Motion to Rescind SBA Loan Agreement and Pretrial Services Contract Due to Breach of Contract, Fraudulent Misrepresentation, Undisclosed Sale of Loan Notes, and Violations of Due Process — United States v. Henson (Dkt. 195, D. Md.)

Summary

A pro se motion by defendant Nichelle Henson to rescind the SBA loan agreement and pretrial services contract, filed March 1, 2025 in United States v. Nichelle Henson, in the U.S. District Court for the District of Maryland. The motion asks the Court to rescind both the Small Business Administration loan agreement issued under the Paycheck Protection Program and/or Economic Injury Disaster Loan and the pretrial supervision, which it describes as a contract with Pretrial Services. It argues that both agreements were fraudulently induced, breached by the government and void because of material non-disclosures, an undisclosed sale of loan notes and due process violations. Among other relief, it asks the Court to declare the government's continued pursuit of the charges an abuse of discretion.

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Case 1:21-cr-00470-MJM          Document 195     Filed 03/01/25    Page 1 of 6




         UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

                                                 *
       UNITED STATES                             *
                                                 *
                                                 *
                                                 *
               VS.                               *
       NICHELLE HENSON
                                                 *
                                                 *
                                                 *
                                                 *
        * * * * * * * * * * * * * * * * * * * * ** * 400,000,000* * * * * * * *

    MOTION TO RESCIND SBA LOAN AGREEMENT AND PRETRIAL SERVICES

            CONTRACT DUE TO BREACH OF CONTRACT, FRAUDULENT

        MISREPRESENTATION, UNDISCLOSED SALE OF LOAN NOTES, AND

                              VIOLATIONS OF DUE PROCESS

       COMES NOW, Defendant Nichelle Henson, appearing pro se, and respectfully moves

this Honorable Court to rescind both the Small Business Administration (SBA) loan

agreement issued under the Paycheck Protection Program (PPP) and/or Economic Injury

Disaster Loan (EIDL) and the Pretrial Services contract, on the grounds that both agreements

were fraudulently induced, breached by the government, and made null and void due to

material non-disclosures, violations of due process, and constitutional infringements. In

support of this motion, Defendant states as follows:

I. INTRODUCTION

   1. Defendant was approved for a PPP/EIDL loan, administered by the SBA and issued

       through an approved lender.
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   2. Defendant was also placed under pretrial supervision as a condition of release, which

      constitutes a contractual agreement between Defendant and Pretrial Services.

   3. The SBA’s actions, including material breaches of contract, failure to follow its own

      regulations, and misrepresentation of essential terms, render the loan agreement

      unenforceable and provide Defendant with the right to rescind the agreement.

   4. The SBA also failed to disclose that it was selling loan notes on the secondary

      market, which constitutes a material breach of contract and a violation of the Truth

      in Lending Act (TILA) (15 U.S.C. § 1635), as it deprived Defendant of the right to

      make an informed financial decision.

   5. Similarly, Pretrial Services failed to disclose material terms, misrepresented

      obligations imposed on Defendant, and operated outside the bounds of federal law,

      thereby invalidating the pretrial contract.

   6. Defendant now seeks to rescind both agreements on the grounds of breach of contract,

      fraudulent misrepresentation, constitutional violations, and due process violations.

II. LEGAL BASIS FOR RESCISSION

A. Breach of Contract by the SBA (Restatement (Second) of Contracts § 237)

   7. The SBA was contractually obligated to process and administer the PPP/EIDL loan in

      accordance with 13 C.F.R. Part 120 and the governing CARES Act provisions.

   8. The SBA failed to adhere to these obligations by:

          o   Failing to provide clear eligibility guidance, resulting in Defendant’s reasonable

              misunderstanding of loan terms.

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          o   Misrepresenting the terms of forgiveness and repayment, which were changed

              after the loan was disbursed.

          o   Failing to process the loan in accordance with uniform standards, causing

              arbitrary and inconsistent application of program rules.

          o   Selling the loan note to third parties without Defendant’s knowledge or

              consent, which constitutes a material breach of contract and unfair financial

              dealing.

   9. Under contract law, when one party materially breaches a contract, the non-breaching

       party has the right to rescind the agreement and be restored to their original position. See

       Restatement (Second) of Contracts § 237.

B. Fraudulent Inducement & Misrepresentation (UCC § 2-721) - SBA and Pretrial Services

   10. The SBA and/or its approved lender made material misrepresentations that induced

       Defendant to accept the loan under false pretenses. Similarly, Pretrial Services

       misrepresented conditions of supervision and withheld information that would have

       impacted Defendant’s consent to the agreement.

   11. Specifically:

      Defendant was led to believe that unfiled tax documents were permissible for loan

       approval.

      The SBA initially stated that certain business expenses were covered, then later claimed

       those same expenses were prohibited.




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      The failure to disclose that the SBA was selling loans to investors on the secondary

       market deprived Defendant of their financial autonomy and concealed material risks

       associated with the loan.

      Pretrial Services failed to disclose that compliance obligations could be expanded

       without judicial oversight, violating due process.

   12. Under UCC § 2-721, when a contract is induced by fraudulent or materially

       misleading statements, the aggrieved party has the right to rescind.

C. Violation of Due Process & Pretrial Services Misconduct

   13. The pretrial services agreement operates as a contract, which can only be enforced if

       entered into voluntarily, knowingly, and without material non-disclosures.

   14. Pretrial Services violated Defendant’s due process rights by:

          o   Failing to disclose that additional restrictions could be imposed without

              judicial review.

          o   Failing to disclose that compliance could be expanded beyond the original

              agreement terms.

          o   Imposing conditions outside the scope of constitutional due process

              protections.

   15. These material failures make the Pretrial Services contract unenforceable and void,

       granting Defendant the right to rescind.

   16. Under Morrissey v. Brewer, 408 U.S. 471 (1972), due process requires notice and an

       opportunity to contest changes in pretrial conditions.

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D. Unjust Enrichment and Abuse of Authority

   17. The SBA, while claiming to be the victim of fraud, personally profited by selling loan

      notes on the secondary market.

   18. The government and Pretrial Services engaged in actions that violated due process,

      improperly expanded supervision obligations, and misrepresented material facts.

   19. These violations constitute unjust enrichment, as the SBA financially benefited from

      misrepresentations while prosecuting borrowers under misleading pretenses, and

      Pretrial Services operated outside the boundaries of lawful enforcement.

   20. The government's continued prosecution under these circumstances represents an

      abuse of discretion and a deprivation of constitutional rights, warranting immediate

      relief.

III. REQUEST FOR RELIEF

WHEREFORE, Defendant respectfully requests that this Honorable Court:

   1. Declare the SBA loan agreement rescinded, releasing Defendant from any repayment

      obligations.

   2. Declare the Pretrial Services agreement rescinded, releasing Defendant from all

      obligations associated with pretrial supervision.

   3. Order the SBA and/or its approved lender to cease collection efforts related to the

      loan.

   4. Declare that any reported delinquency, default, or fraud allegations arising from the

      loan be expunged from Defendant’s financial records.

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   5. Hold that the SBA’s undisclosed sale of loan notes violated TILA and constituted a

       breach of contract.

   6. Order that Pretrial Services cease all enforcement actions against Defendant.

   7. Declare that the government's continued pursuit of these charges despite their own

       misrepresentations constitutes an abuse of discretion.

   8. Award any other relief that the Court deems just and proper.

       Defendant reserves the right to submit additional evidence in support of this motion and

to supplement legal arguments based on further discovery.

Respectfully submitted,

Nichelle Henson, Pro Se




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