Criminal Complaint — U.S. v. Marnell

Record facts

U.S. District Court, C.D. Cal. · No. 2:20-mj-03313-DUTY · Doc. 1 · 2020-07-15 · Docket on CourtListener

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AO 91 (Rev. 1 I~1 1) Criminal ('omplaint (Rev. by USAO on 3/12/20) 
❑Original 
❑Duplicate Original
LODGED
CLERtC, U.S. DISTRICT COl ~tT
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BY: L~Vl DEPUTI'
United States of America
v.
ANDREW MARNELL,
UNITED STATES DISTRICT COURT
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Central District of California
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Case No. 2.20-mj-033 13
Defendants)
CRIMINAL COMPLAINT BY TELEPHONE
OR OTHER RELIABLE ELECTRONIC MEANS
I, the complainant in this case, state that the following is true to the best of my knowledge and belief.
On or about the dates) of May 11, 2020, in the county of Los Angeles in the Central District of California, the
defendants) violated:
Code Section
18 U.S.C. § 1344(2)
Offense Description
Bank Fraud
This criminal complaint is based on these facts:
Please see attached affidavit.
D Continued on the attached sheet.
Attested to by the applicant in accordance with the
requirements of Fed. R. Crim. P. 4.1 by telephone
Complainant's signature
James Shields, Special Agent, FHFA-OIG
Printed name and title
Attested to by the applicant in accordance with the requirements of Fed. R. Crim. P. 4.1 by telephone. 
,SSE °~st.~
OS 
Cr
ti
Date: July 15, 2020 
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Judge 's signature 
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City and state: Los Angeles, California 
Hon. Steve Kim, U.S. Magistrate Judge
Printed name and title
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I, James Shields, being duly sworn, declare and state as
follows:
I. INTRODUCTION
1. 
I am a Senior Special Agent ("SSA") with the Federal
Housing Finance Agency - Office of Inspector General ("FHFA-OIG")
and have been so employed since January 2013. From approximately
November 2009 to January 2013, I was a duly authorized and sworn
Special Agent of the Department of Housing and Urban Development
- Office of Inspector General (~~HUD-OIG") 
In April 2010, I
completed the Criminal Investigator Training Program for federal
agents at the Federal Law Enforcement Training Center. Prior to
my employment with HUD-OIG, I was employed as a sworn officer with
the United States Department of Homeland Security, Department of
Customs and Border Protection (~~DHS-CBP") for two years. 
From
1997 to 2007, I was on active duty with the United States Navy.
In 2006, I graduated with honors from the University of La Verne
with a bachelor's degree in Organizational Management. In 2015,
I graduated from the University of Southern California with a
Master of Business for Veterans. I currently hold Certified Fraud
Examiner and Accredited Mortgage Professional certifications.
2. 
In my position as a SSA with FHFA-OIG, and in my prior
positions with HUD-OIG and DHS-CBP, I have conducted numerous
investigations of bank fraud, loan fraud, mortgage fraud, identity
1
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theft, and other fraud schemes, executed numerous search warrants,
and participated in the arrest of numerous suspects.
II. PURPOSE OF AFFIDAVIT
3. 
This affidavit is made in support of a criminal
complaint against, and arrest warrant for, ANDREW MARNELL
("MARNELL") for a violation of 18 U.S.C. ~ 1344(2) (obtaining
money or property from bank under false pretenses},
4. 
The facts set forth in this affidavit are based upon
my personal observations, my training and experience, and
information obtained from various law enforcement personnel and
witnesses. This investigation involves a joint investigation of
the Federal Bureau of Investigation ("FBI"), the Federal Deposit
Insurance Corporation Office of Inspector General (~~FDIC-OIG"),
Internal Revenue Service Criminal Investigation (~~IRS-CI"), the
Treasury Inspector General for Tax Administration (~~TIGTA"), the
Small Business Administration Office of Inspector General ("SBA-
OIG"), and FHFA-OIG (collectively, the "federal law enforcement
agencies"), and information in this affidavit is based on
evidence obtained in the course of the investigation conducted
by all the involved federal law enforcement agencies. This
affidavit is intended to show merely that there is sufficient
probable cause for the requested complaint and arrest warrant
and does not purport to set forth all of my knowledge of or
investigation into this matter. Unless specifically indicated
otherwise, all conversations and statements described in this
affidavit are related in substance and in part only.
2
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III. STATEMENT OF PROBABLE CAUSE
A. 
Summary of Probable Cause
5. 
