United States’ Sentencing Memorandum — United States v. Smith (Dkt. 95, S.D. Fla.)

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The United States' sentencing memorandum in United States v. Stephanie Diane Smith, Case No. 23-60203-CR, in the U.S. District Court for the Southern District of Florida, entered May 26, 2024 as Document 95. It states that Smith received two PPP loans based on false gross income information for two sole proprietorships, Children 1st Basketball Training and Agape Smith Vending, unlawfully receiving $31,108. It notes an advisory range of 4-10 months based on an offense level of 9, and recommends 10 months' imprisonment, three years of supervised release and restitution of $31,108.

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Case 0:23-cr-60203-BB Document 95 Entered on FLSD Docket 05/26/2024 Page 1 of 14




                              UNITED STATES DISTRICT COURT
                              SOUTHERN DISTRICT OF FLORIDA

                               CASE NO. 23-60203-CR-BB (COHN)

 UNITED STATES OF AMERICA

 vs.

 STEPHANIE DIANE SMITH,

                          Defendant.
                                        /

                     UNITED STATES’ SENTENCING MEMORANDUM

 I.     Introduction

        The United States of America, by and through its undersigned counsel, hereby submits this

 sentencing memorandum as to Defendant Stephanie Diane Smith (“Defendant”). Defendant is

 presently scheduled to be sentenced on May 29, 2024, for convictions of two counts of wire fraud

 resulting from the jury’s guilty verdict in the trial of this cause. Under the Sentencing Guidelines

 (“Guidelines”), the advisory sentencing range is 4-10 months’ imprisonment based upon a total

 offense level of 9 and a criminal history category of I, as computed by the U.S. Probation Office

 (“Probation”) in the Presentence Investigation Report, last revised May 21, 2024 and filed at

 docket entry (“DE”) 93 (the “PSR”). As of the filing this memorandum, neither side has reported

 objections to the PSR.

        For the reasons addressed herein, the United States respectfully recommends a sentence of

 10 months’ imprisonment, to be followed by three years of supervised release, and restitution in

 the amount of $31,108. The United States also seeks a forfeiture money judgment in the amount

 of $31,108 (DE 94). A $200 special assessment is mandatory. This sentence is sufficient, but

 not greater than necessary, to achieve the goals of sentencing set forth in 18 U.S.C § 3553(a).

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 II.    Summary of the Offense

        The United States adopts and incorporates by reference all facts set forth in the Offense

 Conduct section of the PSR (¶¶6-49), to which Defendant has not filed any objection, along with

 the facts proved at trial, many of which the government set forth in its response to Defendant’s

 motion for a new trial (DE 90 at 2-9).

        To summarize, from March 2021 through November 2021, while employed as a Deputy

 Sheriff with the Broward Sheriff’s Office (BSO), Defendant knowingly, and with the intent to

 defraud, participated in a scheme in which she received two loans from the Paycheck Protection

 Program (“PPP”) based upon materially false gross income information for two sole proprietorship

 businesses, Children 1st Basketball Training (“Children 1st”) and Agape Smith Vending

 (“Agape”). The fruits of this scheme resulted in Defendant’s unlawful receipt of $31,108.

        The lies at the center of the scheme, upon which Defendant’s fraudulent PPP loans were

 based, were that Children 1st and Agape each had “$100,000” and “$49,326” of gross income in

 2019, respectively. The “$100,000” and “$49,326” gross income lies were made to the SBA and

 its lenders on PPP loan applications that Defendant signed electronically via DocuSign, and on the

 IRS Form 1040 Schedule C tax documents submitted therewith. For comparison, Defendant

 reported to the IRS on her individual tax return for the year 2019 that Children 1st and Agape had

 $0.00 and $1,452 of gross income in 2019, respectively. Defendant’s bank records further

 demonstrated that Defendant’s accounts did not have deposits or inflows consistent with or

 otherwise substantiating the income represented in the respective PPP applications. Additionally,

 Defendant never sought approval for off-duty employment from her employer (BSO), which




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 BSO’s off-duty policy would have required if Defendant had earned the off-duty income

 represented in the respective PPP loan applications for Children 1st and Agape.

