LLC
(BIZ2Credit)
$ 1,437,499.00

$ 31,380,230.47

d. Total Loss
The Defendant’s fraudulent applications resulted in the actual loss of $2,385,000,
comprised of two fraudulently issued PPP loans in the name of Alias Systems, LLC and a
fraudulent issued $150,000 EIDL in the name of Alias Systems, LLC.
DATE TYPE
NAME
LENDER
AMOUNT
7/29/20 EIDL
Alias Systems, LLC
SBA
$150,000.00
2/5/21 PPP
Alias Systems, LLC
Newtek Small Business Finance, LLC
$1,120,000.00
2/26/21 PPP
Alias Systems, LLC
ReadyCap Lending , LLC
$1,115,000.00

$2,385,000.00

Additionally, the SBA paid lenders fees to Newtek of $33,600 and to ReadyCap in the
amount of $33,450. The Defendant did not receive these amounts directly, but they are included
in the restitution calculation infra.
e. Efforts to Prevent Seizure
On May 25, 2021, IRS-CI agents executed a search warrant on the Defendant’s residence
and served seizure warrants for 18 bank accounts containing proceeds of the fraud. 1 The
Defendant was provided copies of those seizure warrants. In other words, he was well aware that

1 See 21-sz-4 (seizure warrant for US Bank); 21-sz-5 (seizure warrant for E*Trade); 21-sz-6 (seizure warrant for
Morgan Stanley); 21-sz-7 (seizure warrant for SoFi); 21-sz-8 (seizure warrant for WeBull); 21-sz-9 (seizure warrant
for Robinhood); 21-sz-10 (seizure warrant for CitiBank); 21-sz-11 (seizure warrant for PrimeTrust); 21-sz-12
(follow-on seizure warrant for SoFi).
Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 5 of 34

those accounts had been lawfully seized. Nonetheless, following the search warrant executed on
May 25, 2021, the Defendant made dozens of calls to E*Trade, attempting multiple methods of
transferring funds from his seized E*Trade accounts including adding a joint owner and initiating
ACAT transfers. The Defendant successfully initiated purchases on his Morgan Stanley debit
cards, on or about May 26, 2021, knowing that those purchases would be drawn on a seized
account. Finally, the Defendant successfully initiated and caused a transfer on May 27, 2021, of
securities from his seized Webull account to a financial account that was not seized by IRS-CI.
The Defendant has agreed, by plea agreement, that this conduct constitutes obstruction within the
meaning of U.S.S.G. § 3C1.1
f. Disposition and Laundering of the Proceeds
After successfully stealing $2,375,000 in PPP and EIDL funds, the Defendant engaged in
a truly dizzying array of financial transactions. After fraudulently receiving the PPP loans into a
US Bank account in the name of Alias Systems, the Defendant distributed the fraud proceeds to
multiple accounts at US Bank, E*Trade Morgan Stanley, CitiBank, Robinhood, SoFi, Webull,
PrimeTrust, and later TastyWorks.
Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 6 of 34

The fraudulently obtained $150,000 EIDL was used to purchase a $68,129 2020 Tesla
Model 3 and to further fund the Defendant’s Robinhood accounts.

2020 Tesla Model 3 purchased with fraud proceeds

Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 7 of 34

The Defendant used the fraud proceeds to invest in speculative stock options and to fund
purchases of cryptocurrency. The Defendant converted $185,550 of fraud proceeds into
cryptocurrency through Binance, using the proceeds to conduct over 7,450 transactions involving
at least 26 different cryptocurrencies. See Statement of Offense ¶ 32. The Defendant converted
another $92,367 of fraud proceeds into cryptocurrency using Crypto.com, using the proceeds to
conduct over 2,000 transactions involving at least 43 different cryptocurrencies. Id. at ¶ 33. In
addition to the speculative cryptocurrency trading, the defendant used a linked crypto debit card
to purchase rent, hotels, dog boarding, attorney fees, food, ride shares, electronics, and other
personal expenses. Id.

Additional fraud proceeds were traced to the following purchases including thousands of
dollars of payments in “P2P” transfers to third parties, home expenses, electronics, furniture,
clothing, and travel expenses.
P2P (Cash App, Zelle etc.)
$ 26,381.63
Best Buy
$ 25,182.96
Home Depot
$ 21,157.09
Walmart
$ 19,213.64
Rental Payments
$ 13,953.00
Razer.com
$ 12,169.77
eBay
$ 11,747.94
Apple
$ 4,274.46
Sofa Mania
$ 4,262.00
Microsoft
$ 3,710.00
Nasty Pig
$ 3,508.61
Timoteo
$ 2,527.93
Samsung
$ 2,279.00
UBIQUITI INC.
$ 1,800.00
Marriott
$ 1,250.00
Extra Space
$ 1,202.04
Rental Car Companies
$ 669.03
Residence Inn
$ 517.78
Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 8 of 34

UHaul
$ 410.00
Tobacco King and Vape
$ 174.87
Uber/Uber Eats/Lyft
$ 129.38

II.
Other Fraud Schemes
In addition to the Defendant’s $31 million scheme to defraud the PPP and EIDL programs,
the government’s investigation uncovered a multitude of additional fraud schemes perpetrated by
this Defendant. The Defendant objects to the inclusion of the following information in the PSR
because it is not “relevant conduct,” citing to U.S.S.G. § 1B1.3(a)(1)(A) and United States v.
McCants, 554 F.3d 155, 162 n.4 (D.C. Cir. 2009). The Defendant misapprehends the basis for the
Court’s appropriate consideration of this information. Section 1B1.3 of the Guidelines relates to
information used to calculate the Guidelines offense level. The government is not requesting that
the Court use the Defendant’s other fraud schemes in the calculation of the Defendant’s Guidelines
range. Rather, the government proffers the following information regarding the Defendant’s
uncharged fraud schemes for the Court’s consideration at sentencing. Both the Guidelines and
statute explicitly recognize that the Court is not limited in the information it may receive at
sentencing. “No limitation shall be placed on the information concerning the background,
character, and conduct of a person convicted of an offense which a court of the United States may
receive and consider for the purpose of imposing an appropriate sentence.” 18 U.S.C. § 3661.
Citing this statute, the Guidelines also direct that:
In determining the sentence to impose within the guideline range, or
whether a departure from the guidelines is warranted, the court may
consider, without limitation, any information concerning the
background, character and conduct of the defendant, unless
otherwise prohibited by law.

