Plea Agreement — United States v. Anthony Zaghab (D. Colo.)

Record facts

U.S. District Court, District of Colorado · No. 1:21-cr-00188-RBJ · Doc. 11 · 2021-08-09 · Docket on CourtListener

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO

Criminal Action No. 21-cr-00188-RBJ
UNITED STATES OF AMERICA,

Plaintiff,

1. ANTHONY ZAGHAB,

Defendant.

PLEA AGREEMENT

The United States of America (the government), by and through Martha A.
Paluch and Rebecca S. Weber, Assistant United States Attorneys for the District of
Colorado, and the defendant, ANTHONY ZAGHAB, personally and by counsel, John
Richilano, 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 an Information charging a violation
of Title 18, United States Code, Section 1343, Wire Fraud.

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

(4) be liable for restitution in the amount of approximately $708,141 with the
exact amount due determined prior to sentencing which amount is
expected to be reduced as explained in the fact section.

COURT

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(5) to the entry of a final order of forfeiture described fully below.

B. 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. Should the plea of
guilty be vacated on the motion of the defendant, the government may, in its sole
discretion, file additional charges against the defendant related to his conduct described
below.

The government agrees that based upon the evidence in its possession at this
time, it does not intend to file criminal charges against the defendant's wife, mother, or
sister based on the conduct set forth below.

The government agrees that the defendant should receive a two-level reduction
for acceptance of responsibility pursuant to USSG § 3E1.1(a). If the defendant does not
engage in prohibited conduct or otherwise implicate USSG § 3C1.1, the government
agrees to file a motion requesting that the defendant receive a one level reduction for
acceptance of responsibility pursuant to USSG § 3E1.1(b).

The government agrees to recommend a sentence at the low-end of the
applicable guideline range for the criminal history and total offense level calculated by
the Court at sentencing. The defendant is free to file a motion for a variance under 18
U.S.C. §3553(a).

Appellate Waiver
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,

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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 penalty 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 20; or

(3) | the government appeals the sentence imposed.

If any of these three 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 seeking relief otherwise available
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.

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,
Section 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

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elsewhere. The assets to be forfeited specifically include, but are not limited to: 1)
$120,070 in fraud proceeds the defendant voluntarily returned to the United States
Secret Service (USSS); 2) more than $250,000 in fraud proceeds that were applied to
the mortgage for a home held in the defendant’s wife’s name; and 3) a money judgment
in the amount of the proceeds obtained by the defendant’s scheme, which will be
credited with any net proceeds obtained from judicially forfeited assets. The defendant
agrees and consents to the forfeiture of these assets pursuant to any federal criminal,
civil, and/or administrative forfeiture action. The defendant understands that pursuant to
18 U.S.C. § 983, the seizing agency is required to send notice in non-judicial civil
forfeiture matters. Having been advised of said rights regarding notice, the defendant
hereby knowingly and voluntarily waives his/her rights to notice being sent within the
time frames in 18 U.S.C. § 983 and to having the property returned to him/her if notice
is not sent within the prescribed time frames. 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).

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 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

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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(S)

The parties agree that the elements of wire fraud, in violation of Title 18, United
States Code, Section 1343, are as follows:

First: the defendant devised or intended to devise a scheme to defraud or obtain
money or property by means of false or fraudulent pretenses, representations or
promises,

Second: the defendant acted with specific intent to defraud;

Third: the defendant used interstate or foreign wire communications facilities, or
caused another person to use interstate or foreign wire communications facilities for the

purpose of carrying out the scheme.

Fourth: the scheme employed false or fraudulent pretenses, representations, or
promises that were material.
Tenth Circuit Pattern Jury Instructions (Criminal Cases), 2011, § 2.57 (updated 2018).
il. STATUTORY PENALTIES
The maximum penalties for a violation of Count 1 of the Information are: not
more than 20 years’ imprisonment; maximum term of supervised release of three years;
maximum fine of $250,000 or twice the gain or loss from the offense, or both

imprisonment and a fine; $100 mandatory victim’s fund assessment fee; restitution of an

amount to be determined at the time of sentencing.

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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.