        Defendant was directly and intentionally involved with her PPP loans every step of the

 way—throughout the processes of applying, funding, and forgiveness.             Defendant’s direct

 participation included phone calls, emails, and online activity related to her PPP loans. For

 example, from May through November 2021 (the duration of the charged scheme), Defendant’s

 cell phone had approximately 40 phone calls with the cell phone of Dora Smith, the person whom

 Defendant paid $4,000 for assisting with the preparation of Defendant’s PPP loan applications.

 Defendant and Dora Smith had never spoken before Defendant’s PPP loan process commenced in

 March 2021, and never spoke again after it concluded with the forgiveness of the Agape PPP loan

 in November 2021. Many of the calls between Defendant and Dora Smith occurred on critical

 dates in the loan process, including: 5 phone calls on the date that, according to the PDF file

 properties, the “2019” Schedule C for Agape was created (March 26, 2021); 7 phone calls on the

 date that Defendant signed via DocuSign the Children 1st PPP loan application (March 29, 2021);

 9 phone calls on the date that the Agape PPP loan application was submitted (April 15, 2021); 1

 phone call on the date that the forgiveness application for Children 1st was signed via DocuSign

 (July 19, 2021); and 2 phone calls on the date that the forgiveness application for Agape was signed

 via DocuSign (October 18, 2021).

        Defendant signed via DocuSign the PPP loan documents for Children 1st (on March 29)

 and Agape (on April 29) using the internet service provided by AT&T at her residence (IP address

 162.227.127.56). After signing the loan document for Children 1st on March 29, Defendant

 received via email a PDF of the entire package—including the PPP loan application (SBA Form


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 2483-C) that falsely represented that Children 1st had gross income of $100,000 in 2019.

 Defendant saved that PDF attachment, created a new email, and sent the PDF to Dora Smith. In

 total, Defendant sent or received at least 23 emails related to her PPP loans. Defendant received

 emails from Cross River (the lender for the Children 1st PPP loan), Blue Acorn (the loan processor

 for the Agape PPP Loan), and the SBA.

        Defendant’s participation in the scheme also included online activity. Using her iPhone,

 Defendant logged into her online PPP loan account for Agape on the website/portal for Blue Acorn

 (the loan processor for the Prestamos, the lender of the Agape PPP loan) at least 7 times from April

 15 to May 17, 2021. The login dates included April 15 (the date the Agape PPP loan application

 was submitted), April 29 (the date Defendant signed the Agape PPP loan documents via

 DocuSign), and May 11 (the date Defendant received the Agape PPP loan proceeds). During

 Defendant’s login on April 15 (the date the Agape PPP loan application was submitted), Defendant

 was simultaneously on a phone call with Dora Smith that lasted approximately 5 minutes.

 Defendant’s April 29 login occurred two minutes after Defendant signed the Agape PPP loan

 documents via DocuSign.

        Upon receipt of the PPP loans in her bank account, Defendant wrote checks to herself and

 her wife with the word “payroll” in the memo. With respect to the $28,833 Defendant received

 from the Children 1st PPP loan, Defendant wrote four checks (two checks to herself and two

 checks to her wife) totaling $14,500. With respect to the $10,275 Defendant received from the

 Agape PPP loan, Defendant wrote six checks (three checks to herself and three checks to her wife)

 totaling $7,700. Defendant had never written such payroll checks before receipt the PPP loans,




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 and did not write such checks after the loans were forgiven. Defendant also paid Dora Smith

 $4,000 ($2,000 for each PPP loan) using the fraudulently obtained PPP loan proceeds.