U.S.S.G. § 1B1.4.
Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 9 of 34

The Court may properly consider the uncharged fraud schemes described below at
sentencing. The scope and breadth of the Defendant’s continuous frauds support a guidelines
sentence at the top of the guideline range, consistent with Section 1B1.4’s mandate that any
information concerning the conduct of the defendant may be considered in determining the
sentence to impose within the guideline range.
a. Unemployment Fraud
From approximately March 2020 until at least May 2021, the Defendant used his own
personal identifying information and at least two stolen identities to orchestrate a scheme to
defraud at least five state employment agencies out of at least $173,931.00 of unemployment
insurance (UI) and Pandemic Unemployment Assistance (PUA) funds. In addition to the
fraudulent UI and PUA applications, the Defendant advised at least one other associate on how to
fraudulently apply for UI and PUA benefits.
i. Fraudulent Applications in the Name of Eldabbagh
The Defendant used his own personal information to submit applications for UI benefits to
at least five different state employment agencies and received approximately $126,088.00 in UI
benefits. Approximately $101,656.00 of these benefits were fraudulently obtained.
The Defendant was well aware that he could only lawfully claim UI benefits from one
state. During the application for UI benefits from the Virginia Employment Commission (VEC),
likely the only legitimate application the Defendant completed, the Defendant certified that he
acknowledged that he could only submit an application for UI benefits to one state.
Notwithstanding his acknowledgment of this warning, the Defendant proceeded to file initial UI
applications, ongoing PUA applications or receive benefits from the District of Columbia (DC),
Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 10 of 34

Maryland (MD), New York (NY) and Massachusetts (MA). The total amounts below do not
include unemployment assistance received from Virginia.
FRAUDULENT ELDABBAGH UI APPLICATIONS
State
Benefit Amount
DC
$17,549.00
NY
$15,120.00
MD
$30,100.00
MA
$38,887.00
Total
$101,656.00

ii. Fraudulent Applications in Other Identities
In addition to the UI applications that the Defendant filed in his own name, the investigation
revealed that the Defendant submitted UI applications in the names of two other associates without
their consent. The Defendant filed at least three UI applications in the name of victim C.S. – in
whose name the fraudulent PPP loan applications were filed – successfully stealing approximately
$35,686.00 in benefits in the name of C.S. The Defendant stole C.S.’s personal information when
C.S. lived with the Defendant for a short time. After that time, C.S. lived in Nevada and California.
Since leaving Virginia, C.S. has not lived, worked or filed for UI benefits in DC, MD or VA. See
ECF 30 (Statement of Offense) ¶ 24 (admitting to stealing C.S.’s identification card and social
security card).
FRAUDULENT C.S. UI APPLICATIONS
State
Benefit Amount
MA
$0.00
MD
$26,274.00
VA
$9,412.00
Total
$35,686.00

The Defendant filed at least two UI applications in the name of associate N.A. and thereby
Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 11 of 34

fraudulently obtained $36,589.00 in benefits in N.A.’s name. When interviewed, N.A. told agents
that he did not authorize the Defendant to file for UI benefits using his name and that N.A. did not
apply for UI benefits in MA or MD. During the execution of a search warrant, a MD UI debit card
in the name of N.A. was found under the Defendant’s bed. The investigation has also revealed that
N.S. received unemployment benefits from D.C., which are not included in these totals.
FRAUDULENT N.A. UI APPLICATIONS
State
Benefit Amount
MA
$20,109.00
MD
$16,480.00
Total
$36,589.00

b. Bank Fraud while on Pretrial Release
Additionally, as this Court is aware, the Defendant committed an audacious attempt at bank
fraud while on pretrial release. This offense and supporting evidence are described in detail in the
Government’s Motion for Revocation, ECF 20. Prior to the Defendant’s arrest and arraignment on
this matter, IRS-CI executed seizure warrants on 18 bank accounts containing more than $1 million
of fraud proceeds from this scheme. After his arrest, the Defendant was released with extremely
restrictive financial conditions. Nonetheless, just one month after arraignment in this case, the
Defendant attempted to defraud CitiBank out of $230,000 by fraudulently claiming that a check
that he cashed and deposited into his own account had actually been forged and thus the $230,000
stolen from him. The Defendant demanded the return of the $230,000. In reality, the Defendant
had transferred that money from CitiBank to his own account at E*Trade, which was then seized
in its entirety as fraud proceeds by IRS-CI. This brazen fraud on Citibank, committed while on
pre-trial release for a $31 million fraud, is consistent with the Defendant’s relentless history of
theft and fraud.
Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 12 of 34

c. Possible Identity Theft
Over the course of the investigation, a wide range of evidence of possible identity theft was
uncovered including the possession of access devices, other identifying documents, and the
attempt, establishment and use of bank accounts opened in stolen identities. During the execution
of a search warrant on the Defendant’s residence, agents uncovered dozens of access devices2 in
various names other than the Defendant. The majority of these persons have not been interviewed
and so it is unknown whether the Defendant was authorized to have possession of these materials.
In the residence, IRS-CI also discovered six access devices in the name of victim C.S.,
whose information the Defendant has admitted to stealing and using to execute the PPP and EIDL
scheme. Redacted photos of six access devices in identity theft victim C.S.’s name are provided
below. The Defendant was not authorized to have these access devices in C.S.’s name and these
cards appear to be yet another extension of a vast scheme to defraud by misusing C.S.’s stolen
identity.