The parties agree the government would be able to prove the following facts at

trial:

Background Related to Pandemic-Related Relief Programs

The United States Small Business Administration (“SBA”) is an executive-branch

agency of the United States government that provides support to entrepreneurs and
small businesses. In or around March 2020, the Coronavirus Aid, Relief, and Economic
Security (“CARES”) Act was enacted to provide emergency financial assistance to the
millions of Americans suffering adverse economic effects caused by the COVID-19

pandemic. The CARES Act established several new temporary programs and expanded

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existing programs, including programs created or administered by the SBA.

The Economic Injury Disaster Loan (“EIDL”) program was an SBA program that
provided low-interest financing to small businesses, renters, and homeowners in
regions affected by declared disasters. The CARES Act authorized the SBA to provide
EIDLs to eligible small businesses experiencing substantial financial disruptions 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, known as Economic Injury Disaster
Grants (EIDGs). The amount of the advance was determined by the number of
employees the applicant certified having. The advances did not need to be repaid.

In order to obtain an EIDL and/or EIDG, a qualifying business was required to
submit an application to the SBA and provide information about its operations, such as
the number of employees and the entity’s gross business revenues and cost of goods
sold in the twelve months prior to January 31, 2020. The amount of the loan, if
approved, was determined based, in part, on the information provided concerning the
number of employees, gross revenue, and cost of goods. Any funds issued under an
EIDL or EIDG were issued directly by the SBA. EIDL funds were permitted to be used
for payroll expenses, sick leave, production costs, and business obligations, such as
debts, rent, and mortgage payments.

Another source of relief provided by the CARES Act was the authorization of
forgivable loans to small businesses for job retention and certain other expenses,
through a program referred to as the Paycheck Protection Program (“PPP”). In order to
obtain a PPP loan, the authorized representative of a business was required to state the

business’s average monthly payroll expenses and number of employees. These figures

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were used to calculate the amount of money the small business was eligible to receive
under the PPP. A participating lender would then process the PPP loan application. If
the PPP loan application was approved, the participating lender funded the PPP loan
using its own monies, which were fully guaranteed by the SBA. ZAGHAB'S fraudulent
PPP applications were submitted to Lender 1, which participated in the PPP program
and was based in New Jersey.

The Colorado Department of Labor & Employment (“CDLE”) administered
another source of pandemic relief, the Pandemic Unemployment Assistance (“PUA”)
program. PUA was designed to provide unemployment benefits to workers affected by
the pandemic who were not otherwise eligible for regular unemployment benefits. PUA

was funded in part by the State of Colorado and in part by the United States

government.

Business Entities

The defendant owned or controlled corporate entities, all of which had registered
business addresses in Colorado. These entities included the following: MKZ
Investments Inc, Zippy Document Preparation & Tax, Kloud Heads Smoke Shop &
Vape, WSI Marketing & Promotions Inc, and Service Wand Inc. ZAGHAB also claimed

to own or control entities bearing his name (Anthony Zaghab) and the names of family

members (I.Z., H.Z., R.D., and F.A.).

Beginning on approximately April 29, 2020, and continuing until about February
6, 2021, ZAGHAB knowingly engaged in a scheme to defraud the United States, the
State of Colorado, and Lender 1 to obtain pandemic-relief funds to which he was not

entitled. He did this by submitting false and fraudulent EIDL and PPP applications to the

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SBA and to Lender 1 and was paid approximately $666,630 based on those fraudulent
applications. In addition, ZAGHAB claimed and received approximately $41,511 in
unemployment insurance benefits on behalf of ineligible family members without their
knowledge or consent.

EIDL Scheme

ZAGHAB submitted numerous fraudulent EIDL applications to the SBA. The SBA
funded five of these EIDLs for a total of approximately $517,300, plus an additional

$31,000 in EIDGs for these five entities. The approved EIDL applications included the

following:
. . Claimed
Business | Applicant Loan Grant Neo Claimed Cost of
Name Name Amount | Amount Emplovees | Revenue Goods
ploy Sold
MKZ
Investments eee $44,300 | $5,000 5 $100,000 | $1,500
Inc agna
Anthony Anthony
Zaghab Zaghab $150,000 | $5,000 5 $400,000 $2,000
peonhy Anth
ocument nthony
Preparation | Zaghab $150,000 | $10,000 10 $1,000,000 ; $2,500
& Tax
Kloud
Heads Anthon
Smoke Za hab, $150,000 | $10,000 10 $1,000,000 | $2,500
Shop & g
Vape
1.2.1 1.Z. $23,000 | $1,000 1 $50,000 $2,000

ZAGHAB falsely represented that the information provided in the EIDL

' Initials have been used to denote fictitious business entities bearing the names of ZAGHAB’s
family members.

