United States’ Detention Memorandum — United States v. Brugnara (Dkt. 9, N.D. Cal.)

Summary

The United States' detention memorandum in United States v. Luke Brugnara, Case No. 3:24-cr-00277 MMC, in the U.S. District Court for the Northern District of California, filed June 27, 2024 as Document 9 by Assistant U.S. Attorney Ryan Arash Rezaei. The government argues that Brugnara should be detained, describing a two-decade record of prior federal cases, including false tax returns, false statements, Endangered Species Act counts and a 2014 art fraud for which he was sentenced to 84 months. It states that he is now charged with multiple counts of wire fraud and money laundering arising from an alleged plan to defraud the United States and the Small Business Administration, and concludes that he belongs in jail.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Record facts

Full text

Case 3:24-cr-00277-MMC               Document 9         Filed 06/27/24        Page 1 of 10




 1 ISMAIL J. RAMSEY (CABN 189820)
   United States Attorney
 2
   MARTHA BOERSCH (CABN 126569)
 3 Chief, Criminal Division

 4 RYAN ARASH REZAEI (CABN 285133)
   Assistant United States Attorney
 5
          450 Golden Gate Avenue, Box 36055
 6        San Francisco, California 94102-3495
          Telephone: (415) 436-7200
 7        FAX: (415) 436-7234
          ryan.rezaei@usdoj.gov
 8
   Attorneys for United States of America
 9
                                   UNITED STATES DISTRICT COURT
10
                                 NORTHERN DISTRICT OF CALIFORNIA
11
                                       SAN FRANCISCO DIVISION
12

13   UNITED STATES OF AMERICA,                                 ) CASE NO. 3:24-cr-00277 MMC
                                                               )
14              Plaintiff,                                     ) UNITED STATES’ DETENTION MEMORANDUM
                                                               )
15         v.                                                  )
                                                               )
16   LUKE BRUGNARA,                                            )
                                                               )
17              Defendant.                                     )
                                                               )
18
19 I.           INTRODUCTION
20              Luke Brugnara is an incorrigible menace who for two decades has – at least when he’s not been
21 in federal prison – made a career of committing crime. Those crimes range from filing false tax returns

22 and making false statements 1 to perpetrating an art fraud scheme in 2014. 2 For perpetrating his art fraud

23 scheme – and committing other crimes including escape – Brugnara was sentenced to 84 months

24 imprisonment.

25
     1
         See Nos. 8-CR-222 WHA, Doc. 68 (2010 superseding indictment charging Brugnara with three counts of filing false tax
26 returns in 2002 and 2004 and one count of obstructing the administration of Internal Revenue laws from 1998 through 2005)
     and 8-CR-236 MMC (2008 indictment charging Brugnara with two counts of making false statements and four counts of
27 violating the Endangered Species Act).
     2
      No. 14-CR-306 WHA, Doc. 348 (2015 superseding indictment charging Brugnara with four counts of wire fraud, one count
28
     of mail fraud, two counts of false declaration before a court, escape, and contempt of court).
     GOVERNMENT DETENTION MEMORANDUM                          1
     3:24-cr-00277 MMC

            Case 3:24-cr-00277-MMC           Document 9     Filed 06/27/24      Page 2 of 10




 1          Not only does Brugnara seem to like committing federal crime, he’s responsible for a notorious

 2 escape from the San Francisco federal courthouse:

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17 This still captures Brugnara literally running full speed from the San Francisco courthouse during the

18 pendency of his art fraud case. See ABC 7 News, EXCLUSIVE: SF real estate mogul, art scammer,
19 gives jailhouse interview, https://abc7news.com/lucky-luke-san-francisco-real-estate-mogul-brugnara-

20 dan-noyes-i-team/960144/ (last viewed June 24, 2024).

21          For the ordinary defendant, one escape might be enough. But “Lucky Luke,” as he was once

22 described by ABC 7, is no ordinary defendant. He’s got more. In 2023, Brugnara was sentenced to 456

23 days imprisonment after his supervised release was revoked for absconding from supervision, among

24 other violations. No. 17-cr-00306 WHA, Doc. 1157. Brugnara had absconded for two months. Then,

25 in May 2024, after he was sent to a reentry center to serve the remainder of his 456-day term, Brugnara

26 escaped again. He was gone for about a week until the U.S. Marshals Service located him and his

27 girlfriend at a hotel near the San Francisco airport.

28

     GOVERNMENT DETENTION MEMORANDUM                 2
     3:24-cr-00277 MMC

            Case 3:24-cr-00277-MMC            Document 9       Filed 06/27/24      Page 3 of 10




 1          Brugnara is back again, this time charged with multiple counts of wire fraud and money

 2 laundering stemming from his scheme to defraud the United States and the Small Business

 3 Administration. As part of his scheme, in 2021, Brugnara fraudulently obtained a loan under the

 4 Paycheck Protection Program. Instead of using that loan as represented – to cover payroll – he used the

 5 loan proceeds to buy a house.

