Criminal Complaint — United States v. Jean R. Lavanture (Northern District of New York, September 9, 2020)

Summary

An AO 91 criminal complaint filed September 9, 2020, in the U.S. District Court for the Northern District of New York, United States versus Jean R. Lavanture (a/k/a Rudy Lavanture), Case 1:20-mj-00452-CFH, charging bank fraud under 18 U.S.C. § 1344 between on or about June 16, 2020 and July 22, 2020. The attached affidavit of FBI Special Agent Matthew J. Wabby states that entities Lavanture controlled received four PPP loans and five EIDLs totaling approximately $4,906,281 from the SBA, Bank of America, N.A. and Kabbage, Inc. It alleges loan applications falsely reporting employees and payroll, cash withdrawals of approximately $439,503.25, and a $952,000 wire on July 29, 2020 toward an estate purchase in Byram Township, New Jersey. Magistrate Judge Christian F. Hummel acknowledges the affidavit as attested by telephone.

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Case 1:20-mj-00452-CFH Document1 Filed 09/09/20 Page1of10 -

AO 91 (Rev, 11/11) Criminal Complaint

UNITED STATES DISTRICT COURT

for the
Northern District of New York

UNITED STATES OF AMERICA )
)
Vv. )
)

JEAN R. LAVANTURE a/k/a ) Case No. 1:20-MJ- 452 (CFH)
RUDY LAVANTURE, )
)
Defendant. )

CRIMINAL COMPLAINT

I, the complainant in this case, state that the following is true to the best of my knowledge and belief.
Between on or about the dates of June 16, 2020 and July 22, 2020, in the county of Ulster, in the Northern District
of New York, and elsewhere, the defendant violated:

Code Section Offense Description
18 U.S.C. § 1344 ‘Bank Fraud

This criminal complaint is based on these facts:
See attached affidavit.

Continued on the attached sheet.

FBI Special Agent Matthew J. Wabby

Printed name and title

Attested to by the affiant in accordance with Rule 4.1 of the Federal Rules of Criminal oS

Date: September 9, 2020 F Vb) UX, Lp iz / Ltn
Judge’s signature
City and State: Albany, NY Hon. Christian F. Hummel, U.S. Magistrate Judge

Printed name and title
Case 1:20-mj-00452-CFH Document1 Filed 09/09/20 Page 2 of 10

Affidavit in Support of a Criminal Complaint

Special Agent Matthew J. Wabby, of the Federal Bureau of Investigation (FBI, deposes
and states as follows:

Introduction

1. I respectfully submit this affidavit in support of a criminal complaint charging Jean
R. Lavanture, a/k/a Rudy Lavanture (“Lavanture”), with committing bank fraud in violation of 18
U.S.C. § 1344.

2. Iam a Special Agent with the Federal Bureau of Investigation (FBI), and have been
so employed since September 2012. In June 2019, I was assigned to the FBI Albany Field Office’s
White Collar Squad, investigating corruption, fraud, money laundering, and related crimes. I am
also part of the COVID-19 Fraud Response Working Group.

3. Previously I was assigned to the FBI’s Plattsburgh Resident Agency and
investigated a variety of crimes within the jurisdiction of the FBI, including corruption of federal
officers, drug trafficking organizations, money laundering, financial crimes, and violent
crimes. Prior to becoming a Special Agent, I worked in public accounting for approximately seven
years, where I became a Certified Public Accountant (CPA). I am still a licensed CPA and also a
Certified Fraud Examiner (CFE).

4, | I am familiar with the facts of this case based on my personal involvement in this
investigation and my conversations with law enforcement officers and agencies, my review of
various reports and documents in connection with the matter, and my interviews of witnesses.
Where statements of others are related in this affidavit, they are related in substance and in part.
Because this affidavit is submitted for the limited purpose of showing probable cause for a

complaint, I have not set forth every fact that I know concerning this investigation.
Case 1:20-mj-00452-CFH Document1 Filed 09/09/20 Page 3 of 10

Statute

5. Section 1344 of Title 18 of the United States Code states:

Whoever knowingly executes, or attempts to execute, a scheme or artifice—

(1) to defraud a financial institution; or

(2) to obtain any of the moneys, funds, credits, assets, securities, or other property owned

by, or under the custody or control of, a financial institution, by means of false or fraudulent

pretenses, representations, or promises;
shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.
Basis for a Finding of Probable Cause

6. This is an investigation into a fraud scheme in which Lavanture obtained millions
of dollars in Paycheck Protection Program (“PPP”) loans and Economic Injury Disaster Loans
(“EIDL”) under false pretenses and then spent the loan proceeds on uses prohibited by the
respective programs, in violation of 18 U.S.C. § 1344 and other federal laws.

7. Overview of the Loan Programs. The Coronavirus Aid, Relief, and Economic
Security (CARES) Act is a federal law enacted in March 2020 and designed to provide emergency
financial assistance to the millions of Americans who are suffering the economic effects of the
COVID-19 pandemic. The CARES Act authorized forgivable loans to small businesses for
job/employee retention and certain other expenses, through the PPP.