In or around June 2020, financial institutions
informed law enforcement about a possible fraud associated with
loan applications submitted in the names of borrowers
Quicksilver LLC ("Quicksilver"), Shale Creek LLC ("Shale
Creek"), Slatestone LLC (~~Slatestone"), Stratrock Ventures LLC
("Stratrock"), and other companies traced to MARNELL
(collectively, the "MARNELL-controlled entities"). According to
information obtained in the course of the resulting
investigation, MARNELL and potentially other co-conspirators
submitted fake documents and other false information to obtain
loans guaranteed by the Small Business Administration ("SBA")
through the Paycheck Protection Program, which is a program
created by the Coronavirus Aid, Relief, and Economic Security
Act. The investigation has revealed that MARNELL (and possibly
others) sought to obtain more than $10 million (and that MARNELL
and possibly others obtained more than $8 million) in PPP loans
from various lenders, including TransPecos Banks SSB
(~~TransPecos"), Fundbox Inc. (~~Fundbox"), ReadyCap Lending LLC
("ReadyCap"), Customers Bancorp Inc. ("Customers Bank"), and
Kabbage Inc. ("Kabbage"), and that MARNELL (and possibly others)
used the PPP loan proceeds to gamble at the Bellagio Hotel &
Casino and other gambling establishments and to fund a futures
trading account at Charles Schwab & Co, Inc. ("Schwab"). The
investigation has also revealed that MARNELL is fraudulently
obtaining, possibly with co-conspirators, other loans from the
3
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SBA under the Economic Injury Disaster Loan Program, and using
the proceeds at casinos and for other unapproved purposes.
B. 
Paycheck Protection Program
6. 
The Coronavirus Aid, Relief, and Economic Security
("CARES") Act is a federal law enacted in or around March 2020
and designed to provide emergency financial assistance to the
millions of Americans who are suffering the economic effects
caused by the COVID-19 pandemic. One source of relief provided
by the CARES Act was the authorization of up to $349 billion in
forgivable loans to small businesses for job retention and
certain other expenses, through a program referred to as the
Paycheck Protection Program (~~PPP"). In or around April 2020,
Congress authorized over $300 billion in additional PPP funding.
7. 
In order to obtain a PPP loan, a qualifying business
must submit a PPP loan application, which is signed by an
authorized representative of the business. The PPP loan
application requires the business (through its authorized
representative) to acknowledge the program rules and make
certain affirmative certifications in order to be eligible to
obtain the PPP loan. In the PPP loan application, the small
business (through its authorized representative) must state,
among other things, its: (a) average monthly payroll expenses;
and (b) number of employees. These figures are used to
calculate the amount of money the small business is eligible to
receive under the PPP. In addition, businesses applying for a
PPP loan must provide documentation showing their payroll
expenses.
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8. 
A PPP loan application must be processed by a
participating lender. If a PPP loan application is approved,
the participating lender funds the PPP loan using its own
monies, which are 100% guaranteed by 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, is transmitted by the lender
to the SBA in the course of processing the loan.
9. 
PPP loan proceeds must be used by the business on
certain permissible expenses—payroll costs, interest on
mortgages, rent, and utilities. The PPP allows the interest and
principal on the PPP loan to be entirely forgiven if the
business spends the loan proceeds on these expense items within
a designated period of time after receiving the proceeds and
uses a certain amount of the PPP loan proceeds on payroll
expenses.
C. 
TransPecos Loans
10. On July 9, 2020, I participated in an interview of
Jack A. Starks, Jr., who is the Senior Vice President of
Compliance/Legal/IT for TransPecos. I have also reviewed
information and supporting documentation that TransPecos
provided to law enforcement investigators. Based on these
sources, I know the following:
a. 
In or about May 2020, TransPecos issued three PPP
loans totaling more than $3.5 million to MARNELL-controlled
businesses, namely, Shale Creek, Quicksilver, and Slatestone.
Although the loan applications listed "Tyler Lerman," "Andrew
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Merrill," and "Andrew Maxwell," as the principals of these
entities, as discussed below, information obtained in the course
of the investigation indicates MARNELL and potentially other co-
conspirators were the ones submitting the applications and
receiving the funds.
b. 
Between April 5 and April 16, 2020, TransPecos
received an application and supporting documentation for a PPP
loan in the amount of $439,000 for borrower Shale Creek, which
was represented to be a Montana-headquartered firm, owned and
controlled by "Tyler Lerman." It was represented that Shale
Creek had 26 employees and average monthly payroll expenses of
$175,600.1 It was further represented that "the Applicant has
not and will not receive another loan under the Paycheck
Protection Program," and that the applicant did not own any
other business or have common management with any other
business. Based on information and documents submitted in
support of the loan application, TransPecos approved and funded
1 I and other federal law enforcement agents have reviewed
bank records and other financial records associated with MARNELL
to attempt to determine whether Shale Creek, and any of the
other MARNELL-controlled entities identified in this affidavit,
are functional companies that employ the individuals identified
in payroll records submitted in support of the loan
applications. Although the investigation is ongoing, I have
seen no evidence thus far that Shale Creek is a functioning
company (other than being registered with the Wyoming Secretary
of State), nor any evidence that it has any employees, any
payroll expenses, or conducts any business whatsoever. Along
similar lines, I have seen no evidence thus far that any of the
MARNELL-controlled entities are functioning companies (other
than being registered with various Secretaries of State), nor
any evidence that they employ anyone, have any payroll expenses,
or conduct any business whatsoever. They appear to be shell
companies that exist solely for the purpose of carrying out this
and other fraud schemes.
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the requested loan, and transferred the loan proceeds via ACH to
account ending x2842 at United Missouri Bancshares (UMB)
Financial Corporation ("UMB Bank"). Investigators are still
attempting to trace these funds.
c. 