        In August 2023, Defendant participated in a consensual interview with the FBI about the

 PPP loan applications for Children 1st and Agape. During that interview, which occurred at a

 time and location of Defendant’s choosing, the FBI showed Defendant her loan documents for

 both PPP loans and asked Defendant to confirm whether the information was true. Although

 Defendant knew that, in 2019, Children 1st and Agape did not earn $100,000 and $49,326,

 respectively, Defendant nevertheless told the FBI that all the information in the PPP loan

 applications and supporting documents was true. Furthermore, Defendant initialed the documents

 in 39 places to indicate in writing that the information was true. Defendant never told the FBI

 that the gross income information for either business was false, or that someone else (e.g., Dora

 Smith) had completed the PPP loan applications with false information without Defendant’s

 knowledge.

 III.   Procedural History

        This prosecution was initiated by a criminal complaint filed in the Southern District of

 Florida on October 11, 2023 (DE 3). On October 19, 2023, a grand jury sitting in this District

 retuned the indictment charging Defendant with two counts of wire fraud. Defendant pleaded not

 guilty and proceeded to trial, which commenced on February 26, 2024. On March 5, 2024, the

 jury returned a guilty verdict on both counts. The Court adjudicated Defendant guilty, deferred

 sentencing to May 29, 2024, and ordered a presentence investigation. The draft PSR was first

 disclosed on April 24, 2024 (DE 91) and the revised PSR with addendum was disclosed on May

 21, 2024 (DE 93). Neither party has filed objections.


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        Additionally, on March 19, 2024, Defendant filed a motion for a new trial pursuant to Rule

 33 of the Federal Rules of Criminal Procedure (DE 84), to which the government responded in

 opposition on April 19, 2024 (DE 90). The Court denied Defendant’s motion for a new trial in a

 written Order entered on May 2, 2024 (DE 92).

 IV.    Sentencing Guidelines Calculation

        As set forth in the PSR (¶¶ 53-61), the offense level is calculated as follows:

  Base Offense Level (§ 2B1.1(a)(1))                                                      7

  Loss greater than $15,000 but not more than $40,000 (§ 2B1.1(b)(1)(C))                  4

  Zero-Point Offender §§ 4C1.1(a)(1)-(10).                                                -2

                              Total Offense Level                                         9


        The United States submits that this is the correct computation of the offense level.

 Defendant has zero criminal history points, which establishes a criminal history category of I (PSR

 ¶64). Therefore, the guideline imprisonment range is four to ten months (PSR ¶113).

 V.     Consideration of Sentencing Factors Under 18 U.S.C. § 3553(a)

        Title 18, United States Code, Section 3553(a), enumerates several factors that the Court

 must consider in sentencing a defendant. As addressed in turn below, the 3553(a) factors relevant

 to Defendant Stephanie Smith supports the sentence recommended by the United States.

        1.      Nature and Circumstances of the Offense.

        A jury found Defendant guilty of serious offenses – two counts of wire fraud in connection

 obtaining fraudulent loans from the PPP. In 2020, as the COVID-19 pandemic spread across the

 country, Congress responded earnestly by passing the CARES Act to help small business owners

 and their employees whose livelihoods were jeopardized by the shuttering of business operations

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 and cash flow. The PPP was designed as a lifeline to small businesses to keep their employees

 on the payroll by protecting their paychecks. Funds for the PPP were limited, and the legitimate

 demand for relief money quickly exceeded the available supply.

           In 2021, Congress authorized additional funding for the PPP since the pandemic was far

 from over. Defendant, then a sworn law enforcement officer who remained employed by BSO

 throughout the pandemic and received her BSO salary uninterrupted, selfishly exploited this

 declared national emergency, and the government’s response to it, by lying to get two separate

 PPP loans, neither of which she was entitled to. The circumstances of this offense involved

 Defendant signing two separate PPP loan applications in which she falsely certified that all

 information was true despite the obviously enormous overstatement of income for Children 1st

 and Agape. Defendant also caused the submission of false tax documents to support those lies.