8. PPP loan proceeds must be used by the borrowing business only on certain,
permissible expenses — specifically, payroll costs, interest on mortgages, rent, and utilities, Payroll
costs are capped at $100,000 on an annualized basis for each employee. The PPP allows the

interest and principal on the loan to be entirely forgiven if the business spends the loan proceeds
Case 1:20-mj-00452-CFH Document1 Filed 09/09/20 Page 4 of 10

on these expense items within a designated period of time after receiving the proceeds, and uses a
certain amount of the PPP loan proceeds on payroll expenses.

9. To obtain a PPP loan, a qualifying business must submit a loan application, which
is signed by an authorized representative of the business. A PPP joan application is submitted to
and processed by a participating lender (¢.g., a bank). If a loan application is approved, the
participating lender funds the loan using its own monies, which are, in turn, fully guaranteed by
the Small Business Administration (the “SBA”), a federal agency. Among other things, the
borrowing business (through its authorized representative) must certify on its loan application that
it was in operation as of February 15, 2020, and that it paid employees or independent contractors
as of that date. To calculate the amount of money the business is eligible to receive, the business
must certify on its loan application, among other things, its average monthly payroll expenses and
number of employees. In addition, businesses applying for a PPP loan must provide
documentation of their payroll expenses. Permissible forms of documentation can include U.S.
Corporation Income Tax Returns (IRS Forms 1120), Employer’s Quarterly Federal Tax Returns
(IRS Forms 941), Employer’s Annual Federal Unemployment Tax Returns (IRS Forms 940), and
Wage and Tax Statements (IRS Forms W-3). The person submitting a PPP application must
“certify that the information provided in this application and the information provided in all
supporting documents and forms is true and accurate in all material respects.” They must further
certify that they “understand that knowingly making a false statement to obtain a guaranteed loan
from SBA is punishable under the law,” including by criminal penalty.

10. The CARES Act also authorized EIDLs to be granted to small businesses and non-
profit organizations experiencing substantial financial disruption due to the COVID-19 pandemic.

These low-interest loans are designed to provide temporary relief to organizations suffering a
Case 1:20-mj-00452-CFH Document1 Filed 09/09/20 Page5 of 10

temporary loss of revenue. EIDLs are to be used to cover an array of expenses, such as rent,
utilities, and fixed debt payments.

11. AnEIDDL application is submitted directly to the SBA, which pays the loan directly.
On its application, the borrowing business must provide information about its operations, including
the number of employees, and gross revenues and cost of goods sold for the 12-month period
preceding the disaster. For EIDLs applied for in response to the COVID-19 pandemic, the 12-
month period was that preceding January 31, 2020. Finally, on its application to the SBA, the
applicant must also certify under penalty of perjury that all of the information in the application is
true and correct to the best of the applicant’s knowledge.

12. Background on Lavanture, Lavanture, age 47, is a resident of Saugerties, Ulster
County, New York. Lavanture has a criminal history that includes three felony convictions: (1) a
1999 trafficking in counterfeit devices conviction in the United States District Court for the District
of New Jersey; (2) a 2002 grand larceny-second degree conviction in New York County Criminal
Court; and (3) a 2003 misuse of federal agency names conviction in the United States District
Court for the Southern District of New York.

13. Lavanture receives monthly Supplemental Security Income (SSI) payments
deposited into a bank account in his name. From my research, I know that SSI is meant only for
elderly or disabled individuals with limited financial resources and income.

14. The Internal Revenue Service (IRS) has disclosed that from 2017 through 2019,
Lavanture has not filed a federal income tax return, nor have any employers or other organizations
reported any income that he earned.

15. | Background on the Lavanture Entities. From my investigation, I know that

Lavanture controls the following entities that received PPP loans and/or EIDLs: Intrust Investment
Case 1:20-mj-00452-CFH Document1 Filed 09/09/20 Page 6 of 10

Realty LLC (“Intrust”), Project Youth Exposure Inc. (“Project Youth Exposure”), Dreamcast
Entertainment LLC (“Dreamcast”), Woodstock Torch Awards, and Provident Investment Realty
LLC (“Provident”) (collectively, the “Lavanture Entities”).

16. | The New York State Department of Labor (“NYDOL”) has disclosed that none of
the Lavanture Entities that received PPP loans has ever reported having employees or a payroll.
The IRS has disclosed that from 2017 through 2019, none of the Lavanture Entities filed a federal
income tax return, nor made any filings with the IRS indicating that any of the entities had
employees or contractors during these years,

17. Fraudulent Loan Applications. Between on or about June 16, 2020 and July 22,
2020, the Lavanture Entities applied for and received a total of four PPP loans and five EIDLs,
totaling approximately $4,906,281, from the SBA and two private lenders, Bank of America, N.A.
(“BoA”) and Kabbage, Inc. (“Kabbage”). BoA is a financial institution insured by the Federal
Deposit Insurance Corporation. All loan proceeds were deposited into BoA accounts standing in
the names of the entities that received the loans; according to BoA, each entity’s address is
Lavanture’s residential address in Saugerties. Lavanture was the sole signatory on each account.

