United States’ Memorandum in Aid of Sentencing — United States v. Vidal (Dkt. 103, E.D. Mich.)

Summary

In this memorandum filed August 18, 2022 in No. 21-cr-20613 in the Eastern District of Michigan, the government asks Hon. Nancy G. Edmunds to sentence Kevin Womble to 21 months, the bottom of a 21 to 27 month guideline range, and to order restitution of $102,391.37. Womble pleaded guilty to conspiracy to commit wire fraud after obtaining, with tax preparer Antonio George's help, a $195,383 PPP loan and a $150,000 EIDL for Bless My Grind, LLC on false employee and payroll figures. The memorandum says the PPP money went to home renovations, funeral costs and jewelry rather than payroll.

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Case 2:21-cr-20613-NGE-KGA ECF No. 103, PageID.620 Filed 08/18/22 Page 1 of 11




                      UNITED STATES DISTRICT COURT
                      EASTERN DISTRICT OF MICHIGAN


UNITED STATES OF AMERICA,                  No. 21-cr-20613

                   Plaintiff,

v.                                         Hon. Nancy G. Edmunds

D-2 KEVIN WOMBLE,

                   Defendant.


      UNITED STATES’ MEMORANDUM IN AID OF SENTENCING



      The United States submits this Memorandum in Aid of Sentencing

pertaining to Defendant Kevin Womble (“Defendant” or “Womble”). Mr.

Womble previously entered a guilty plea to one count of Conspiracy to Commit

Wire Fraud in violation of 18 U.S.C. § 1349. The charges against Womble stem

from his submission of falsified and fraudulent loan applications seeking certain

COVID-19 pandemic relief funds. The United States requests that the Court: (1)

find the applicable sentencing guidelines range to be 21 to 27 months; (2) impose a

custodial sentence of 21 months; (3) impose a three-year term of supervised

release; (4) enter an order of restitution in the amount of $102,391.37; and (5) enter

Case 2:21-cr-20613-NGE-KGA ECF No. 103, PageID.621 Filed 08/18/22 Page 2 of 11




an order of forfeiture in accordance with the terms agreed to by the parties in the

Rule 11 Plea Agreement between Womble and the United States.

I.     Factual Background

       The Payroll Protection Program (“PPP”) is a program administered by the

United States Small Business Administration (“SBA”) designed to help businesses

keep their workforces employed during the coronavirus pandemic. Enacted as part

of the CARES Act, PPP allows small businesses to obtain forgivable loans from

participating financial institutions. The SBA will forgive the loans if all employees

are on payroll for eight weeks and the money is used for payroll, rent, mortgage

interest, or utilities.

       The PPP loan application requires the applying business 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 must state,

among other things, the following: (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.

       The Economic Injury Disaster Loan (“EIDL”) program is an SBA program

that provides low-interest financing to small businesses, renters, and homeowners


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in regions affected by declared disasters. The CARES Act authorized the SBA to

provide EIDLs of up to $2 million to eligible small businesses experiencing

substantial financial disruption due to the COVID-19 pandemic. In addition, the

CARES Act authorized the SBA to issue advances of up to $10,000 to small

businesses within three days of applying for an EIDL. The amount of the advance

is determined by the number of employees the applicant certifies having. The

advances do not have to be repaid.

      Womble is the owner of Bless My Grind, LLC (“BMG”) and also an

associate of co-defendant, Antonio George (“George”). As the Court is aware,

George is a tax preparer who submitted, and helped others submit, fraudulent PPP

and EIDL loan applications. In June 2020, Womble, with George’s assistance,

applied for a PPP loan on behalf of BMG for $195,383. This application contained

materially false information concerning the number of BMG employees and

BMG’s payroll information.     Womble was aware that the information on the

application was false.    Nevertheless, he and George agreed to submit the

application and the loan was successfully funded to Womble’s bank account.

Womble did not use the money for payroll, or any other proper expenses for BMG.

Instead, the money was used for home renovations, funeral costs, and jewelry.