Between April 13 and May 6, 2020, TransPecos
received an application and supporting documentation for a PPP
loan in the amount of $1,341,700 for borrower Slatestone, which
was represented to be a Wyoming-headquartered firm, owned and
controlled by "Andrew Merrill." It was represented that
Slatestone had 75 employees and average monthly payroll expenses
of $536,680. It was further represented that "the Applicant has
not and will not receive another loan under the Paycheck
Protection Program," and that the applicant did not own any
other business or have common management with any other
business. It was also represented that loan proceeds would be
used for payroll and other business expenses. Based on
information and documents submitted in support of the loan
application, TransPecos approved the requested loan, and on or
about May 11, 2020, TransPecos funded the loan, transferring the
proceeds via ACH to account ending x2627 at JPMorgan Chase Bank
("JPMC Bank"), which investigators have traced to a Schwab
account in MARNELL's name; records from Schwab indicate MARNELL
used these PPP loan proceeds to fund a futures trading account
at Schwab (which lost more than $500,000 in May 2020 alone) and
to fund a $150,000 wire transfer to the Bellagio Hotel & Casino,
7
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for gambling and entertainment expenses, as will be discussed in
more detail below.z
d. 
Between April 23 and May 11, 2020, TransPecos
received an application and supporting documentation for a PPP
loan in the amount of $1,818,000 for borrower Quicksilver, which
was represented to be a Montana-headquartered firm, owned and
controlled by "Andrew Maxwell." It was also represented that
Quicksilver had 139 employees and an average monthly payroll of
$727,200. It was further represented that "the Applicant has
not and will not receive another loan under the Paycheck
Protection Program," and that the applicant did not own any
other business or have common management with any other
business. It was also represented that loan proceeds would be
used for payroll and other business expenses. Based on
information and documents submitted in support of the loan
application, TransPecos approved and funded the requested loan,
and transferred the loan proceeds via ACH to account ending
x6279 at Live Oak Banking Company ("Live Oak"), a business
account held Quicksilver's name and on which MARNELL is the sole
signer. According to TransPecos, they were able to recover the
funds associated with this loan from Live Oak. I have spoken to
a representative of the Federal Reserve Bank of Atlanta, who
confirmed that the ACH transfer of the loan proceeds for the
2 As discussed in more detail below, TransPecos was able to
recover all of its funds from Schwab, but it appears the monies
used to return funds to TransPecos represented PPP loan proceeds
from other lenders (laundered through a brokerage and futures
trading account at Schwab), as no other transfers or other
monies went into any of the relevant Schwab accounts.
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Quicksilver loan from TransPecos to Live Oak involved an
interstate wire tranfer.
e. 
Among the documents and information submitted in
support of the PPP loans sought from TransPecos were payroll
data and forms, including Form 940 tax forms supposedly
submitted to the Internal Revenue Service ("IRS") on behalf of
borrowers Shale Creek, Quicksilver, and Slatestone. As
indicated in further detail below, however, information obtained
from the Treasury Inspector General for TIGTA indicates these
Form 940 tax forms were never submitted to the IRS.
f. 
According to login records from TransPecos, the
same IP addresses were used to access accounts associated with
all three TransPecos loans, and one of these IP addresses was
45.49.21.139, which is an IP address traced to Charter
Communications Inc. ("Charter Communications"). Information
from Charter Communications indicates that, at all relevant
times, the IP address was associated with an account held in the
name of MARNELL's husband, S.R., and was associated with the
SUBJECT PREMISES,
a search warrant is being also sought for the
SUBJECT PREMISES. As discussed in more detail below, the
SUBJECT PREMISES is the address listed on both MARNELL's and
S.R.'s California drivers' licenses and is an address associated
with other accounts in MARNELL's name and in accounts maintained
in aliases "Andrew Maxwell" and `Andrew Merrill" including
accounts associated with other PPP loans.
~']
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11. On July 8, 2020, I participated in an interview of
Brad Day, the Bank Secrecy Officer at Live Oak Bank. I have
also reviewed information and documents that Live Oak Bank
provided to law enforcement investigators. Based on these
sources, and as relevant to the TransPecos loans, I know the
following:
a. 
On or about May 8, 2020, two business accounts
were opened in the name of Quicksilver by customer "Andrew
Marvell," using MARNELL's Social Security Number (`ASSN") ending
x4394.3
b. 
A copy of MARNELL's California driver's license
was submitted as the identification document associated with the
two business accounts opened at Live Oak, along with business
entity information for Quicksilver (the same LLC information was
provided to both Live Oak and TransPecos for this entity,
3 Based on information obtained from law enforcement
databases, consistent with information obtained from financial
institutions in the course of this investigation, MARNELL
appears to be using at least three different SSNs in his own
name (and other SSNs in other names). Based on these same
sources, one of the SSNs he is using in his own name, SSN ending
x4394, was issued in or about 1986, which was six years after he
was born, according to information in law enforcement databases.
According to information reported by financial institutions,
MARNELL also appears to be using at least two others SSNs in his
own name, one that was issued in or about 1988, and another
issued in or about 2003, according to law enforcement databases.
