Plea Agreement and Statement of Facts Relevant to Sentencing — United States v. Gilroy (Dkt. 22, D. Colo.)

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A plea agreement and statement of facts relevant to sentencing in United States v. Patricia Ann Gilroy, Criminal Case No. 22-cr-00063-DDD, in the U.S. District Court for the District of Colorado, filed March 31, 2022 as Document 22. It is submitted by Assistant U.S. Attorneys Pegeen D. Rhyne and Sarah H. Weiss and by the defendant with counsel Peter Aiken. Gilroy agrees to waive indictment and plead guilty to a single-count Information charging wire fraud under 18 U.S.C. § 1343, to waive certain appellate and collateral attack rights, and to be liable for restitution of $907,427.69 to the SBA and participating lenders, plus interest. The agreement closes with the parties' signatures.

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ase 1:22-cr-OQ063-DDD Document 22 Filed 03/31/22 USDC Colorado Page 1 of 14

                    IN THE UNITED STATES DISTRICT COURT
                       FOR THE DISTRICT OF COLORADO

Criminal Case No. 22-cr-00063-DDD

UNITED STATES OF AMERICA

             Plaintiff,

Vv.

1. PATRICIA ANN GILROY,

             Defendant,

                PLEA AGREEMENT AND STATEMENT OF FACTS
                          RELEVANT TO SENTENCING

      The United States of America, by and through Pegeen D. Rhyne and Sarah H,

Weiss, Assistant United States Attorneys for the United States Attorney’s Office for the

District of Colorado (the “government”), and the defendant, Patricia Ann Gilroy (“Gilroy”

or the “defendant”), personally and by counsel, Peter Aiken, submit the following Plea

Agreement pursuant to D.C.COLO.LCrR 11.1. This agreement binds only the Criminal

Division of the United States Attorney's Office for the District of Colorado and the

defendant.

                                i. AGREEMENT

A.    Defendant’s Plea of Guilty:

      The defendant agrees:

      (1)   to waive indictment and plead guilty to a single-count Information

                                                                     Court’s Exhibit

                                                                            1

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charging a violation of 18 U.S.C. § 1343 (wire fraud);

(2) to waive certain appellate and collateral attack rights, as explained in
detail below;

(3) to be liable for restitution to the SBA and participating lenders in the
amount of $907,427.69, plus interest accruing through the date of the
sentencing hearing, with additional information about apportionment
between the SBA and participating lenders being provided at the
sentencing hearing;

(4) to pay $50,000 toward restitution at or before the time of sentencing; and

(5) not to contest forfeiture as more fully described below.

B. The Government's Obligations:

This agreement is made pursuant to Fed.R.Crim.P.11(c)(1)(A). The government
agrees not to bring other charges against the defendant based on information currently
known to the United States Attorney's Office, District of Colorado concerning fraud
against the government programs described below. Should the plea of guilty be
vacated on the motion of the defendant, the government may, in its sole discretion, file
an indictment with additional charges.

Provided the defendant does not engage in prohibited conduct or otherwise
implicate USSG §§ 3C1.1 and 3E1.1, cmt. n.4 between the guilty plea and sentencing in
this case, the government agrees that the defendant should receive a two-level
reduction for acceptance of responsibility pursuant to USSG § 3E1.1(a) and agrees to
file a motion requesting that the defendant receive a one-level reduction for acceptance

of responsibility pursuant to USSG § 3E1.1(b).
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The government agrees to recommend a sentence at the low-end of the

applicable guideline range for the criminal history and a total offense level calculated by

the Court at sentencing.
Cc. Defendant's Waiver of Appeal:

The defendant is aware that 18 U.S.C. § 3742 affords the right to appeal the
sentence, including the manner in which that sentence is determined. Understanding
this, and in exchange for the concessions made by the government in this agreement,
the defendant knowingly and voluntarily waives the right to appeal any matter in
connection with this prosecution, conviction, or sentence (including the restitution
order}, unless it meets one of the following criteria:

(1) the sentence exceeds the maximum sentence provided in the
statute of conviction, 18 U.S.C. § 1343;

(2) the sentence exceeds the top end of the advisory guideline range
from the Sentencing Guidelines that applies for the defendant's
criminal history (as determined by the district court) at a total offense
level of 18; or

(3) the government appeals the sentence imposed.