2 Underneath the bed in the Defendant’s bedroom, agents found:

Three access devices in the name of K.R.M.

One access device in the name of M.J.H.

Three access devices in the name of C.S.

One access device in the name of A.J.

Three access devices in the name of K.D; two of these were for payments of MD and DC UI payments

Four access devices in the name of N.A; two of these were for payments of MD and DC UI payments

Two access devices in the name of B.S.

A copy of S.H.’s Virginia Driver’s License and Social Security Card

Three envelopes that have the names, dates of birth and social security numbers of N.A., C.S. and B.S.
written on the face of the envelope

Two ADP Earnings Statements for A.K.

Form 1095-C (Employer Provided Health Insurance Coverage), in the name of D.A.
Elsewhere in the Defendant’s bedroom, agents found:

One access device in the name of S.H.

Two access devices in the name of C.S.

One access device in the name of J.M.S.

Employment documents in the name of R.B. including Form I-9, TSP-1, and W-4
Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 13 of 34

d. Fraudulent bank accounts in the name of victim C.S.
In addition to unauthorized credit cards and PPP loans, the Defendant clearly opened at
least one bank account in C.S.’s name. A Robinhood account in C.S.’s name was opened in April
2019 with the Defendant’s PO Box as the address. Later, C.S.’s driver’s license was provided to
Robinhood. Finally, a phone was added to the account and linked to an IP address assigned to the
Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 14 of 34

Defendant.
e. R.S. Identity Theft
Victim R.S. is the founder of a Washington D.C. based consulting firm, which appears as
COMPANY 1 in the Indictment and Statement of Offense. Tax returns and financial documents
that were stolen from COMPANY 1 were doctored and used to perpetrate the PPP loan fraud. R.S.
told investigators about a prior identity theft incident where an identity thief ordered an Apple –
Pro Display XDR (approximate value of $5,133.79) using R.S.’s identity. The display was ordered
from Best Buy with a delivery address of the mother of the Defendant’s long-time romantic
partner. A Prince Willian County police report was found on the Defendant’s devices stating that
the previously mentioned display was never delivered to the address. This police report claims that
R.S. lives at the address, however this is the address of the Defendant’s romantic partner’s mother.
A review of browser history on the Defendant’s seized devices revealed multiple searches
for R.S.’s name and an attempt to access what appears to be R.S.’s company Microsoft Outlook
email box. A review of digital evidence also revealed an invoice in the approximate amount
$13,000.00 in the name of B&H Photo and Video. The invoice is dated 12/31/2019, credit card
number is unknown, and the Defendant’s former address is listed as the shipment address. The
email address used for this order, included R.S.’s name and company. R.S. confirmed that that
email account was not owned by him, nor is it an official email address. Finally, a picture of R.S.’s
Maryland Drivers’ license was found on the Defendant’s devices.
In other words, the Defendant’s fraudulent use of R.S.’s identity goes far beyond the use
of R.S.’s company’s tax and payroll records and includes credit card fraud in R.S.’s name. And,
although the exact mechanism by which the Defendant obtained R.S.’s identifying information
Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 15 of 34

and corporate records remains unknown, the Defendant has admitted that he stole the tax returns
and corporate documents from R.S.’s company, COMPANY 1, which were then used to execute
the PPP loan fraud.
f. PayPal Chargeback Fraud
On or about January 7, 2021, the Defendant fraudulently initiated a dispute with PayPal
claiming that a dog, Blake, that he purchased from PuppySpot arrived in poor health and was
significantly different than advertised PayPal experienced a loss of approximately $3,777.00 from
the scheme. To support the claim that the dog was in poor health when he arrived, the Defendant
created fake veterinary records in the name of “Dr. Rosenthal” claiming that the dog suffered from
diarrhea, abdominal pain and was not in top health. This form was created from a readily available
blank form that is downloadable from the internet. Evidence recovered from the Defendant’s
digital devices, shows that the device accessed the same blank form that was then submitted as
purportedly legitimate veterinary records. The digital devices also reveal a search for the term “Dr.
Rosenthal” on the same day the fraudulent forms were submitted to PayPal. The veterinary records
claim to be signed by a Dr. Rosenthal on December 6, 2020, but contain no additional information
about the veterinary practice, nor could investigators identify a Dr. Rosenthal practicing general
veterinary medicine in D.C. Based on this fraudulent submission, PayPal initiated a chargeback,
refunding the Defendant the $3,777 paid to PuppySpot for the dog, Blake.
III.
Sentencing Guidelines
a. Guidelines Calculations
By plea agreement, the parties agreed that the defendant’s total offense level was 34 and
that after application of a three-point reduction for acceptance of responsibility, the Estimated
Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 16 of 34

Offense Level would be at least 31 resulting in an estimated Guidelines range of 135 to 168
months’ imprisonment. See Plea Agreement ¶ 5(A)-(C). The PSR writer disagreed with the parties’
Guidelines analysis and found the Total Offense Level to be 34, resulting in a Guidelines range of
188 to 235 months’ incarceration. See PSR at ¶¶ 68-82 (offense level calculation). Both
calculations are set forth below.
i. The Plea Agreement’s Calculation
By plea agreement, the parties agreed to the following Guidelines calculation. Pursuant to
Application Note 6 to U.S.S.G. § 2S1.1, because the defendant will be convicted of a count of
laundering funds and a count for the underlying offense from which the laundered funds were
derived, the counts are grouped pursuant to subsection (c) of §3D1.2 (Groups of Closely-Related
Counts).