 More specifically, Defendant did not use her real 2019 tax documents for her PPP loan applications

 because she knew Children 1st had reported zero dollars of gross income (and a loss of -$31,911)

 and Agape had reported $1,452 in gross income (and a loss of -$32,239). Instead, as Dora Smith

 testified, Defendant provided false information to Dora Smith to create and submit false Schedule

 C forms, and then paid Dora Smith $2,000 for doing so for each PPP loan application ($4,000

 total).

           Defendant’s theory of defense at trial claimed ignorance and shifted all blame to Dora

 Smith. But Defendant’s dozens of calls and emails with Dora Smith, as well as Defendant’s own

 online activity in her PPP loan account, proved that Defendant acted deliberately throughout the

 process and knew that both PPP loans were based on lies. Defendant’s knowledge and fraudulent

 intent was further buttressed by the fact that Defendant had applied in 2020 for other pandemic


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 relief from the SBA (an Economic Injury Disaster Loan), and was informed that Agape did not

 qualify for such EDIL because it had not substantiated an economic injury.

        Once the fraudulent PPP loans were disbursed to Defendant’s bank account, her direct role

 in the offense continued by writing sham “payroll” checks to herself and her wife. As Defendant

 testified, she knew that the PPP funds had to be spent on “payroll” (DE 90-1, Tr. at 56-57) and

 Defendant only wrote these purported “payroll” checks to herself and her wife so Defendant could

 apply for loan forgiveness (DE 90-1, Tr. at 180-82). Defendant’s forgiveness applications for

 Children 1st and Agape, which required Defendant to certify again that all the information supplied

 was true (and that she had been entitled to the loans in the first place), contained additional lies

 that resulted in forgives of the PPP loans Defendant was never entitled to receive.

        As a police officer with a bachelor’s degree in sociology, Defendant certainly knew better

 than to make false statements to get pandemic relief assistance. Yet the fact that Defendant knew

 she had not even sought approval from BSO to have any off-duty employment, and that she further

 knew she had reported virtually no income to the IRS for Children 1st and Agape, makes the

 circumstances of Defendant applying for PPP loans for these businesses (while employed by BSO)

 even more egregious.

        Defendant testified at trial that she was not desperate for $20,000 (DE 90-1, Tr. at 39).

 What that shows, in combination with the other admitted evidence, was that this was a crime

 motivated by greed. Defendant was driven by what she saw as an easy opportunity to steal from

 a trust-based program that had little oversight, coupled with a mindset that she would not get

 caught. That mindset was on full display during Defendant’s interview with the FBI interview

 almost two years after the scheme had ended. When presented with the opportunity to tell the


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 FBI about the patently false information in the PPP loan applications, Defendant continued to lie

 by affirming that the information regarding Children 1st and Agape was true when she well knew

 it was not.

           For these reasons, a sentence of 10 months’ imprisonment is sufficient and not greater

 necessary to reflect the seriousness of the offenses of conviction and the circumstances described

 herein.

           2.       History and Characteristics of the Defendant.

           The PSR reflects that Defendant does not have any criminal history points from any

 convictions and has no prior criminal conduct, pending charges, or other arrests. Defendant is

 correctly in criminal history category I, and the Guidelines computation correctly includes a two-

 level reduction in the offense level for a zero-point offender. Defendant’s lack of criminal history

 is therefore factored into the Guideline sentencing range of 4-10 months. That said, Defendant’s

 testimony at trial revealed characteristics of dishonesty and deceitfulness that support a sentence

 at the top of these Guidelines as recommended by the United States.