For the purpose of this affidavit, when I refer to ~~MARNELL's
SSN," I am referring to the earliest-issued SSN, ending x4394.
According to reports that I have reviewed from financial
institutions, MARNELL has claimed in the past to have been the
victim of identity theft, as an explanation for the multiple
SSNs in his name when he was attempting to obtain credit or to
try to explain fraudulent credit card charges, but in each of
the instances where he reported being the victim of identity
theft, the financial institution investigating the claim
determined that any such claim was unfounded and was being used
to try to avoid responsibility for fraudulent conduct.
10
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specifically the same address and state of incorporation,
although different Employer Identification Numbers were listed),
and another supposed business entity called xtractd LLC
("xtractd"), which is listed as the borrower on another PPP loan
application submitted to a different lender (specifically
Customers Bank), as discussed further below.
c. 
On or about May 12, 2020, proceeds from one of
the TransPecos loans, in the amount of $1,818,000, were credited
to one of MARNELL's Quicksilver business accounts at Live Oak
Bank. TransPecos records indicate this loan was the $1,818,000
PPP loan issued to Quicksilver, supposedly owned and operated by
"Andrew Maxwell." Fraud investigators at Live Oak flagged this
transfer (and another discussed below) as possibly fraudulent,
froze the funds, and eventually returned them to TransPecos.
12. I have reviewed information and documents that Schwab
provided to law enforcement investigators, and I have spoken to
FDIC-OIG SA Vikas Arora regarding his communications with a
Schwab representative concerning relevant accounts. I have also
reviewed reports that various casinos have submitted to law
enforcement and have spoken with an assigned agent from IRS-CI
regarding her conversations with casino representatives
regarding relevant activity. Based on these sources, I know the
following:
a. 
In or about March 2020, a Schwab brokerage
account, ending x2726 (the "Schwab x2726 brokerage account"),
was opened in MARNELL's name, using MARNELL's SSNs, and his home
address (the SUBJECT PREMISES). In or about June 2020, another
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Schwab brokerage account, ending x7759 (the `Schwab x7759
brokerage account"), was opened in MARNELL's name, using
MARNELL's SSN and his home address (the SUBJECT PREMISES). At
least one of the brokerage accounts was linked to a futures
trading account, ending x8828 (the "Schwab x8828 futures trading
account," and collectively with the Schwab x2726 brokerage
account and the Schwab x7759 brokerage account, the "Schwab
accounts"). A brokerage account was also opened in S.R.'s name,
but no activity occurred in the account, and it was closed with
a zero balance, with fraud indicators.
b. 
The brokerage accounts allowed for uncovered
options writing, with margin requirements. I know from training
and experience and from discussions with other agents with
training and experience in financial markets that uncovered
options trading allows a trader (here, the Schwab customer) to
sell options without holding an offsetting position in the
underlying security (also known as selling a "naked option"),
and in this type of option trading, the seller of the option
runs the risk that the buyer will exercise an in-the-money
option, and the seller may have to acquire a position quickly in
the underlying security, potentially at a significant loss.
This type of options trading carries significant risks because
of the limited upside profit potential (which is the premiums
paid on the option), and the significant downside loss potential
(which could vary depending on the volume of options traded and
volatility of the underlying security). At least one of the
brokerage accounts was also linked to a futures trading account,
12
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which involves all of the same risks of naked options trading,
along with additional risks involved in trading futures.
c. 
On or about May 11, 2020, a deposit in the amount
of $1,341,700 was received from TransPecos into the Schwab x2726
brokerage account in MARNELL's name, and I know from TransPecos
records that these funds represented all or virtually all the
proceeds of the PPP loan issued to Slatestone, supposedly owned
and operated by ~~Andrew Merrill," rather than MARNELL, and that
the loan issued for the purpose of paying payroll and other
business expenses of Slatestone.
d. 
Prior to the $1,341,700 deposit, the Schwab x2726
brokerage account had a zero balance. Between May 20 and May
22, 2020, more than $1.3 million of the $1,341,700 was
transferred from the Schwab x2726 account to the Schwab x8828
futures trading account, which was then used to conduct futures
options trading, resulting in a net loss of $525,693 for the
month of May 2020.
e. 
After transfers back from the Schwab x8828
futures trading account to the Schwab x2726 brokerage account,
$370,484.00 was left in the Schwab x2726 brokerage account at
the end of May 2020, and (after commissions and fees were
deducted) $421,523.10 was left in the Schwab x8828 futures
trading account -- all of this combined amount, or a total of
$792,007.10, represented proceeds from the original TransPecos
$1,341,700 PPP loan to Slatestone. No other transfers or other
monies went into any of the Schwab accounts in May 2020.
13
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f. 
On or about June 1, 2020, a deposit in the amount
of $1,842,929.16 was received from Fundbox into the Schwab x2726
brokerage account, and I know from Fundbox records, as discussed
below, that these funds represented proceeds of a PPP loan
issued to Stratrock, supposedly owned and operated by "S.R.,"
and that the loan issued for the purpose of paying payroll and
other business expenses of Stratrock.
g. 