      Thereafter, in July 2020, Womble submitted yet another fraudulent loan

application, this time for an EIDL on behalf of BMG. Again, with George’s


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assistance, Womble included falsified employee and revenue information on the

EIDL application. The $150,000 loan was successfully funded into Womble’s bank

account. Again, Womble misappropriated the loan funds.

II.    Procedural History

       On September 24, 2021, a four-count Information was filed in the Eastern

District of Michigan charging Womble, George and two others with Conspiracy to

Commit Wire Fraud in violation of 18 U.S.C. § 1349. Womble appeared before

United State Magistrate Judge Elizabeth A. Stafford on September 28, 2021, for

his initial appearance and entered a plea of not guilty. On October 27, 2021,

Womble appeared before this Court and entered a plea of guilty to Count One of

the Information pursuant to the terms of a Rule 11 plea agreement.

III.   Guidelines Calculation

       The Rule 11 Plea Agreement between the United States and the Defendant

calculated a total offense level of 19 for the Defendant. Probation calculated the

same in the Pre-Sentence Investigation Report (“PSR”). The offense level was

calculated as follows:

          • Base offense level of 7 for Conspiracy to Commit Wire Fraud in

             violation of 18 U.S.C. §§ 1349 and 1343 (USSG § 2B1.1(a)(1))

          • 12 points for loss greater than $250,000, but less than $550,000

             (USSG § 2B1.1(b)(1)(H).

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          • 3 points removed for acceptance of responsibility pursuant to USSG

             §§ 3E1.1(a)-(b).

IV.   Sentencing Factors

      The Court, in fashioning an appropriate sentence, must consider both the

guidelines range and the other factors contained in 18 U.S.C. § 3553(a). However,

just as there are factors the Court must consider, there are others that are not

appropriate for consideration in fashioning an appropriate sentence. Factors that

are impermissible for the Court’s consideration include those “collateral

consequences” that may be the result of a Defendant’s prosecution and conviction.

See United States v. Musgrave, 761 F.3d 602, 608 (6th Cir. 2014) citing United

States v. Peppel, 707 F.3d 627, 635 (6th Cir. 2013). For example, in Musgrave, the

Sixth Circuit found that it was impermissible for the sentencing court to vary

downward from the guidelines range based upon certain collateral consequences of

conviction, including the defendant’s possible loss of his CPA license as well as

the stain of a felony conviction. Id. The Sixth Circuit noted that permitting a

sentencing court to vary downwards based on these sorts of concerns would tend to

support unjustifiably shorter sentences for defendants from privileged backgrounds

with more to lose in terms of professional accomplishments or shame before their

community. Id. Those sentencing factors that are pertinent to the Defendant are

discussed in detail below.


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      (1) The nature and circumstances of the offense and the history and
      characteristics of the defendant.

             (A) Nature and circumstances of the offense

      In an effort to alleviate the impact of the COVID-19 pandemic on

businesses, the government provided PPP and EIDL loans. These were designed

to get money into the hands of struggling businesses quickly and, particularly with

respect to the PPP program, much of the “red tape” typically associated with such

programs was removed. The Defendant turned the features of these programs into

an advantage and exploited the system. And while Womble’s actions may have

been influenced by George, he knew that he was submitting false and fraudulent

loan applications and he directly benefitted from the criminal proceeds.

             (B) The history and characteristics of the defendant

      The Defendant is 38-year-old man, who is in good health (see generally,

PSR at ¶¶ 39-50). Though Mr. Womble was raised by a single mother, his material

needs were met. Womble has also had a fairly stable employment history,

currently earning over $12,000 per month. As such, Womble’s actions as they

relate to the instant offense cannot be considered to have been motivated by a

financial necessity.

      The United States acknowledges that Womble has two young children.

(PSR at ¶ 45). However, it appears that Womble has a stable relationship with the

mother of his two young children and that they have a suitable home environment.
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As such, a term of imprisonment will not likely bring about tragic consequences

for the children.

        The United States also acknowledges that Womble’s mother is a breast

cancer survivor and that he participates in her ongoing care. Additionally,

Womble’s older brother has cognitive and physical disabilities. (PSR at ¶¶ 39-42).