If the first criteria applies, the defendant may appeal only the issue of how his
sentence exceeds the statutory maximum sentence. But if one of the latter two criteria
apply, the defendant may appeal on any ground that is properly available in an appeal
that follows a guilty plea.

The defendant also knowingly and voluntarily waives the right to challenge this
prosecution, conviction, or sentence {including the restitution order) in any collateral
attack (including, but not limited to, a motion brought under 28 U.S.C. § 2255. This

waiver provision does not prevent the defendant from sesking relief otherwise available
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in a collateral attack on any of the following grounds:

(1) the defendant should receive the benefit of an explicitly retroactive change
in the sentencing guidelines or sentencing statute;

(2) the defendant was deprived of the effective assistance of counsel; or
(3) the defendant was prejudiced by prosecutorial misconduct.

The Defendant also waives the right to appeal any sentence imposed below or
within the Guideline range upon a revocation of supervised release in this cause
number. The Defendant also waives the right to appeal the denial of any motion filed
under 18 U.S.C. § 3582(c)(1)(A) where such denial rests in any part upon the court's
determination that “extraordinary and compelling reasons” for a sentence reduction are
lacking or that a sentence reduction is not warranted under the factors set forth in 18
U.S.C. § 3553(a).

D: Forfeiture of Assets:

The defendant admits the forfeiture allegations. The defendant further agrees to
forfeit to the United States immediately and voluntarily any and all assets and property,
or portions thereof, subject to forfeiture, pursuant to Title 18, United States Code,
Sections 981(a)(1)(C) and Title 28, United States Code, Section 2461(c), whether in the
possession or control of the United States, the defendant, the defendant's nominees, or
elsewhere. The assets to be forfeited specifically include, but are not limited to: a
money judgment in the amount of $865,351. The defendant agrees and consents to
the forfeiture of these assets pursuant to any federal criminal, civil, and/or administrative
forfeiture action. | The defendant further agrees to the forfeiture of any substitute
assets up to the value of any property described above pursuant to 21 U.S.C. § 853(p)

and Federal Rules of Criminal Procedure 32.2(e).
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Forfeiture of the defendant's assets shall not be treated as satisfaction of any
fine, restitution, cost of imprisonment, or any other penalty this Court may impose upon
the defendant in addition to forfeiture.

The United States Attorney’s Office for the District of Colorado will recommend to
the Attorney General that any net proceeds derived from the sale of the judicially
forfeited assets be remitted or restored to eligible victims of the offense, for which the
defendant has pleaded guilty, pursuant to 18 U.S.C. § 981(e), 28 C.F.R. pt. 9, and any
other applicable laws, if the legal requirements for recommendation are met. The
defendant understands that the United States Attorney's Office only has authority to
recommend such relief and that the final decision of whether to grant relief rests solely
with the Department of Justice, which will make its decision in accordance with
applicable law.

ll, ELEMENTS OF THE OFFENSE
The parties agree that the elements of the wire fraud offense charged in the
single-count Information are as follows:
A. The defendant devised a scheme to defraud:
B. The defendant acted with specific intent to defraud;
C. The defendant used, or caused another person to use, interstate or
foreign wire communications facilities for the purpose of carrying
out the scheme; and

D. The scheme employed false or fraudulent pretenses,

Case 1:22-cr-00063-DDD Document 22 Filed 03/31/22 USDC Colorado Page 6 of 14

representations, or promises that were material.’

lll, STATUTORY MAXIMUM SENTENCE

The maximum sentence for a violation of 18 U.S.C. § 1343 is: not more than 20
years of imprisonment, a fine of not more than the greater of $250,000 or twice the gain
or loss from the offense, or both; not more than 3 years of supervised release; a $100
mandatory victim’s fund assessment fee; plus restitution in the amount of $907,427.69
plus interest accruing through the date of the sentencing hearing.