On or about June 5, 2020, a wire in the amount of
$150,000 was sent from the Schwab x2726 brokerage account to an
account at Bank of America N.A. ("BofA"), ending x6419, held in
the name of Bellagio LLC, 3600 S Las Vegas Blvd, Las Vegas, NV
89109 (the "Bellagio account"), which is the corporate name and
address for the Bellagio Hotel and Casino (the "Bellagio") in
Las Vegas, Nevada. The wire instruction referenced MARNELL by
name and account number in the transmission notes, indicating
the $150,000 wire was for his benefit. Reports from casinos
indicate that MARNELL engaged in gambling activity throughout
May and June 2020, and that he has been engaged in gambling
activity, including at the Bellagio, in varying degrees and
amounts since at least 2013.4 The $150,000 transfer on June 5,
2020 from the Schwab x2726 brokerage account to the Bellagio,
for MARNELL's benefit, represented PPP loan proceeds, because
all of the funds in the Schwab x2726 brokerage account at the
time of transfer (and at all other times) were traceable to the
4 According to a report from Wells Fargo N.A. ("Wells
Fargo"), where MARNELL had worked as a credit analyst, MARNELL
was fired from Wells Fargo for embezzling money from the company
(through a company credit card) related to gambling activity in
June 2018.
14
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TransPecos and Fundbox PPP loans to Slatestone and Stratbox,
respectively
h. 
On or about June 18, 2020, a deposit in the
amount of $1,842,929.17 was received from Fundbox into the
Schwab x7759 brokerage account in MARNELL's name, and I know
from Fundbox records, as discussed below, that these funds
represented proceeds of a PPP loan issued to Quicksilver,
supposedly owned and operated by "Andrew Maxwell." These funds
were transferred to the Schwab x2726 brokerage account, also in
MARNELL's name, and they were then transferred, along with other
remaining funds from the other PPP loans, to the Schwab x8828
futures trading account, which was then used to conduct futures
options trading, resulting in a net loss of $2,773,455.40 for
the month of June 2020.
i. 
On or about June 22, 2020, $1,341,700 was
transferred from the Schwab x2726 brokerage account to
TransPecos (representing the full amount of the loan proceeds
that TransPecos had transferred to Schwab for MARNELL-controlled
entities). It is not clear from account records obtained to
date which entity or person initiated the return of these funds
to TransPecos. However, account records indicate that the
transfer was funded through transfers from the Schwab x8828
futures trading account, which itself was funded solely through
transfers of PPP loan proceeds from the Schwab x2726 brokerage
accounts. At all times, other than PPP loan proceeds, no other
transfers or other monies went into any of the Schwab accounts,
15
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and trading activity in those accounts did not result in any net
gains to the accounts, but rather resulted in large net losses.
j. 
Although the Schwab accounts collectively had a
net negative balance at the end of June 2020, on July 8, 2020, a
wire transfer of $200,000 was sent from the Schwab x2726
brokerage account to the Bellagio account, with the same
reference to MARNELL in the wire instructions as the previous
wire discussed above. Investigators are still attempting to
identify the source of the monies used to fund this wire
transfer. Information from the Bellagio indicates that MARNELL
was gambling at the Bellagio from July 9 to July 11, 2020, and
that he lost more than $150,000 in those two days.
13. I have spoken with an assigned special agent from
TIGTA and reviewed reports that she prepared, and according to
these sources:
a. 
Form 940s are forms that employers file with the
IRS to report and ultimately to pay an employer's annual Federal
Unemployment Tax Act (FUTA) tax. All employers that pay payroll
are required to file these forms on an annual basis.
b. 
IRS has no record of the Form 940 payroll forms
submitted to TransPecos for Shale Creek, Quicksilver, or
Slatestone, nor does IRS have any record of any Form 940s or any
other payroll records being submitted for these entities or the
associated Employer Identification Numbers (~~EINs").
14. Information from the Department of Homeland Security
("DHS") indicates that fake information was submitted to
TransPecos as identification for "Andrew Maxwell," the supposed
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principal of Quicksilver. A photograph of what purports to be
the inside jacket of a United States passport in the name
"Andrew Maxwell," passport number ending x9799 (with what
appears to be MARNELL's photograph) was submitted to TransPecos
as identification for "Andrew Maxwell," but DHS has no record of
this passport being issued in this name -- the passport number
is real but belongs to another person. The same fake passport
was used as identification for "Andrew Maxwell" for other PPP
loans discussed below.
15. Based on my training and experience and publicly
available information regarding TransPecos, I know that
TransPecos is a financial institution, as that term is defined
in 18 U.S.C. § 20, that is insured by the Federal Deposit
Insurance Corporation.
D. 
FundBox Loans
16. I have reviewed information and documents that FundBox
provided to law enforcement investigators, and I have also
reviewed information and documents from Schwab, and spoken with
FDIC-OIG SA Arora regarding his communications with a Schwab
representative regarding the Schwab accounts. Based on these
sources, I know the following:
a. 