Count Five (Wire Fraud)

U.S.S.G. § 2B1.1(a)(1)
Base Offense Level

U.S.S.G. § 2B1.1(b)(1)(K)
Intended loss greater than $9,500,000
20

U.S.S.G. § 2B1.1(b)(10)(C) Sophisticated means

U.S.S.G. § 2B1.1(b)(12)
Conduct described in 18 U.S.C. § 1040
2

U.S.S.G. § 3C1.1

Obstruction

Offense Level (Count Five)

Count Seven (Money Laundering)

U.S.S.G. § 2S1.1(a)
Base Offense Level

313

U.S.S.G. § 2S1.1(b)(2)(A)
Convicted under 18 U.S.C. § 1957

U.S.S.G. § 3C1.1

Obstruction

Offense Level

3 U.S.S.G. § 2B1.1(a)(1)

Base Offense Level

U.S.S.G. § 2B1.1(b)(1)(K)
Intended loss greater than $9,500,000

U.S.S.G. § 2B1.1(b)(10)(C)
Sophisticated means

U.S.S.G. § 2B1.1(b)(12)
Conduct described in 18 U.S.C. § 1040

Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 17 of 34

U.S.S.G. § 3D1.2(c)
Final Combined Offense Level for Group
34

U.S.S.G. § 3D1.3

U.S.S.G. § 3E1.1(a)
Acceptance of responsibility

-2

U.S.S.G. § 3E1.1(b)
Early acceptance of responsibility

-1

Final Offense Level

ii. The PSR’s Calculation

The PSR’s Guidelines calculation is set forth in paragraphs 68 to 82.

U.S.S.G. § 2S1.1(a)
Base Offense Level

344
¶ 73

U.S.S.G. § 2S1.1(b)(2)(A)
Convicted under 18 U.S.C. § 1957

1
¶ 74

U.S.S.G. § 3C1.1

Obstruction

2
¶ 77

Adjusted Offense Level

U.S.S.G. § 3E1.1(a)
Acceptance of responsibility

-2
¶ 80

U.S.S.G. § 3E1.1(b)
Early acceptance of responsibility

-1
¶ 81

Final Offense Level

34
¶ 82

b. Differences
The PSR’s offense level calculation differs from the Parties’ agreed-upon Guidelines
calculation due to (1) the intended loss amount; (2) the interpretation of the cross reference from
U.S.S.G. § 2S1.1 to § 2B1.1(a) to determine the base offense level; and (3) the PSR’s imposition
of a two-level enhancement pursuant to U.S.S.G. § 2B1.1(b)(11)(C)(i) for the unauthorized
transfer or use of any means of identification unlawfully to produce or obtain any other means of

4 U.S.S.G. § 2B1.1(a)(2)

Base Offense Level

U.S.S.G. § 2B1.1(b)(1)(L)
Intended loss greater than $25,000,000

U.S.S.G. § 2B1.1(b)(10)(C)
Sophisticated means

U.S.S.G. § 2B1.1(b)(11)(C)(i)
Unauthorized transfer of means of identification

to produce another means of identification
2

U.S.S.G. § 2B1.1(b)(12)
Conduct described in 18 U.S.C. § 1040

Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 18 of 34

identification. See PSR ¶¶ 73, 168. Each issue is addressed in turn.
i. Loss Amount
By plea agreement, the parties agreed that the intended loss was between $9,500,000 and
$25,000,000, resulting in a 20-level increase in offense level pursuant to U.S.S.G.
§ 2B1.1(b)(1)(K). See Plea Agreement ¶ 5(A). By the time the Defendant entered his plea of guilty,
the government had identified more than $31 million in fraudulent applications for PPP loans and
EIDL funds. The Defendant admitted to the scope of his scheme in his statement of Offense. See
Statement of Offense ¶ 26. Accordingly, the PSR found that the intended loss was more than $25
million and less than $54 million, resulting in a 22-level increase in offense level pursuant to
U.S.S.G. § 2B1.1(b)(1)(L). See PSR ¶¶ 73, 168.
As explained in footnote 2 of the plea agreement, and as stated on the record during the
January 28, 2022, status conference, the government agreed to re-extend the basic terms of the
original and then-expired November 24, 2021, plea offer after the Defendant stated that he had not
received that plea offer. The extension of this plea offer was made to avoid any possibility of future
litigation regarding whether the Defendant had been afforded all rights under Missouri v. Frye,
566 U.S. 134 (2012) (defense counsel has a duty to communicate formal plea offers) and Lafler v.
Cooper, 566 U.S. 156 (2012) (remedy for counsel’s ineffective assistance regarding plea offers
was to order the State to reoffer the plea agreement). The government stated on the record that the
investigation had since revealed that the intended loss was in excess of $25 million, which was
inconsistent with the expired plea offer’s intended loss amounts. Further, the February 16, 2022,
cover letter accompanying the re-extended plea offer explicitly recognized the government’s duty
to truthfully account for the intended loss in this case. The Defendant has explicitly stated his
Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 19 of 34

understanding that the government’s duty to provide the Court and the U.S. Probation Office with
the relevant facts including the intended loss and agreed that providing information to the Court
and the U.S. Probation Office regarding the intended loss in this case did not constitute a violation
of this plea offer. See Plea Agreement at 5 n. 2.
ii. Base Offense Level

The government disagrees with the base offense level calculated by the draft PSR for the
grouped counts. The PSR states that the base offense level should be 6, pursuant to § 2B1.1(a)(2),
but the government believes it should be 7, pursuant to § 2B1.1(a)(1).

The governing guideline for the grouped counts is § 2S1.1, for money laundering in
violation of 18 U.S.C. § 1957. In order to determine the base offense level under § 2S1.1,
§ 2S1.1(a)(1) directs the Court to apply the “offense level for the underlying offense from which
the laundered funds were derived,” if the defendant is criminally responsible for the underlying
offense and that offense level can be determined. Here, the underlying offense is wire fraud, for
which the defendant is criminally responsible, and which is governed in turn by § 2B1.1. At this
point, § 2B1.1(a)(1) and (a)(2) provides that the base offense level is either 7 if the defendant was
convicted of an offense “referenced to this guideline” (§ 2B1.1) and that offense of conviction has
a statutory maximum term of 20 years or more, or 6, if otherwise.