 6          The United States seeks Brugnara’s detention. The United States is entitled to a detention

 7 hearing as Brugnara poses a serious risk of flight. The preponderance of the evidence establishes that

 8 Brugnara will not appear as required and there’s clear and convincing evidence that Brugnara is a danger

 9 to the community.

10 II.      RELEVANT BACKGROUND

11          A.      Criminal History

12          As referenced, Brugnara has a lengthy criminal history, including three separate federal cases in

13 this district. First, in No. CR-8-00222 WHA, Brugnara was convicted of multiple counts of filing false

14 tax returns and sentenced to 30 months imprisonment. Second, in No. CR-8-00236 MMC, Brugnara

15 was convicted of multiple violations of the Endangered Species Act and making false statements. He

16 was sentenced to 15 months imprisonment. Finally, in CR-14-00306-WHA, Brugnara was convicted of

17 multiple counts of fraud, false declaration before a court, contempt, and escape, arising from an art fraud

18 scheme. He was sentenced to 84 months imprisonment.
19          B.      Current Charges

20          In November 2020, Brugnara was released from federal prison. Less than two months later, in

21 January 2021, he applied for a COVID-19 loan on behalf of his company, Brugnara Corporation, under

22 the Economic Injury and Disaster Loan program. In those applications, he falsely represented that

23 Brugnara Corporation had $13.75 million in gross revenues and Brugnara Corporation had four

24 employees. The loan applications were rejected because Brugnara Corporation was engaged in

25 ineligible business activity (real estate). Declination letters explaining the rejection – that the

26 company’s business activity was ineligible – were sent to Brugnara at the address listed as the

27 company’s business address.

28          A month later, Brugnara submitted a first draw loan application on behalf of Brugnara

     GOVERNMENT DETENTION MEMORANDUM                   3
     3:24-cr-00277 MMC

            Case 3:24-cr-00277-MMC           Document 9       Filed 06/27/24      Page 4 of 10




 1 Corporation under the Paycheck Protection Program, a different COVID-19 program. The application –

 2 which Brugnara filed in the name of his wife Kay Brugnara – contained a number of material

 3 misrepresentations. Among other things, Brugnara falsely represented that Kay Brugnara was Brugnara

 4 Corporation’s sole owner. (Brugnara had listed himself as the company’s sole owner just one month

 5 before in the rejected EIDL applications; he had also listed himself as the company’s sole owner when

 6 he opened a Wells Fargo business account in December 2020, just one month after his prison release.)

 7          Brugnara also misrepresented Brugnara Corporation’s business. Whereas in the EIDL

 8 applications Brugnara listed the company’s business as real estate, in the first draw PPP application,

 9 Brugnara represented that the company’s business was equipment rental and leasing. Brugnara knew he

10 needed to change the description of the company’s business for purposes of the PPP application after he

11 received letters explaining that his prior EIDL applications were rejected because the company’s

12 business activity – real estate – was ineligible.

13          In addition to these false representations, Brugnara misrepresented what he intended to do with

14 the loan proceeds. Brugnara represented that the PPP loan proceeds – he received $422,500 in all –

15 would be used to cover payroll. But instead of using the loan proceeds to cover payroll, he used them to

16 help purchase a house on 43rd Avenue in San Francisco. This misrepresentation lies at the center of

17 Brugnara’s fraud scheme.

18          Not only did Brugnara trick the Small Business Administration into giving him a loan – which he

19 then used to buy the 43rd Avenue house – he tricked a San Francisco housekeeper into helping finance

20 the purchase of that very same house. More specifically, in December 2020, following his release from

21 prison, Brugnara met M.G. online and convinced her to let him move in with her. As corroborated by

22 text messages, Brugnara raised the idea of having her help him purchase a home. M.G. was worried

23 about being considered a straw purchaser, but Brugnara assuaged any fears she had. He promised M.G.

24 that they would move into the home together.

25          Based on all of that, in early 2021, M.G. filled out a home loan application to help finance the

26 purchase of the 43rd Avenue house (as stated, funds from the PPP loan were also used to purchase the

27 house). Once the purchase was finalized, Brugnara moved out of M.G.’s apartment. But Brugnara did

28 not allow M.G. to move into the 43rd Avenue house. Instead, Brugnara’s family moved into the house.