In or about June 2020, Fundbox issued two PPP
loans totaling $3,685,858.32 to MARNELL-controlled entities,
namely, Stratrock and Quicksilver. Although the loan
applications and other information indicated that the principals
of these entities were, respectively, "S.R." and "Andrew
Maxwell," other information obtained in course of the
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investigation indicates MARNELL and potentially others were the
ones submitting the applications and receiving the funds. Among
other evidence of this, all of the Fundbox PPP loan proceeds
were transferred to MARNELL's Schwab accounts and used by
MARNELL for options trading and gambling.
b. 
On or about May 22, 2020, Fundbox received an
application and supporting documentation for a PPP loan in the
amount of $1,842,929.16 for borrower Stratrock, which was
represented to be a Colorado-headquartered firm, owned and
controlled by "S.R." It was also represented that Stratrock had
129 employees and average monthly payroll expenses of $734,593.
It was further represented that "the Applicant has not and will
not receive another loan under the Paycheck Protection Program,"
and that the applicant did not own any other business or have
common management with any other business. It was also
represented that loan proceeds would be used for payroll and
other business expenses. Based on information and documents
submitted in support of the loan application, Fundbox approved
the requested loan for Stratrock.
c. 
On or about June 15, 2020, Fundbox received an
application and supporting documentation for a PPP loan in the
amount of $1,842,929.17 for borrower Quicksilver, which was
represented to be a Montana-headquartered firm, owned and
controlled by "Andrew Maxwell," with a phone number that was the
same as the phone number listed for "Tyler Lerman" in the PPP
loan application submitted to TransPecos for borrower Shale
Creek. It was also represented to Fundbox that Quicksilver had
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129 employees and had an average monthly payroll of $734,593.
It was further represented that "the Applicant has not and will
not receive another loan under the Paycheck Protection Program,"
and the applicant did not own any other business or have common
management with any other business, and that the loan would be
used to pay payroll and for other approved business expenses.
Based on the information in the application and the documents
that were submitted, Fundbox approved the requested loan for
Quicksilver.
d. 
As discussed above, all of the Fundbox PPP loan
proceeds were transferred to MARNELL's Schwab accounts and used
for risky and losing options trading and for gambling
activities, and as of the end of June 2020, MARNELL had lost all
of the Fundbox PPP loan proceeds, leaving the Schwab accounts
with a net negative balance.
e. 
Among the application documents and information
submitted to Fundbox were payroll data and forms, including the
same (fake) Form 940 that was submitted to TransPecos for
Quicksilver. The Form 940 tax forms submitted to Fundbox and to
TransPecos for borrower Quicksilver were identical, containing
the exact same information, including the same Employer
Identification Number ("EIN"), and business name and address,
with the exception that the form submitted to Fundbox was dated
two days before the form submitted to TransPecos, and the form
submitted to Fundbox had a signature on it (both forms had
signature blocks filled in with the name of "William Kalemeier"
as `Treasurer" of Quicksilver, but the only the form submitted
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to Fundbox had what appeared to be a signature of "William
Kalemeier" affixed to it).
f. 
A Form 940 was also submitted for Stratrock, but
according to information provided by TIGTA, the IRS has no
record of receiving this Form 940 or any Form 940 tax forms or
other payroll records for this entity or the associated EIN.
The financial information on the Form 940 submitted to Fundbox
for borrower Stratrock (i.e., the payroll payments and other
numbers reported on the form) was identical to the financial
information on the Form 940 submitted to Fundbox for borrower
Quicksilver. The Form 940 submitted for Stratrock, like the
Form 940 submitted for Quicksilver, was also supposedly signed
by "William Kalemeier" as "Treasurer" of Stratrock, and it was
dated the same day as the Form 940 submitted for Quicksilver.
The only differences between the 940 forms submitted for
Stratrock and Quicksilver were the EINs, the names and addresses
of the businesses, and the state of incorporation. The forms
for these two supposed businesses were otherwise identical,
including all of the financial information.
g. 
Among the IP addresses used to submit documents
and information for the Stratrock loan was 45.49.21.139, which
is the same IP address used to access accounts associated with
the TransPecos loans, and the same IP address used to access
other financial accounts in MARNELL's name and in the names of
aliases "Andrew Maxwell" and "Andrew Merrill," including
accounts associated with other PPP loans discussed below, and an
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IP address that has been traced to MARNELL and the SUBJECT
PREMISES through Charter Communication records.
17. Information from DHS indicates that fake information
was submitted to Fundbox as identification for "Andrew Maxwell,"
the supposed principal of Quicksilver. A photograph of what
purports to be the inside jacket of a United States passport in
the name "Andrew Maxwell," passport number ending x9799 (with
what appears to be MARNELL's photograph) was submitted to
Fundbox as identification for "Andrew Maxwell," but DHS has no
record of this passport being issued in this name -- the
passport number is real but belongs to another person. This is
the same fake passport that was submitted to TransPecos as
identification for "Andrew Maxwell," who was listed as the
principal of borrower Quicksilver for the PPP loans obtained
from TransPecos, and it is the same fake passport that was
submitted to ReadyCap, another PPP lender discussed below. The
same email address, amaxwell@eastbaydeco.com, was listed with
both Fundbox and ReadyCap as the email address of "Andrew
Maxwell."