It is the undersigned’s understanding that the United States Probation Office has taken the
position that in these circumstances the relevant “offense of conviction,” as referenced by § 2B1.1,
is money laundering, not wire fraud, and money laundering in violation of 18 U.S.C. § 1957 is not
Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 20 of 34

an “offense referenced to [§ 2B1.1].” Therefore, subsection (a)(1) does not apply, and the base
offense level should be 6 pursuant to subsection (a)(2).5

The government respectfully disagrees with the United States Probation Office’s
interpretation of § 2B1.1(a)(1) and (a)(2) as they apply to this case. Instead, the government
believes that the relevant “offense of conviction” should be wire fraud, and that subsection (a)(1)
therefore applies, and the base offense level is 7. First, this reading makes intuitive and logical
sense. The money laundering guideline, § 2S1.1(a)(1), calls for a defendant who is criminally
responsible for the underlying offense that generated the proceeds being laundered—such as wire
fraud—to be punished as if the defendant were convicted of the underlying offense, by calculating
the offense level for the underlying offense and applying it to the defendant. Then, § 2S1.1 applies
certain enhancements for the defendant’s additional criminal conduct in laundering the proceeds
of his criminal activity. This is appropriate because money laundering offenses are often geared
toward facilitating the underlying offense, making it harder to detect, making it more difficult to
recover stolen proceeds, and so forth. Thus, in applying § 2S1.1(a) to calculate the offense level
for a defendant who laundered the proceeds of wire fraud, it makes sense to calculate the wire
fraud guideline as if the defendant had in fact been convicted of wire fraud. Because wire fraud in
violation of 18 U.S.C. § 1343 is an offense punishable by up to 20 years in prison, and because
§ 1343 is referenced to § 2B1.1, the base offense level should be 7, pursuant to § 2B1.1(a)(1).6

5 The government understands that the PSR’s calculation is consistent with guidance issued by the staff of the U.S.
Sentencing Commission.
6 This is precisely what one would also expect under the Guidelines admonition to incorporate all “relevant conduct”
in assessing the defendant’s offense level, specific offense characteristics, cross references, and adjustments. See
U.S.S.G. § 1B1.3(a).
Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 21 of 34

To hold otherwise would lead to absurd results. The PSR’s reading would mean that
laundering the proceeds of basic property crimes (calculated under § 2B1.1) is punished more
lightly than laundering the proceeds of other crimes, because other guideline provisions do not
have the same dual scheme set forth in § 2B1.1(a)(1) and (2). Here, it also obviates the +1
enhancement for a defendant convicted of a § 1957 offense (per § 2S1.1(b)(2)(A)) predicated on
wire fraud, because the defendant also receives -1 discount in calculating the underlying offense
level under § 2B1.1—leaving no additional penalty for the laundering conduct. In other words, a
defendant who, as here, pleads guilty to both wire fraud in violation of § 1343 and expenditure
money laundering in violation of § 1957 will have the same offense level as if he pleaded guilty
solely to wire fraud. This cannot be what the Sentencing Commission intended.

Second, § 2B1.1(a)(1) applies under its literal terms here because the defendant was
convicted of an offense referenced to § 2B1.1—namely, Count Five of the Indictment charging
wire fraud. Numerous cases have adopted this common-sense understanding. Compare United
States v. Abdelsalam, 311 F. App’x 832, 845 (6th Cir. 2009) (applying base offense level 6 where
defendant was convicted of money laundering and receipt of stolen property, a 10-year offense);
with United States v. Nikolovski, 565 F. App’x 397, 401-02 & n.4 (6th Cir. 2014) (clarifying that
Abdelsalam’s holding that the proper base offense level was six was based on the ten-year statutory
maximum penalty for violation of 18 U.S.C. § 2315); see also United States v. Campbell, 765 F.3d
1291, 1296 n.3 (11th Cir. 2014) (“Section 2S1.1(a)(1) provides that the base offense level for
money laundering is the offense level of the underlying offense that produced the laundered
money. Here, the underlying offense is the wire fraud and mail fraud charges, in violation of 18
U.S.C. §§ 1341 at 1343. The guideline section associated with those charges is § 2B1.1. Section
Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 22 of 34

2B1.1(a)(1) provided Campbell's base offense level of 7.”); United States v. Salado, 590 F. App’x
692, 693 (9th Cir. 2015) (applying base offense level 7 where defendant was convicted of § 1957
and also “was convicted of the underlying offenses of mail fraud and bank fraud, each punishable
by a statutory maximum term of imprisonment of twenty years or more”). Here, because the
defendant was convicted of both money laundering and wire fraud, § 2B1.1(a)(1) applies, and the
base offense level should be 7.

That is the approach recently adopted in this district by Chief Judge Howell in sentencing
a defendant convicted of both money laundering and bank fraud offenses:
THE COURT: 2S1.1(a)(1) instructs that the base offense level for the underlying
offense from which the laundered funds were derived, namely the bank fraud, and
for which the defendant is convicted in Counts 1 and 2, is determined by 2B1.1.
So, in this respect, 2S1.1(a)(1) sends the base offense level for the money
laundering directly to 2B1.1. 2B1.1, in turn, provides that the base offense level
for the defendant's underlying bank fraud should be 7 if the defendant was
convicted of an offense referenced to this guideline and that offense of conviction
has a statutory maximum term of imprisonment of 20 years or more; see the
guideline at 2B1.1 (a)(1) -- or otherwise should be 6. See 2B1.1(a)(2), defendant’s
underlying bank fraud for which he was convicted and pleaded guilty to Counts 1
and 2 of the superseding indictment is punishable by up to 30 years’ imprisonment.
See 18 U.S.C. Section 1344, and is referenced to Section 2B1.1 in Appendix A of
the sentencing guidelines. Thus, as the government contends, the plain text of the
guideline dictates that the defendant’s base offense level should be 7, not 6.