However, despite her history with cancer, Womble’s mother is apparently well

enough to care for her disabled son. Id. Moreover, Womble has an older brother

who resides in nearby Ann Arbor who can presumably handle any family issues

that may arise if the Defendant is sentenced to a term of incarceration.

        (2) The need for the sentence imposed (A) to reflect the seriousness of
        the offense, to promote respect for the law, and to provide just
        punishment for the offense; and (B) to afford adequate deterrence.

              (A) Seriousness of the offense and just punishment

        Womble’s sentence should provide just punishment that appropriately

reflects the seriousness of the offense and the need to promote respect for the law.

As stated above, Womble’s conduct was serious. He knowingly exploited a crisis

for personal financial gain. Not only did this conduct defraud the taxpayers, but

likely denied Covid-relief funds for other prospective businesses genuinely in

need.

              (B) Deterrence




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       The Government notes that Womble met with law enforcement and

immediately accepted responsibility for his conduct. In addition, while Womble

does have some prior run-ins with the law, he has no history of engaging in the

type of conduct giving rise to his offense in this case.

       While specific deterrence is less of a concern here, this Court must still

impose a sentence that addresses concerns of general deterrence. See Musgrave,

761 F.3d at 609 (noting that Section 3553 requires the sentencing court to impose a

sentence that affords both adequate specific and general deterrence). There is a

real need to send a message for this type of offense. The Sixth Circuit has found,

that because white collar crimes “are more rational, cool and calculated…these

crimes are prime candidates for general deterrence.” Id. citing United States v.

Martin, 455 F.3d 1227, 1240 (11th Cir. 2006). In a case involving COVID-19

relief fraud, it is important to put any would-be offenders on notice that such

offenses will not go unpunished. And while the PPP program is not currently in

effect, it is all but certain that society will face other crises in the future that will

require a similar response from the government. These programs must be

protected and sentences that reflect the need for general deterrence can be an

important safeguard.

V.     Restitution and Forfeiture Issues




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      Pursuant to the terms of Womble’s Rule 11 Plea Agreement with the United

States, the parties agreed to restitution in the amount of $102,391.37. This amount

represents the outstanding loss to Kabbage, the online lender that funded BMG’s

PPP loan.

      The parties also agreed, pursuant to the Rule 11 Plea Agreement, that the

Defendant will forfeit $240,223.90 held in BMG’s Fifth Third Bank account

ending x6859, as well as a gold medallion valued at $10,000 which Womble

purchased with proceeds of his crime. The United States has been informed that

Womble’s attorney is currently in possession of this medallion.

                                     Conclusion

      Based upon the considerations set forth above, the United States respectfully

requests that this Court: (1) find the Defendant’s Guidelines range to be 21-27

months; (2) impose a custodial sentence for a term of 21 months; (3) enter an order

of restitution in the amount of $102,391.37 payable to “Kabbage”; (4) impose a

three-year term of supervised release; and (5) enter an order of forfeiture as

described in the Rule 11 Plea Agreement.




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                                           s/Patrick J. Suter
                                           PATRICK J. SUTER
                                           U.S. Department of Justice
                                           Criminal Division, Fraud Section
                                           1400 New York Ave., N.W.
                                           Washington, D.C. 20005
                                           Phone: (202) 679-1430
 Date: August 18, 2022                     E-Mail: patrick.suter2@usdoj.gov




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                          CERTIFICATE OF SERVICE

       I hereby certify that on August 18, 2022, I electronically filed the

 foregoing document with the Clerk of the Court using the ECF system and

 caused a copy of such filing to be served on counsel for Defendant.

                                               s/Patrick J. Suter
                                               PATRICK J. SUTER
                                               U.S. Department of Justice
                                               Criminal Division, Fraud Section
                                               1400 New York Ave., N.W.
                                               Washington, D.C. 20005
                                               Phone: (202) 679-1430
 Date: August 18, 2022                         E-Mail: patrick.suter2@usdoj.gov




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