E. 
ReadyCap Loan
18. I have reviewed documents and information that
ReadyCap., Customers Bank, and Live Oak provided to law
enforcement, along with data from a law enforcement database
compiling information concerning PPP loans, and I have spoken to
a Live Oak representative and to another law enforcement
investigator from FHFA-OIG regarding her communications with a
Customers Bank representative regarding a ReadyCap PPP loan
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sought in the name of borrower East Bay Associates LLC (`East
Bay Associates"). From these sources, I know the following:
a. 
Shortly after the PPP program was introduced,
Customers Bank partnered with several vendors including
ReadyCap, Kabbage, and other financial institutions to offer PPP
loans to small businesses.
b. 
On or about April 8, 2020, ReadyCap received an
application and supporting documents for a PPP loan in the
amount of 5456,917 for borrower East Bay Associates, which was
represented to be a Florida-headquartered firm, owned and
controlled by "Andrew Maxwell." On at least one of the
application forms, it was also represented that East Bay
Associates employed 27 people and had an average monthly payroll
of $182,767.5 The IP address used to affix a virtual signature
for "Andrew Maxwell" to at least two documents was 45.49.21.139,
which is the same IP address used to access accounts associated
with the TransPecos loans, other accounts in MARNELL's name, and
has otherwise been traced to MARNELL at the SUBJECT PREMISES,
PREMISES as described in this affidavit. It was further
represented that "the Applicant has not and will not receive
another loan under the Paycheck Protection Program," and that
5 ReadyCap provided at least two versions of the PPP loan
application form submitted for East Bay Associates, one dated
April 8, 2020, and the other dated April 14, 2020. On the first
of these applications, dated April 8, 2020, it was represented
that East Bay Associates had 27 employees and an average monthly
payroll of $182,767; on the second version, dated April 14,
2020, it was represented that East Bay Associated had 26
employees and an average monthly payroll of $141,000.
Regardless, I have seen no evidence thus far that East Bay
Associates is a functional company or has any employees or has
any payroll expenses.
22
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the applicant did not own any other business or have common
management with any other business. It was also represented
that loan proceeds would be used for payroll and other business
expenses. Based on information and documents submitted in
support of the loan application, ReadyCap approved a PPP loan in
the amount of $352,500.
c. 
On or about May 18, 2020, an ACH transfer of
$352,500 was initiated from Customers Bank to an account at Live
Oak Bank, account ending x6912, held in Quicksilver's name, and
on which MARNELL was the sole signer, to fund the PPP loan that
ReadyCap had issued to East Bay Associates, for "Andrew
Maxwell." According to transfer instructions, the funds were
supposed to be transferred to a checking account at Live Oak
Bank, but they were frozen because of a discrepancy between the
type of account designated in wire instructions and the type of
account at Live Oak Bank, which was a savings account. In
addition, fraud investigators at Live Oak Bank identified a
discrepancy in the name of the borrower entity on the PPP loan,
which was East Bay Associates, and the name of the
accountholder, which was Quicksilver, and a difference between
the supposed principal of East Bay Associates, "Andrew Maxwell,"
and the individual signer on the account, which was MARNELL. As
a result, Live Oak Bank froze the funds and ultimately returned
them.
19. Information from DHS indicates that fake information
was submitted to ReadyCap as identification for "Andrew
Maxwell," the supposed principal of East Bay Associates. A
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photograph of what purports to be the inside jacket of a United
States passport in the name "Andrew Maxwell," passport number
ending x9799 (with what appears to be MARNELL's photograph) was
submitted to ReadyCap as identification for "Andrew Maxwell,"
but DHS has no record of this passport being issued in this name
-- the passport number is real but belongs to another person.
This is the same fake passport that was submitted to TransPecos
and Fundbox as identification for the "Andrew Maxwell," the name
that was listed as the principal of borrower Quicksilver for the
PPP loans obtained from TransPecos and Fundbox. The same email
address, amaxwell@eastbaydeco.com, was listed with both Fundbox
and ReadyCap as the email address of "Andrew Maxwell."
F. 
Customers Bank Loan
20. I have reviewed information provided by Customers Bank
to law enforcement investigators, along with data from a law
enforcement database compiling information concerning PPP loans,
and I have spoken to another law enforcement investigator from
FHFA-OIG about her conversations with a Customers Bank
representative regarding a PPP loan obtained from Customers Bank
in MARNELL's name, and from these sources, I know the following:
a. 
In or about April 2020, Customers Bank received a
loan application for a PPP loan in the amount of $1,352,318 for
xtractd, with the same address and phone number listed for this
entity as that listed for Slatestone in application materials
sent to TransPecos. The principal of xtractd was listed as
`Andrew Marvell," with MARNELL's SSN. It was also represented
that xtractd employed 78 people and had an average monthly
24
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payroll of $542,683.59. It was further represented that "the
Applicant has not and will not receive another loan under the
Paycheck Protection Program," and that the applicant did not own
any other business or have common management with any other
business. It was also represented that loan proceeds would be
used for payroll and other business expenses. Based on
information and documents submitted in support of the loan
application, Customers Bank approved the requested loan, and on
or about April 23, 2020, proceeds in the amount of $1,352,318
were disbursed to a Customers Bank account ending x8371.
b. 