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applications was true and accurate. Specifically, as forth in the table above, ZAGHAB
falsely stated the number of employees, the purported gross revenues, and the
purported cost of goods sold for each of these entities.

As to the specific entities referenced above, ZAGHAB falsely represented that
Kloud Heads Smoke Shop & Vape was established in 2019, when in fact ZAGHAB
registered it with the Colorado Secretary of State on or about April 29, 2020. Similarly,
ZAGHAB inflated the employees, revenues, and costs for MKZ Investments in the
twelve months prior to January 31, 2020, when in fact it was in delinquent status with
the Colorado Secretary of State until ZAGHAB cured that status on June 17, 2020, the
same day that ZAGHAB submitted the EIDL application.

ZAGHAB also applied for and obtained an EIDL for a fictitious business entity
bearing the name of the defendant's deceased father.

ZAGHAB submitted numerous other EIDL applications that were declined or
denied by the SBA, but still resulted in ZAGHAB receiving EIDGs ranging from $5,000

to $10,000 each, for a total of $35,000. These grants included the following:

. . Claimed
Business Applicant Grant Claimed Claimed Cost of
Name Name Amount Number of Gross Goods
Employees | Revenue Sold
WSI Marketing
& Promotions aaron $5,000 5 $100,000 | $2,000
Inc aghab
Service Wand Anthony
inc Zaghab $10,000 10 $400,000 $2,600
H.Z. H.Z. $5,000 5 $400,000 $1,500
R.D. R.D. $10,000 10 $1,000,000 $1,000
F.A. F.A. $5,000 5 $50,000 $2,000

ZAGHAB falsely represented that the information provided in the EIDL

applications that resulted in EIDGs was true and accurate. Specifically, as set forth in

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the table above, ZAGHAB falsely stated the number of employees, the purported gross
revenues, and the purported cost of goods sold for each of these entities. ZAGHAB
also falsely stated the date each of these businesses was established.

ZAGHAB also applied for and attempted to obtain EIDLs on behalf of fictitious or
purported business entities called “R.D.,” “H.Z.,” and “F.A.,” without the knowledge or
consent of his family members bearing these names.

In all of the above-described EIDL applications — both the ones that were granted
and the ones that were declined but resulted in grants - ZAGHAB falsely represented
that the funds would be used to pay payroll and other permissible expenses when, in

fact, ZAGHAB used the majority of these proceeds for his personal benefit.

PPP Scheme

ZAGHAB also submitted and caused to be submitted four fraudulent PPP loan
applications to Lender 1. All four PPP loan applications were approved and funded.

Specifically, on June 29, 2020, ZAGHAB submitted a PPP application for a
business called “Anthony Zaghab.” He falsely represented that the business had been
established in 2019, and that it had a monthly payroll of $8,333. He received a PPP
loan in the amount of $20,833.

On February 6, 2021, ZAGHAB submitted a second PPP application for the
purported business entity “Anthony Zaghab.” He again falsely represented that the
business had been established in 2019, and that it had a monthly payroll of $8,333. He
received a PPP loan in the amount of $20,832.

On June 29, 2020, ZAGHAB submitted a PPP application for a business called

“H.Z.” He falsely represented that the business had been established in 2019, and that

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it had a monthly payroll of $8,333. He received a PPP loan in the amount of $20,833.
On February 3, 2021, ZAGHAB submitted a second PPP application for the
purported business entity “H.Z.” He again falsely represented that the business had

been established in 2019, and that it had a monthly payroll of $8,333. He received a

PPP loan in the amount of $20,832.
ZAGHAB obtained a total of $83,330 in PPP loan proceeds based on these false

representations, which he used for his own personal benefit instead of to pay

permissible expenses, like payroll.