     GOVERNMENT DETENTION MEMORANDUM                   4
     3:24-cr-00277 MMC

           Case 3:24-cr-00277-MMC          Document 9       Filed 06/27/24     Page 5 of 10




 1 It got worse. Because Brugnara subsequently failed to make payments on the loan, it went into default.

 2 M.G. was stuck with the defaulted loan.

 3          Brugnara’s text messages with M.G. show how abusive he was to her. For example, after M.G.

 4 sent Brugnara a blog about straw purchasers, Brugnara lashed out to M.G.:

 5

 6

 7

 8

 9

10

11

12

13

14

15

16          Brugnara then instructed M.G. to stop texting his phone because it was being monitored by the

17 federal government (again, during this time, Brugnara was on supervised release):

18
19

20

21

22

23

24

25

26

27

28

     GOVERNMENT DETENTION MEMORANDUM               5
     3:24-cr-00277 MMC

           Case 3:24-cr-00277-MMC             Document 9       Filed 06/27/24     Page 6 of 10




 1 Following these messages, Brugnara continued to string M.G. along, even though M.G. had pointed out

 2 that Brugnara had promised he would allow her to move into the house or buy her a condominium. Of

 3 course, that never happened.

 4          C.      Escape from the residential reentry center

 5          As previously noted, Brugnara escaped from federal custody as recently as two months ago. The

 6 United States obtained the following information about Brugnara’s May 2024 escape from the

 7 residential reentry center:

 8          -    Thursday, May 2. Brugnara arrived at the residential reentry center in Oakland (the “RRC”).

 9               As mentioned in Court, Brugnara was released to the RRC to serve the remainder of the 456-

10               prison term Judge Alsup had imposed in mid-2023 after revoking Brugnara’s supervised

11               release. Brugnara’s term is set to expire in August 2024.

12          -    Thursday, May 9. The U.S. Marshals received an escape notice at 2:30 p.m. from the Bureau

13               of Prisons. USMS learned that RRC staff conducted a work site check at 11:30 a.m. but did

14               not find Brugnara. (Brugnara’s purported employer, FITSKM LLC, is discussed below.)

15               RRC staff stayed at the site until 2:00 p.m. At 2:15 p.m., Brugnara contacted BOP and said

16               he did not know when he would be able to return to the RRC. USMS then received the

17               escape notice. After USMS received the escape notice, at 4:11 p.m., Brugnara returned to the

18               RRC. About an hour later, the RRC contacted USMS and requested that USMS pick up

19               Brugnara and return him to Santa Rita Jail to serve the remainder of his 456-day term. In

20               other words, the RRC was kicking Brugnara out of the RRC.

21          -    Friday, May 10. The next day, USMS picked up Brugnara from the RRC to transfer him to

22               Santa Rita Jail. But on the way, Brugnara complained of chest and back pain. Brugnara was

23               taken to the hospital. After Brugnara’s discharge, USMS attempted to take Brugnara back to

24               Santa Rita Jail. But Santa Rita Jail rejected Brugnara because he was suicidal. After taking

25               Brugnara to the hospital a second time, USMS returned Brugnara to the RRC. The RRC was

26               ordered to keep Brugnara in an isolation medical room.

27          -    Saturday, 5/11. At 11:18 a.m., Brugnara walked up to the monitor station and handed

28               security monitors a note declaring his intent to leave the facility. Brugnara walked out the

     GOVERNMENT DETENTION MEMORANDUM                  6
     3:24-cr-00277 MMC

           Case 3:24-cr-00277-MMC           Document 9       Filed 06/27/24     Page 7 of 10




 1              front door of the facility without authorization and left. USMS received notice of Brugnara’s

 2              second escape.

 3         -    Friday, May 17. Six days later, USMS arrested the defendant at a hotel near the San

 4              Francisco Airport. Yitong Wen was with Brugnara at the time of his arrest and had rented

 5              the hotel room where they were found. Between May 11 and the day of his capture,

 6              Brugnara had no contact with the RRC.

 7         D.      Brugnara misled the RRC about FITSKM LLC

 8         As noted in the above timeline, Brugnara’s purported employer was FITSKM LLC, located at a

 9 residence on Washington Street, in San Francisco. Brugnara failed to inform the RRC the following

10 about that company:

11         -    First, the company is currently owned by Brugnara’s long-time girlfriend, Yitong Wen.

12              Brugnara has been with Wen since at least 2021.

13         -    FITSKM’s listed address – the Washington Street residence – is where her parents live.

14         -    Back in 2021, after having had M.G. purchase the 43rd Avenue house, Brugnara purportedly

15              transferred ownership of the 43rd Avenue house to FITSKM LLC, as reflected in the

16              following handwritten affidavit recovered from Brugnara’s storage unit:

17

18
19

20

21

22

23

24

25

26

27

28

     GOVERNMENT DETENTION MEMORANDUM                7
     3:24-cr-00277 MMC

            Case 3:24-cr-00277-MMC           Document 9       Filed 06/27/24      Page 8 of 10




 1          -   Then, in September 2021, Brugnara’s own company, Brugnara Corporation, purportedly

 2              purchased FITSKM LLC, as reflected in the following affidavit:

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17          In sum, ownership of the 43rd Avenue house – through FITSKM LLC – ultimately passed to

18 Brugnara’s company. Brugnara told the RRC none of this.
19 III.     LEGAL STANDARD AND ARGUMENT

20          A. Legal Standard

21          Under 18 U.S.C. § 3142(g) the factors the Court must consider in determining whether there are

22 conditions of release that will reasonably assure the appearance of the defendant and the safety of the

23 community are: (i) the nature and circumstances of the offense charged; (ii) the weight of the evidence

24 against the defendant; (iii) the history and characteristics of the defendant, including the defendant’s

25 character, physical and mental condition, family and community ties, past conduct, history relating to

26 drug or alcohol abuse, criminal history, and record concerning appearance at court proceedings, as well

27 as whether the crime was committed while the defendant was on probation or parole; and (iv) the nature

28 and seriousness of the danger to any person or to the community that would be posed by the defendant’s

     GOVERNMENT DETENTION MEMORANDUM                  8
     3:24-cr-00277 MMC

            Case 3:24-cr-00277-MMC          Document 9       Filed 06/27/24      Page 9 of 10




 1 release. See 18 U.S.C. § 3142(g).

 2          B.     Argument

 3          As far as the nature and circumstances of the offense charged and weight of the evidence,

 4 Brugnara committed another fraud, just as he did back in 2014. Brugnara’s false representations

 5 resulted in the distribution of $422,500 in loan proceeds, which, as stated, he then used to buy a house

 6 for his family instead of using it to cover payroll. Along the way, he also convinced a housekeeper to

 7 take out an approximately million dollar loan to help finance the purchase of the home. The weight of

 8 the evidence is also very strong. Among other things, Brugnara had over 90 recorded calls with the

 9 company that processed Brugnara’s fraudulent PPP application (thus establishing he, and not his wife,

10 was responsible for the loan application). And as far as his intent to defraud, all along Brugnara

11 intended to use the PPP proceeds to purchase the 43rd Avenue house. In fact, he pursued the purchase as

12 he worked through the PPP loan process.

13          As for history and characteristics of the defendant, they strongly favor detention. About a

14 decade ago, after convincing Judge Alsup to allow him to meet with his lawyer outside of the

15 courtroom, Brugnara literally ran from the federal courthouse. He was convicted of escape. Then, last

16 year, while on supervised release, Brugnara absconded from supervision for two months. This violation,

17 among other violations, led Judge Alsup to revoke Brugnara’s supervised release and impose a 456-day

18 term. That was in mid-2023.
19          And, more recently, Brugnara escaped again, this time from the RRC. The timeline of events

20 surrounding that escape is significant. Brugnara voluntarily returned to the RRC after RRC staff could

21 not find him at his purported place of business. At the RRC’s request, USMS transported him to Santa

22 Rita Jail. But then Brugnara claimed to be suicidal, so as a result, USMS had to return Brugnara to the

23 RRC. And it was then – after realizing he could be going back to jail – that Brugnara escaped a second

24 time. He was gone for six days before USMS arrested him. Brugnara has no intention of appearing in

25 court given his established and recent history of escape. And he will be even more motivated to flee

26 after learning about his exposure as a result of his fraud. Brugnara faces a minimum of 46-57 months

27 based on his PPP fraud scheme.

28          Brugnara is also an economic danger to the community, one who has no intention of abiding by

     GOVERNMENT DETENTION MEMORANDUM                 9
     3:24-cr-00277 MMC

           Case 3:24-cr-00277-MMC           Document 9       Filed 06/27/24     Page 10 of 10




 1 any rules. And he’s proud of that. Here’s a text message he sent in March 2021 after he was able to

 2 secure the purchase of the 43rd Avenue house:

 3

 4

 5

 6

 7

 8

 9          Brugnara is a serial fraudster, a criminal through and through. He is a man who has no respect

10 for the rule of law or for this Court. And he’s going to commit more crime while on release. This

11 judicial district, more than any other, knows this.

12          Yesterday in court, Brugnara – who had to be physically removed from the courtroom – offered

13 a taste of what’s in store if he is released. He will say and do whatever he wants. And it’s up to this

14 Court to prevent that from happening. Brugnara belongs in jail.

15 DATED: June 27, 2024                                          Respectfully submitted,

16                                                               ISMAIL J. RAMSEY
                                                                 United States Attorney
17

18
                                                                 _____/S/___________________
19                                                               RYAN ARASH REZAEI
                                                                 Assistant United States Attorney
20

21

22

23

24

25

26

27

28

     GOVERNMENT DETENTION MEMORANDUM                10
     3:24-cr-00277 MMC

File and source

File

9.pdf

Size

951,253 bytes

SHA-256

3eaccf285ecd927ad93062240f6dff117a93a3c6426930921633950e398f0e3e

Our copy

9.pdf