Between May 4, 2020, and June 11, 2020,
approximately $1.1 million of the PPP loan proceeds for xtractd
were further transferred to other accounts, and investigators
are still tracing these funds.
21. Based on my training and experience and publicly
available information regarding Customers Bank, I know that
Customers Bank is a financial institution, as that term is
defined in 18 U.S.C. ~ 20, that is insured by the Federal
Deposit Insurance Corporation.
G. 
Kabbage Loans
22. On July 8, 2020, I participated in an interview of
Spencer Robinson, the Chief Risk Officer at Kabbage, and I have
also reviewed data from a law enforcement database compiling
information concerning PPP loans, and from these sources I know
the following:
a. 
Kabbage is a financial technology company that
provides small businesses with products that can help grow their
25
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business. Kabbage partners with banks to provide capital for
these business products. When the PPP loan program was
announced, Kabbage applied with the Small Business
Administration (~~SBA") to be a non-bank PPP lender.
b. 
In or about June 2020, Kabbage received an
application for a PPP loan in the amount of $1,301,050 for
borrower Slatestone, purportedly owned and operated by "Andrew
Merrill," and based on information and documents submitted in
support of the loan application, Kabbage approved the requested
loan, and an SBA loan number was issued for it.
c. 
The PPP loan did not fund because the borrower
failed pre-funding identification verifications. Also, because
of the loan amount, it would have required a full manual
underwriting, which did not happen.
d. 
Kabbage had received an additional PPP loan
application in the name of an Arizona-based business whose
principal was represented to be "Andrew Marnell," with MARNELL's
SSN. This loan also never funded because the borrower again
failed the pre-funding identity verification checks.
H. 
Information from TD Ameritrade
23. I have reviewed information and documents that TD
Ameritrade Inc. ("TD Ameritrade") provided to law enforcement
investigators. Based on these sources I know the following:
a. 
In or about February and March 2020, accounts
were opened in the name "Andrew Maxwell" and "Andrew Merrill" at
TD Ameritrade. Previously, in 2018, TD Ameritrade closed
26
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accounts in MARNELL's name because of fraudulent activity and
banned him as a future client.
b. 
Login information shows the accounts opened in
the names of "Andrew Maxwell" and "Andrew Merrill" were accessed
from the SUBJECT PREMISES using IP address 45.49.21.139, which
is the same IP address used to access accounts associated with
other PPP loan applications, other accounts in MARNELL's name
and in the names of his aliases "Andrew Maxwell" and "Andrew
Merrill," and has otherwise been traced to MARNELL at the
SUBJECT PREMISES.
c. 
I have listened to recordings of two calls that
TD Ameritrade representatives had with "Andrew Maxwell" and
"Andrew Merrill," and it appears the same person is using both
identities, as the voice sounds the same, and also sounds like
the same voice on recordings I have reviewed from Live Oak of a
customer identifying himself as MARNELL.
d. 
The TD Ameritrade accounts opened in the names of
"Andrew Maxwell" and "Andrew Merrill" were closed in or about
April 2020 because of fraud indicators.
I. 
Information Concerning Fraud Affecting the Economic
Injury Disaster Loan Program
24. I have spoken to an assigned special agent from SBA-
OIG SA and reviewed documents from the Bellagio including a
document that appears to be an account statement from an account
maintained at Aspiration Bank in MARNELL's name, and I have
spoken with a special agent from IRS-CI who has had further
conversations with casino investigators, and from these sources,
27
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I know that, on or about May 22, 2020, applications were filed
for two (2) SBA Economic Injury Disaster Loans (~~EIDL"), one on
behalf of xtractd and the other on behalf of Slatestone -- for
both loans MARNELL was represented to be the principal of the
relevant business entities. In applications for both loans, it
was represented that xtractd and Slatestone each employed 10
people. The loan for xtractd was approved for $150,000. On or
about June 11, 2020, SBA disbursed $149,900, the total loan
proceeds less fees, into MARNELL's Aspiration Bank account,
ending in x6538. A review of bank statements revealed that the
loan proceeds were used for personal expenses such as groceries
and home improvement, for cash withdrawals near MARNELL's
residence, and for gambling and entertainment expenses at the
Bellagio.
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IV. CONCLUSION
25. For all the reasons described above, there is probable
cause to believe that, on or about May 11, 2020, ANDREW MARNELL
knowingly and with intent to defraud carried out a scheme or
plan to obtain money or property from TransPecos through the use
of material false statements and promises, namely, MARNELL
obtained the proceeds of the PPP loan issued to Slatestone,
based on false and fraudulent representations regarding the
borrower and the use of proceeds, in violation of 18 U.S.C.
~ 1344(2) (bank fraud).
Attested to by the applicant in
accordance with the requirements
of Fed. R. Crim. P. 4.1 by
telephone on this 15 day of
July 
2020.
STEVE KIM
UNITED STATES MAGISTRATE JUDGE
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