Colorado Pandemic Unemployment Assistance Scheme

ZAGHAB also applied for and obtained approximately $41,511 in Colorado PUA
for ineligible family members without their knowledge and consent. Specifically, in or
around April 2020, ZAGHAB applied for and obtained PUA for his sister and his mother,
both of whom resided outside of the United States. ZAGHAB submitted these
applications without the knowledge of his sister or mother and used the money for his
own personal benefit. In or around April 2020, ZAGHAB also applied for and obtained
PUA for his father who is and was deceased at the time of the application and used the
money for his own personal benefit.

Defendant’s Cooperation

Once contacted by law enforcement, the defendant retained counsel. The

defendant and his counsel met with government counsel, during which time the

2 The government agrees that it will not seek to include in the loss calculation or
restitution amount the funds the defendant and his wife received in Colorado
unemployment benefits during the relevant time period alleged in this Information as
they were in fact unemployed when they received those funds.

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defendant admitted his conduct as set forth above. The defendant admitted, as shown
by bank records, that he directed more than $250,000 of the fraud proceeds to pay
down the mortgage on a home in Centennial, Colorado, held in the name of his wife. He
also agreed to return $120,070 of the fraud proceeds to the USSS, and he did so on
April 27, 2021.5

Charged Count

As charged in the Information, ZAGHAB agrees that on June 23, 2020, to further
the scheme set forth above, he knowingly transmitted and caused to be transmitted by
means of wire communication in interstate commerce certain writings, signs, signals,
pictures, and sounds, to wit, the submission of an EIDL application for Zippy Document
Preparation & Tax from Colorado to an SBA contractor’s server located in lowa.

VI. ADVISORY GUIDELINE CALCULATION

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

3 The United States Attorney’s Office will recommend to the Attorney General that any
net proceeds derived from the sale of judicially forfeited assets be remitted or restored

to eligible victims of the offense.
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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

presentence report, or otherwise identified during the sentencing process, affect the

estimate below.

a) Under Section 2B1.1(a)(1), the base offense level is 7.

b) The following specific offense characteristics apply: There is a 14-
level increase pursuant to § 2B1.1(b)(1)(H) because the loss was
between $550,000 and $1,500,000.

C) A 2-level enhancement applies pursuant to 2B1.1(b)(11)(C)(i) for
the defendant's use of his family members’ means of identification
to obtain another means of identification, the loan account number,

see App. N. 10(C)(ii)(I).

d) There are no victim-related, role-in-offense, obstruction, grouping,
or multiple-count adjustments.

e) The adjusted offense level is 23.

f) The parties agree the defendant should receive a 3-level reduction
for acceptance of responsibility pursuant to § 3E1.1(a) and(b). The
resulting total offense level is 20.

g) The parties understand that the defendant's criminal history
computation is tentative and based on the defendant's prior
convictions. The parties believe the defendant is in criminal history

category I.

h) The career offender/criminal livelihood/armed career criminal
adjustments do not apply.

i) The advisory guideline range resulting from these calculations is
33-41 months. However, in order to be as accurate as possible,
with the criminal history category undetermined at this time, the

4 The parties agree that the appropriate measure of loss in this case is the amount of
loans, grants, and unemployment benefits the defendant received, and not the amount
of funds sought in attempted applications that were frequently duplicative of earlier
applications and/or ultimately denied.

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i)

k)

offense level(s) estimated above could conceivably result in a
range from 33 months (bottom of Category !) to 87 months (top of
Category VI). The guideline range would not exceed, in any case,
the cumulative statutory maximums applicable to the counts of

conviction.

Pursuant to guideline § 5E1.2, assuming the estimated offense
level above is correct, the fine range for this offense would be
$15,000 to $150,000, plus applicable interest and penalties.

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

three years.

The government will seek a restitution order in an amount to be
determined prior to sentencing and a final money judgment order
for that same amount.

The parties understand that the Court is free, upon consideration and proper

application of all 18 U.S.C. § 3553 factors, to impose that reasonable 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.

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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.

Date: O§ 3 202. |
Date: LIZ

#1] a

Date:

Date: 8/4 vA

—_= 7s —n

ANTHONY ZAGHAB
Defendant

MA.

JOHN RICHILANO
Attorney for Defendant

MARTHA A. PALUCH
Assistant U.S. Attorney

Liar

REBECCA S. WEBER
Assistant U.S. Attorney

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