Acting on the advice of staff apparently at the sentencing commission, the probation
office, and the defense posit that the base offense level should be 6 since money
laundering is not an offense referenced to this guideline. While correct that money
laundering is not referenced directly to 2B1.1 -- see Appendix A -- in this case, the
defendant was convicted not only of money laundering conspiracy but also of the
underlying bank fraud from which the laundered funds were proceeds and, in
addition, the 2S1.1 money laundering guideline does refer for the base offense level
-- that money laundering offense for a direct launderer -- to 2B1.1. Thus, base
offense level 7, at the guideline at 2B1.1(a), applies.

United States v. Kelvin Otunyo, D.D.C. No. 18-cr-251 (BAH), ECF No. 116 (Tr. of 8/13/21
Sentencing Hr’g), at 27:2-28:9. Judge Bates recently adopted this position in United States v.
Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 23 of 34

Jamar Skeete, 19-cr-414 (JDB) (April 8, 2022 sentencing hearing); ECF No. 43 (sealed Statement
of Reasons).

The government respectfully submits that this approach is persuasive and consistent with
the plain meaning of § 2B1.1(a)(1) as applied to this case.
iii. 2B1.1(b)(11)(C)(i)

The Final PSR includes a two-level increase to the offense level pursuant to U.S.S.G.
§ 2B1.1(b)(11)(C)(i). PSR ¶ 73. Application Note 10(C)(ii) to Section 2B1.1 instructs, in part, that
an example of conduct to which subsection (b)(11)(C)(i) applies is:
A defendant obtains an individual's name and social security number from a source
(e.g., from a piece of mail taken from the individual's mailbox) and obtains a bank
loan in that individual's name. In this example, the account number of the bank loan
is the other means of identification that has been obtained unlawfully.

This enhancement was not contemplated by the parties’ agreed-upon calculations in the
plea agreement. See Plea Agreement ¶ 5(A). Nonetheless the plea agreement explicitly states that
the “parties also reserve the right to address the correctness of any Sentencing Guidelines
calculations determined by the presentence report writer or the court, even if those calculations
differ from the Estimated Guidelines Range calculated herein.” See Plea Agreement ¶ 7.
c.
Criminal History and Guidelines Range
The PSR calculated four criminal history points resulting in a Criminal History Category
of III. The government does not contest the PSR’s criminal history calculation.
A total offense level of 31, as calculated by the parties’ plea agreement, and a Criminal
History Category of III results in an advisory Guidelines range of 135 to 168 months’
imprisonment.
A total offense level of 34, as calculated by the PSR, and a Criminal History Category of
Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 24 of 34

III results in an advisory Guidelines range of 188 months to 235 months’ imprisonment.
IV.
The 18 U.S.C. § 3553(a) Factors

In United States v. Booker, 543 U.S. 220 (2005), the Supreme Court held that the
Sentencing Guidelines are no longer mandatory. However, the Guidelines are “the product of
careful study based on extensive empirical evidence derived from the review of thousands of
individual sentencing decisions” and “should be the starting point and the initial benchmark” in
determining a defendant’s sentence. United States v. Gall, 552 U.S. 38, 46, 49 (2007).
Accordingly, this Court “should begin all sentencing proceedings by correctly calculating the
applicable Guidelines range.” Id. at 49.

Next, the Court should consider all of the applicable factors set forth in 18 U.S.C.
§ 3553(a). Id. at 49-50. The Guidelines themselves are designed to calculate sentences in a way
that implements the considerations relevant to sentencing as articulated in § 3553(a). United States
v. Rita, 551 U.S. 338, 347-351 (2007). The § 3553(a) factors include, inter alia: (1) the nature and
circumstances of the offense; (2) the history and characteristics of the defendant; (3) the need for
the sentence imposed to reflect the seriousness of the offense, to promote respect for the law, to
provide just punishment for the offense, and to afford adequate deterrence to criminal conduct and
protect the public from further crimes of the defendant; (4) the need to avoid unwarranted sentence
disparities; and (5) the need to provide restitution to any victims of the offense. See 18 U.S.C.
§ 3553(a)(1)-(7).
Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 25 of 34

A.
The Nature and Circumstances of the Offense and the Need for the
Sentence to Reflect the Seriousness of the Offense

The Defendant’s offenses are egregious. He shamelessly looted government programs
meant for people who otherwise stood to lose their jobs and their businesses as a result of the
COVID-19 pandemic. The Defendant executed a vast and sophisticated scheme to rob the PPP and
EIDL programs. Using corporate tax returns and financial documents stolen from COMPANY 1
and the identity of victim C.S. and COMPANY 1’s employees, the Defendant created complex
false documents to support his 29 false applications for government funds, attempting to steal over
$31 million. He succeeded in stealing $2,385,000. The sheer number of false applications
demonstrates that the defendant did not suffer from a momentary lapse of judgment, but instead
made the deliberate choice to engage in a relentless pattern of fraud. The Defendant’s scheme
robbed emergency government relief programs that were designed to save businesses – and their
employees – from the unprecedented economic impact of the COVID-19 pandemic. These
programs were finite – in other words, by stealing PPP funds, the Defendant prevented other
deserving people businesses from accessing desperately needed help. He did so out of sheer greed
and with callous disregard to those who were actually suffering economic impacts from COVID-
19. The gravity of the Defendant’s offenses and the sophistication of his scheme supports a serious
term of imprisonment, within the Guidelines range.
B.
The Need to Promote Respect for the Law and to Deter the Defendant
and Others from This Type of Criminal Conduct

A significant sentence of imprisonment here is necessary for both specific deterrence and
general deterrence.
Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 26 of 34