           First, Defendant testified on direct examination that she had no reason to believe that there

 was anything not accurate, true, or correct about her tax returns filed with the IRS (DE 90-1, Tr.

 at 24).        However, on cross examination, Defendant could not explain significant business

 expenses for Children 1st and Agape reported on her tax returns. Specifically, from 2018 through

 2020, Defendant claimed, in total, nearly $200,000 in expenses for Children 1st and Agape (the

 equivalent of 50% of her aggregate BSO salary for those years), and she could not identify what

 those expenses were. For example, Defendant’s 2019 tax return claimed that Children 1st had

 “$31,911” in expenses and $0.00 of gross income (GX 402). Defendant testified this was true “to


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Case 0:23-cr-60203-BB Document 95 Entered on FLSD Docket 05/26/2024 Page 10 of 14




  the best of my knowledge” (DE 90-1, Tr. at 99), but Defendant could not explain the following

  expenses, among others: “$9,414” of “other business property” rented or leased (Schedule C, line

  20b; DE 90-1, Tr. at 94); “$2,002” of “repairs in maintenance” (Schedule C, line 21; DE 90-1, Tr.

  at 95); and “$3,578” in “supplies” (Schedule C, line 22; at DE 90-1, Tr. at 95-96). Defendant

  testified that some of her expenses were basketballs and uniforms she purchased for children she

  was training, but could not tell the jury how much she spent on basketballs or uniforms in 2019,

  or even how much those items cost (DE 90-1, Tr. at 96-97). Similarly, Defendant’s 2020 tax

  return claimed that Agape had $45,019 in “contract labor” expenses and $0.00 of gross income

  (GX 403). When asked about this, Defendant testified, “I don’t know what ‘contract labor’ is,

  sir.” (DE 90-1, Tr. at 123). Nevertheless, Defendant testified that “to the best of my knowledge”

  this information was correct.      DE 90-1, Tr. at 123.       The veracity of these expenses on

  Defendant’s tax returns, which Defendant signed, raises questions about Defendant’s character for

  truthfulness given the nature of these businesses (i.e., basketball training for children and vending

  machines in beauty salons) and the size of the expenses relative to all other sources of her income

  (50% of her aggregate BSO wages from 2018 through 2020).

         Defendant’s testimony about her FBI interview also showed a dishonest character.

  Defendant admitted that she put her initials on the documents during the interview (DE 90-1, Tr.

  at 189-92; 195), but she testified that she could not remember why she initialed the documents and

  what questions the FBI had asked her about her PPP loans. Additionally, Defendant admitted that

  she did not tell the FBI that the gross income information for Children 1st and Agape in her PPP

  loan applications was false, but she testified this was because “there was no need to” (DE 90-1,

  Tr. at 195), she “didn’t pay attention to the information” (DE 90-1, Tr. at 199), and she “looked


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  but didn’t look” at the documents (DE 90-1, Tr. at 199). None of these explanations were

  credible.

         In sum, the portrait of dishonest character that emerged from Defendant’s testimony at trial

  supports the sentence recommended by the United States.

         3.      Need for the Sentence to Reflect the Seriousness of the Offense, Promote
                 Respect for the Law, Provide Just Punishment, and Afford Adequate
                 Deterrence to Criminal Conduct.

         As explained above, Defendant has committed serious offenses. Wire fraud carries a

  maximum term of imprisonment of twenty years, and with two counts of conviction, Defendant’s

  maximum exposure is forty years in prison. The sentence recommended by the United States is

  needed to reflect the seriousness of this offense, and to promote respect for the law, and provide

  just punishment. Although a sentence of 10 months’ imprisonment is toward the bottom of the

  overall sentencing table of the Guidelines, and certainly modest in comparison to the maximum

  penalty under law, it will still send a message that stealing from government programs such as PPP

  has serious consequences. In this respect, the sentence will also afford adequate deterrence to this

  criminal conduct, which is very much needed.

         As to general deterrence, the Eleventh Circuit has explicitly stated that “general deterrence

  is an important factor in white-collar cases, where the motivation is greed.” United States v.