IV. COLLATERAL CONSEQUENCES

The conviction may cause the loss of civil rights, including, but not limited to, the
rights to possess firearms, vote, hold elected office, and sit on a jury.

V._ STIPULATION OF FACTS

The factual basis for this plea is set forth below. Because the Court must, as
part of its sentencing methodology, compute the advisory guideline range for the
offense of conviction, consider relevant conduct, and consider the other factors set forth
in 18 U.S.C. § 3553, additional facts that may be included below which are pertinent to
those considerations and computations. To the extent the parties disagree about the
facts set forth below, the stipulation of facts identifies which facts are known to be in
dispute at the time of the execution of the plea agreement.

This stipulation of facts does not preclude either party from presenting non-
contradictory additional facts which are relevant to the Court's guideline computation, to

other 18 U.S.C. § 3553 factors, or to the Court’s overall sentencing decision.

1 Tenth Circuit Pattern Jury Instructions (Criminal Cases), 2021 Edition, § 2.57.
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The parties stipulate that the following facts are true and correct.

Background about the PPP and EIDL Programs under the CARES Act

On March 27, 2020, the President of the United States signed into law the
Coronavirus Aid, Relief, and Economic Security (CARES) Act, which provided
emergency assistance, administered by the United States Small Business
Administration (SBA), to small business owners affected by the Coronavirus (COVID-
19) pandemic. The two sources of funding for small businesses were the Paycheck
Protection Program (PPP) and the Economic Injury Disaster Loans {EIDL) program.
The CARES Act mandated that only businesses in operation on February 15, 2020, for
PPP, or before February 1, 2020, for EIDL, were eligible under the programs.

PPP loan proceeds were required to be used for certain permissible expenses,
including payroll costs, mortgage interest, rent, and utilities. To obtain a PPP loan, a
qualifying small business was required to submit a PPP loan application, signed by an
authorized representative of the business, in which the applicant acknowledged the
program rules and made certain affirmative certifications. The applicant was also
required to state the business's: (a) average monthly payroll expenses; and (b) number
of employees. These figures were used to calculate the loan amount that the business
was eligible to receive under the PPP. Businesses were also required to provide
documentation showing their payroll! expenses. PPP loan applications were received
and processed, in the first instance, by a participating lender. If a PPP loan application
was approved, the participating lender funded the loan using its own monies, but the
loans were guaranteed by the SBA. Data from the application, including information

about the borrower, the total amount of the loan, and the listed number of employees,

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was transmitted by the lender to the SBA in the course of processing the loan. The
SBA paid participating lenders a processing fee for each funded PPP loan.

At all times relevant to this plea agreement and until April 2021, under the EIDL
program, a small business could receive a loan in an amount of up to six months of
working capital with a maximum of $150,000. The SBA determined the amount of the
loan for which each small business was eligible based, in part, on the amount of gross
revenues and cost of goods sold for the business set forth in the EIDL application.

Gilroy’s Scheme

From in or about April 2020 through in or about April 2021, defendant Patricia
Gilroy knowingly and intentionally engaged in a scheme to defraud the SBA by
submitting fraudulent PPP and EIDL applications on behalf of ten inactive, shell
companies that she controlled, receiving a total of $865,351 as a result of those
fraudulent loan applications.

As part of this scheme, from in or about April 2020 through in or about April 2021,
Gilroy knowingly and with the intent to defraud submitted eight fraudulent PPP
applications to lenders on behalf of six of the shell companies. Three of those PPP
applications were approved and funded, resulting in a total of $518,135 being sent to
bank accounts controlled by Gilroy. In all eight of these PPP applications, Gilroy
knowingly and with the intent to defraud made materially false statements about each
shell company’s: (1) average monthly payroll; (2) number of employees; (3) eligibility to
receive the loan; and (4) intent to use the loan proceeds only for business-related
purposes as permitted under PPP. With these PPP applications, Gilroy also knowingly

and intentionally submitted fraudulent supporting documentation, including false tax
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forms to support her false statements about payroll. Gilroy also fraudulently applied for
and received second draw payments under PPP for two of those companies, resulting
in a total of an additional $52,916 being sent to bank accounts controlled by Gilroy. As
a direct result of Gilroy's fraudulent PPP applications, the SBA paid participating lenders
$30,906.75 in processing fees in connection with the three funded loans and the two
second draw payments. Gilroy understands and agrees that her restitution obligation
includes these processing fees.