While the PPP program and COVID EIDL program have ended, it is critical that the
Defendant’s sentence serve as a deterrent to others who would rob government programs.
Government program fraud is a deliberate and calculated crime of choice. It is therefore more
susceptible to general deterrence and more in need of a significant sentence to achieve that
deterrence. United States v. Martin, 455 F.3d 1227, 1240 (11th Cir. 2006) (finding that crimes that
are “rational, cool, and calculated” rather than “crimes of passion or opportunity” are “prime
candidates for general deterrence”) (citation omitted). This type of crime is also difficult to detect
and highly lucrative. This Defendant received $2,385,000 directly into his bank account, making
this type of crime extremely attractive for would-be fraudsters, unless there is a significant fear of
meaningful consequences. See, e.g., United States v. Hefferman, 43 F.3d 1144, 1149 (7th Cir.
1994) (“Considerations of (general) deterrence argue for punishing more heavily those offenses
that either are lucrative or are difficult to detect and punish, since both attributes go to increase the
expected benefits of a crime and hence the punishment required to deter it.”).
Of even more importance, here, is the need to deter this specific defendant from committing
additional fraud. The Defendant is being sentenced today for a crime spree that included at least
29 fraudulent applications for government funds. Indeed, had the Defendant not been stopped by
the diligent efforts of IRS-CI and the SBA-OIG, there is little doubt that he would be continuing
to this day to file fraudulent applications to rob government programs. In fact, he filed his last
fraudulent PPP application just seven days prior to the execution of a search warrant on his
residence. As discussed supra, the government’s investigation revealed that while this Defendant
was executing his unrelenting fraud on the PPP and EIDL programs, he was also defrauding the
Pandemic Unemployment Assistance program, engaging in credit card theft, additional identity
Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 27 of 34

theft, and fraud on PayPal. Not even a 34-count Indictment and strict conditions of pre-trial release
were enough to stop this Defendant from his inexorable drive to defraud – he was caught
attempting to defraud Citibank out of $230,000 while on pre-trial release. This instant prosecution
comes after a string of state theft and drug convictions for this Defendant, resulting in suspended
sentencings, probation, and community service. Those contacts with the criminal justice system
did nothing to deter the Defendant from the vast fraud that he now stands before the Court to be
sentenced for. Accordingly, it is of the utmost importance that this Defendant be sentenced to a
significant term of incarceration, in order to specifically deter him from this relentless course of
fraudulent conduct.
C.
The History and Characteristics of the Defendant

This Defendant has a lengthy criminal history consisting of a series of theft and drug
offenses. See PSR ¶¶ 84-97. Further, while committing the instant vast PPP/EIDL fraud scheme,
the Defendant was simultaneously committing unemployment insurance fraud, identity theft,
credit card theft, and fraud on PayPal. See Section II Other Fraud Schemes, supra. Finally, the
Defendant attempted to steal $230,000 from Citibank while on pre-trial release in this case. See
Section II Other Fraud Schemes, supra. The Defendant’s history of arrest and conviction, his
conduct while on pre-trial release in this case, and his vast simultaneous frauds uncovered during
this investigation demonstrate that this Defendant is an incorrigible fraudster, who has been
completely undeterred, and perhaps even emboldened, by his prior contacts with the criminal
justice system.
On November 1, 2018, the defendant was found guilty of theft under $1500. According to
the PSR, the Defendant shop-lifted merchandise worth more than $2,000 from Target. See PSR at
Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 28 of 34

¶ 85. When approached by loss prevention, a struggle ensued, and the defendant attempted to bite
the loss prevention officer. The Defendant escaped and lost his phone. The police were then
dispatched to the Target after the Defendant reported that he was the victim of a strong-arm robbery
resulting in the theft of his cell phone. The Defendant was charged with 2nd Degree Assault, Theft
over $1,500, False Statements, and Theft under $1,500. He pleaded guilty to Theft under $1,500
and he was sentenced to a suspended sentence and probation. The defendant was then arrested
three different times while on probation in this matter. His probation was then terminated
unsatisfactorily after he failed to provide verification that he completed the 24 hours of community
service.
On April 23, 2019, the defendant was convicted of Unlawful Entry in Arlington, Virginia
after shoplifting a Verizon phone and charger from Target. He was sentenced to a suspended
sentence and 12 months of probation. Id. at ¶ 86.
On August 14, 2019, the defendant was found guilty of Trespass in Fairfax County,
Virginia. According to the PSR, the defendant was arrested for attempting to shoplift multiple
items from a Micro Center. Id. at ¶ 84. He was sentenced to community service and probation. He
appears to have completed the terms of that sentence.
On November 22, 2019, the defendant was found guilty of Possessing Paraphernalia in
Arlington County and was sentenced to a suspended sentence and 12 months’ probation. Id. at 87.
On March 12, 2019, the defendant was found guilty of Trespass after stealing over $1,000
of items from an Apple store in McLean and attempting to steal from an Apple Store in Arlington.
Id. at 88. In that case, police executed a search warrant and identified many items that could have
Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 29 of 34

been stolen from Apple stores and evidence that the defendant was shipping a large number of
items. The Defendant was sentenced to a suspended sentence and a fine.
The Defendant began the instant offense on or before July 4, 2020, when he filed the first
false PPP application with Cross River Bank. See Statement of Offense ¶ 27. At that time, he was
on probation for both the Arlington County Trespass conviction as well as the Arlington County
Possession Paraphernalia conviction. See PSR ¶ 90.
In addition to the above convictions, the Defendant has a lengthy history of arrest.7 On
October 9, 2015, the Defendant was arrested for various drug charges in Queen Anne’s County,
MD. The case was placed on the stet docket. See PSR ¶ 93. On August 15, 2018, the Defendant
was charged as a Fugitive from Justice in relation to his Montgomery County prosecution. That
case was dismissed after the Defendant waived extradition. Id. at ¶ 94. On September 2, 2018, the
Defendant was charged with Assault in Arlington County. Id. at ¶ 95. That case was dismissed.
On March 12, 2019, the Defendant was charged with Shoplifting in Arlington County, and was
found not guilty. No additional information is available regarding this case. Id. at ¶ 96. On March
28, 2020, the Defendant was arrested for Possession of Schedule I or II drugs in Arlington County.
That case was nolle prossed. Id. at ¶ 97.
The Defendant describes his childhood as “quite good” and as an upper-middle class socio-
economic upbringing. PSR ¶ 103. He never “needed for anything.” PSR ¶ 104. He has a supportive
family, who at various times have financially supported him. PSR ¶¶ 105, 106, 147, 149, 151. He
has had several well-paying jobs in the tech field, which he has lost for failure to disclose pending