  Hayes, 762 F.3d 1300, 1308 (11th Cir. 2014); see also United States v. Howard, 28 F.4th 180, 209

  (11th Cir. 2022) (noting that “[g]eneral deterrence is more apt, not less apt, in white collar crime

  cases. The reason is that economic and fraud-based crimes are more rational, cool and calculated

  than sudden crimes of passion or opportunity, which makes them prime candidates for general

  deterrence.”) (internal quotations and citations omitted).


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          As explained above, this case was motivated by Defendant’s greed at a time when she was

  fully employed, and millions of other Americans were suffering from the economic impact of a

  global pandemic.      As the pandemic spread, so too did fraud related to the PPP and EIDL programs

  and other programs designed to provide critical economic assistance—especially in the Southern

  District of Florida. The government’s recommended sentence of imprisonment in this case is thus

  appropriate to provide both specific and general deterrence. Such a sentence will send a clear

  message to Defendant and other offenders that there are serious consequences for defrauding

  government relief programs.        Leniency in this case would send the wrong message.

          4.       Need to Avoid Unwarranted Sentence Disparities Among Defendants with
                   Similar Records who have been found guilty of similar conduct.

          In October 2023, seventeen Deputy Sheriffs of the Broward Sheriff’s office were arrested

  on similar charges relating to fraudulently obtained PPP loans. Since then, all but three of those

  defendants have accepted responsibly and pleaded guilty. Defendant Stephanie Smith was the

  first former Deputy Sheriff charged in this operation to go to trial.1

          A sentence of 10 months’ imprisonment for Stephanie Smith would not create an

  unwarranted sentence disparity among the other former Deputy Sheriffs that have been sentenced

  thus far.     Although those defendants did not receive a sentence that included a term of

  imprisonment, those defendants had Guidelines ranges at or near zero months’ imprisonment.

  Furthermore, those defendants stood before the court for sentencing having accepted responsibility

  for their conduct.     Defendant Stephanie Smith has not. This Defendant has neither accepted

  responsibility, nor shown any remorse for her conduct.           Furthermore, Defendant’s Guidelines are


  1
    Defendant Carolyn Denise Wade proceeded to trial on May 13, 2024 (Case No. 23-60173-CR-KMW (Graham).
  The jury was unable to reach a unanimous verdict in that case. Defendant Alexandra Acosta is schedule to proceed
  to trial in June 2024 (Case No. 23-60170-CR-Scola).
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  above of the range that includes zero months’ imprisonment, and no variance is warranted.   Based

  on these distinguishing factors, as well as the other factors addressed herein, a sentence of 10

  months’ imprisonment in this case would not create an unwarranted disparity.

  VI.    Restitution and Forfeiture

         Restitution is mandatory in this case pursuant to 18 U.S.C. § 3663A(a)(1). As set forth in

  the PSR, restitution is owed to the SBA in the amount of $31,108 (PSR ¶ 125), which represents

  the amount of the unlawfully obtained PPP loans for Children 1st and Agape. Defendant has not

  objected to this amount.

         The United States is seeking forfeiture and filed a motion for entry a forfeiture money

  judgment on May 24, 2024 (DE 94). For the reasons set forth therein, the Court should order a

  forfeiture money judgment in the amount of $31,108.




                              [Remainder of Page Intentionally Blank]




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  VII.   Conclusion

         For the forgoing reasons, the United States respectfully recommends that the Court

  sentence Defendant Stephanie Diane Smith to a term of imprisonment of 10 months, to be followed

  by three years of supervised release. The United States also requests that the Court order

  restitution in the amount of $31,108, a forfeiture money judgment in the amount of $31,108, and

  a special assessment of $200.

                                               Respectfully submitted,

                                               MARKENZY LAPOINTE
                                               UNITED STATES ATTORNEY

                                          By: /s/ David A. Snider
                                              David A. Snider
                                              Assistant United States Attorney
                                              Court ID No. A5502260
                                              500 E. Broward Blvd
                                              Fort Lauderdale, FL 33394
                                              Tel: (954) 660-5696
                                              Fax: (954) 356-7336
                                              Email: david.snider@usdoj.gov




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