Also as part of this scheme, from in or about August 2020 through in or about
November 2020, Gilroy knowingly and with the intent to defraud submitted fraudulent
EIDL applications to the SBA on behalf of six of the shell companies. Two of those
EIDL applications were approved and funded by the SBA, resulting in a total funding of
$294,500 with $294,300 being sent to bank accounts controlled by Gilroy after $100 in
UCC loan handling fees was deducted on each loan. In all six EIDL applications,
Gilroy knowingly and with the intent to defraud made materially false statements about:
(1) the number of employees each company had as of January 31, 2020; and (2) the
amount of gross revenues and cost of goods sold that each company had in the 12
months prior to January 31, 2020. In all of the applications, Gilroy falsely certified that
these statements were true and correct under the penalties of perjury. In fact, as Gilroy
well knew, none of the companies was an active company with any employees or any

gross revenue or cost of goods sold in the 12 months prior to January 31, 2020.

Authorization and Agreement. !n each of those documents, Gilroy falsely agreed to

“use all proceeds of this Loan solely as working capital to alleviate economic injury

|
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|
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Additionally, in connection with each of the two funded EIDL foans, Gilroy signed a Loan
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Case 1:22-cr-O0063-DDD Document 22 Filed 03/31/22 USDC Colorado

caused by the disaster occurring in the month of January 31, 2020 and continuing
thereafter and to pay Uniform Commercial Code (UCC) lien filing fees and a third-party
UCC handling charge of $100 which will be deducted from the Loan amount.” In fact,
as Gilroy had intended when she signed and submitted each of the PPP and EIDL
applications, Gilroy used the PPP and EIDL proceeds for other purposes, including
using the funds toward the purchase of anew home. The interest accruing on the
unpaid balance of these funded EIDL loans through October 1, 2021, is $10,969.94.
Gilroy understands and agrees that her restitution obligation includes the interest on the
unpaid balance of these EIDL loans that accrues up through the date of her sentencing
hearing. Updated interest figures will be presented at the time of sentencing.

On September 22, 2020, Gilroy knowingly and with the intent to defraud
submitted a fraudulent EIDL application to the SBA on behalf of Pest Control Services
seeking a loan, On that application, in order to create the false impression that Pest
Control Services was a company that was active and in operation in the year prior to
January 31, 2020, Gilroy falsely stated that Pest Control Services: (1} had 3 employees
as of January 31, 2020; (2) gross revenues of $328,000 in the 12 months prior to
January 31, 2020; and (3) cost of goods sold of $39,000 in the 12 months prior to
January 31, 2020. In fact, and as Gilroy well knew, Pest Control Services had no
employees as of January 31, 2020, and had no gross revenues or cost of goods sold in
the 12 months prior to January 31, 2020. In response to this fraudulent EIDL
application, the SBA approved and funded a loan of $144,500 to Pest Control Services.

Interstate wire: On November 3, 2020, the SBA in Denver, Colorado created and

certified the payment file for this loan to Pest Control Services and transmitted it via
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interstate wire communications from Colorado to the U.S. Treasury processing site
located in the Kansas City Regional Operations Center in Kansas City, Missouri. After
a computer operator at the U.S. Treasury disbursing office in Kansas City, Missouri
performed payment operations to complete the processing of the file, an Automated
Clearing House (ACH) payment file was transmitted to the Federal Reserve Bank ACH
processing site in New Jersey. The Federal Reserve Bank in New Jersey processed
the payment file and sent $144,400 to Bank of America in Missouri with Pest Control
Services designated as the payee.