7 “The all-inclusive language of both the Guidelines and 18 U.S.C. § 3661 makes clear that a defendant's arrest
record may properly be considered as part of his ‘background.’” United States v. Brown, 516 F.3d 1047, 1053 (D.C.
Cir. 2008).
Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 30 of 34

criminal proceedings and his shoplifting conviction. PSR ¶ 148. Per the PSR, the Defendant uses
methamphetamine but has received court-mandated treatment. As the Guidelines notes, “[d]rug or
alcohol dependence or abuse ordinarily is not a reason for a downward departure.” U.S.S.G.
§ 5H1.4.
All of the foregoing supports a significant period of incarceration within the applicable
Guidelines range.
D.
Unwarranted Sentencing Disparities
The District of Columbia Circuit has recognized that there will “inevitably . . . [be]
sentencing disparities and inequities that can be explained by little more than the identities of the
sentencing judges.” United States v. Gardellini, 545 F.3d 1089, 1096 (D.C. Cir. 2008); see also
United States v. Saez, 444 F.3d 15, 19 (1st Cir. 2006) (“[W]ith different judges sentencing two
defendants quite differently, there is no more reason to think that the first one was right than the
second.”). The Guidelines “reduce unwarranted federal sentencing disparities,” Freeman v. United
States, 564 U.S. 522, 525 (2011), by “creat[ing] a comprehensive sentencing scheme in which
those who commit crimes of similar severity under similar conditions receive similar sentences.”
Id. at 533. A sentencing court “necessarily g[ives] significant weight and consideration to the need
to avoid unwarranted disparities” by “correctly calculat[ing] and carefully review[ing] the
Guidelines range.” Gall v. United States, 552 U.S. 38, 54 (2007). “[I]mposing a within-guidelines
sentence is the surest way to avoid unwarranted disparities.” United States v. White, 737 F.3d 1121,
Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 31 of 34

1145 (7th Cir. 2013).
V.
Restitution and Forfeiture
A. Restitution
Restitution is mandatory under 18 U.S.C. § 3663A. In his plea agreement, the Defendant
acknowledges the Court’s obligation to determine mandatory restitution and agreed, apart from
that determination, to pay restitution in the amount of $2,385,000. Plea Agreement ¶ 11. In
addition to the $2,385,000 – comprised of PPP loans and EIDL funds – the Defendant’s conduct
caused a loss to the SBA of processing fees paid to the lenders that issued the fraudulent loans.
The government requests that the Defendant be ordered to pay restitution in the total amount of
$2,452,050.00. This restitution should be paid to:
Victim
Restitution amount
SBA
$150,000.00
Newtek Small Business Finance, LLC
$1,120,000.00
SBA for fraudulent Newtek PPP loan ($1,120,000) processing
fees paid by SBA
$33,600.00
ReadyCap Lending , LLC
$1,115,000.00
SBA for fraudulent ReadyCap PPP loan ($1,115,000) processing
fees paid by SBA
$33,450.00
Total:
$2,452,050.00

B. Forfeiture
As part of his plea agreement, the Defendant has agreed to the forfeiture of the seized Tesla
Model 3 and 21 bank accounts. See ECF 31 (Consent order of Forfeiture). He has also agreed to a
forfeiture money judgment in the amount of $2,385,000. Id.
As part of his plea agreement, the Defendant also agreed that cryptocurrency purchased
using $185,550.49 from PrimeTrust, $92,367.82 from Crypto.com, and $10,779.00 from BlockFi
constituted forfeitable proceeds of the wire fraud count. As part of the plea, the Defendant agreed
Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 32 of 34

to liquidate his interest in the cryptocurrency prior to sentencing. Undersigned counsel has been
informed by Defense counsel that these funds currently amount to less than $20. In other words,
notwithstanding an agreement to liquidate and remit his interest in these fraud proceeds, they
appear to be entirely dissipated by the Defendant.
Finally, the government will be moving to forfeit as substitute assets approximately 60
electronic devices, including a server, seized from the Defendant’s residence as substitute assets.
VI.
Conclusion

The Defendant is appearing to be sentenced for an unrelenting fraud scheme designed to
defraud critical government programs of more than $31 million ear-marked for the people and
businesses suffering the most devastating economic consequences of the COVID-19 pandemic.
This fraud is the culmination of years of greed-motivated offenses which continued past indictment
and into pre-trial release. The government respectfully submits that a sentence of 168 months of
incarceration, three years’ supervised release, and restitution and forfeiture as described herein is
an appropriate and fair sentence in light of the offense conduct, the need for specific and general
deterrence, and the history and characteristics of the Defendant.
Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 33 of 34

Respectfully submitted,

MATTHEW M. GRAVES
United States Attorney
for the District of Columbia
D.C. Bar No. 481052

By:

LESLIE A. GOEMAAT
MA Bar No. 676695
Assistant United States Attorney
U.S. Attorney’s Office
601 D St NW, Room 5.1521
Washington, DC 20530
Office: 202-803-1608

Leslie.Goemaat@usdoj.gov
Case 1:21-cr-00523-TNM Document 40 Filed 08/18/22 Page 34 of 34

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Government's Memorandum in Aid of Sentencing — United States v. Elias Eldabbagh

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