Gilroy agrees that her restitution obligation includes $907,427.69 and the interest
accruing through the date of the sentencing hearing.

VI.__ ADVISORY GUIDELINE COMPUTATION AND 3553 ADVISEMENT

The parties understand that the imposition of a sentence in this matter is
governed by 18 U.S.C. § 3553. In determining the particular sentence to be imposed,
the Court is required to consider seven factors. One of those factors is the sentencing
range computed by the Court under advisory guidelines issued by the United States
Sentencing Commission. In order to aid the Court in this regard, the parties set forth
below their estimate of the advisory guideline range called for by the United States
Sentencing Guidelines. To the extent that the parties disagree about the guideline
computations, the recitation below identifies the matters which are in dispute.

The Guideline calculation below is the good-faith estimate of the parties, but it is only an
estimate. The parties understand that the government also has an independent
obligation to assist the Court in making an accurate determination of the correct

guideline range. To that end, the government may argue that facts identified in the
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ocument 22 Filed 03/31/22 USDC Colorado Page 12 of 14

presentence report, or otherwise identified during the sentencing process, affect the
estimate below.
A. The base guideline is § 2B1.1, with a base offense level of 7.
§ 2B1.1(a}(1).
B. An 14-level enhancement applies because the loss was more than
$550,000 but less than $1,500,000. §2B1.1(b}(1)(J).

C. The adjusted offense level is 21.

D. The defendant should receive a 3-level downward adjustment for
timely acceptance of responsibility. The resulting total offense
levelis 18. § 3E1.1(a)-(b).

E. The parties understand that the defendant's criminal history
computation is tentative. The criminal history category is
determined by the Court based on the defendant's prior convictions.
Based on information currently available to the parties, it is

estimated that the defendant's criminal history category would be I.

F. The career offender/criminal livelinood/armed career criminal

adjustments would not apply.

G. The advisory guideline range resulting from these calculations is
27-33 months. However, in order to be as accurate as possible,
with the criminal history category undetermined at this time, the
offense level(s) estimated above could conceivably result in a
range from 27 months {bottom of Category |} to 71 months (top of

Category VI). The guideline range would not exceed, in any case,
12


ocument 22 Filed 03/31/22 USDC Colorado Page 13 of 14

the statutory maximum applicable to the count of conviction.

H. Pursuant to guideline § 5E1.2, assuming the estimated offense
level above, the fine range for this offense would be $10,000 to
$100,000, plus applicable interest and penalties.

i. Pursuant to guideline § 5D1.2, if the Court imposes a term of
supervised release, that term is at least 1 year, but not more than 3
years.

j. Pursuant to guideline §5E1.1(a}(1), the Court shall enter a
restitution order for the full amount of the victims’ losses, which the
parties agree will be an amount of $907,427.69 plus interest
accruing through the date of the sentencing hearing.

The parties understand that the Court is free, upon consideration and proper
application of all 18 U.S.C. § 3553 factors, to impose that reascnable sentence which it
deems appropriate in the exercise of its discretion and that such sentence may be less
than that called for by the advisory guidelines (in length or form), within the advisory
guideline range, or above the advisory guideline range up to and including

imprisonment for the statutory maximum term, regardless of any computation or position

of any party on any 18 U.S.C. § 3553 factor.


ocument 22 Filed 03/31/22 USDC Colorado Page 14 of 14

Vil. ENTIRE AGREEMENT

The agreement disclosed to the Court is the entire agreement. There are no
other promises, agreements or “side agreements,” terms, conditions, understandings, or
assurances, express or implied. In entering this agreement, neither the government nor

the defendant has relied, or is relying, on any other terms, promises, conditions or

assurances.
G- (8-21
Date PATRICIA’GILROY
Defendgat

F] 13 bow ‘Le
Date PETER AIKEN |

Attorney for Defe roy

2 ee,
/sifoo- (| Phew’
Date PEGEEN®.RHYNE

SARAH H. WEISS
Assistant U.S. Attorney

14

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