18. Lavanture was also the sole signatory on all nine of the loan applications, each of
which contained materially false representations regarding, among other things, the applicant
company’s number of employees and payroll. The following are examples of these materially
false representations:

a. On orabout July 8, 2020, in his application to Kabbage for a PPP loan in the amount
of $1,309,897.00, Lavanture submitted a 2019 Wage and Tax Statement (Form W-
3) that purported to document 61 employees, and total paid wages in the amount of

$6,099,756.00, for Provident in 2019. Based on my training, experience, and
Case 1:20-mj-00452-CFH Document1 Filed 09/09/20 Page 7 of 10

investigation to date, there is probable cause to conclude that this document, and
the representations contained therein, were materially false and fraudulent, because
the IRS has disclosed that Provident did not have tax filings in 2019, and NYDOL
has disclosed that Provident has never reported having any employees.' For these
reasons, there is also probable cause to conclude that Lavanture, on the PPP loan
application for Provident, falsely certified that Provident was “in operation on
February 15, 2020 and had employees for whom it paid salaries and payroll or paid
independent contractors.”

b. On or about July 10, 2020, in his application to BoA for a PPP loan in the amount
of $1,354,112.00, Lavanture submitted a 2019 Employer’s Annual Federal
Unemployment Tax Return (Form 940), and a 1st-Quarter 2020 Employer’s
Quarterly Federal Tax Return (Form 941), that purported to document $6,499,740
in total paid wages in 2019, and $1,624,935 in total paid wages to 65 employees in
the first quarter of 2020, for Intrust, respectively Based on my training, experience
and investigation to date, there is probable cause to conclude that these documents,
and the representations contained therein, were materially false and fraudulent,
because the IRS has disclosed that Intrust did not have tax filings in 2019, and
NYDOL has disclosed that Intrust has never reported having any employees.” For

these reasons, there is also probable cause to conclude that Lavanture, on the PPP

' Additionally, in a separate EIDL application submitted to the SBA on or about June 19, 2020,
Lavanture certified that Provident had 20 employees, as opposed to 61 employees as represented
in the PPP loan application.

? Additionally, in a separate EIDL application submitted to the SBA on or about June 19, 2020,
Lavanture certified that Intrust had 5 employees, as opposed to 65 employees as represented in the
PPP loan application.
Case 1:20-mj-00452-CFH Document1 Filed 09/09/20 Page 8 of 10

19.

loan application for Intrust, falsely certified that Intrust was “in operation on
February 15, 2020 and had employees for whom it paid salaries and payroll or paid

independent contractors.”

. On or about July 14, 2020, in his application to BoA for a PPP loan in the amount

of $ 1,520,772.00, Lavanture submitted a 2019 Wage and Tax Statement (Form W-
3), and 2019 Employer’s Annual Federal Unemployment Tax Return (Form 940),
that purported to document 73 employees and total paid wages in the amount of
$7,299,708.00 for Project Youth Exposure in 2019. Based on my training,
experience and investigation to date, there is probable cause to conclude that these
documents, and the representations contained therein, were materially false and
fraudulent, because the IRS has disclosed that Project Youth Exposure did not have
tax filings in 2019, and NYDOL has disclosed that Project Youth Exposure has
never reported having any employees.’ For these reasons, there is also probable
cause to conclude that Lavanture, on the PPP loan application for Project Youth
Exposure, falsely certified that Project Youth Exposure was “in operation on
February 15, 2020 and had employees for whom it paid salaries and payroll or paid
independent contractors.”

I have also reviewed a financial analysis of how Lavanture used the PPP and EDIL

monies once they were deposited into BoA accounts he controlled. This analysis demonstrates

that Lavanture has spent loan proceeds on property purchases, personal expenses and Person-to-

3 Additionally, in a separate EIDL application submitted to the SBA on or about June 19, 2020,
Lavanture certified that Project Youth Exposure had 12 employees, as opposed to 73 employees
as represented in the PPP loan application.
Case 1:20-mj-00452-CFH Document1 Filed 09/09/20 Page 9 of 10

Person (P2P) payments, and has also transferred loan proceeds to at least a dozen bank accounts
he controls, Lavanture is also drawing on the loaned funds to withdraw an excessive amount of
cash and issue large checks to himself and other companies he controls. For instance, bank records
demonstrate that approximately $439,503.25 of the loaned funds was withdrawn in cash. These
transactions further demonstrate that Lavanture fraudulently applied for the loans, knowing he
would use the loaned funds for illegal purposes. To date, a review of financial records did not
reveal that Lavanture appeared to use the loaned funds to authorize payroll for the number of
employees listed on the loan applications.
20. The following are examples of how Lavanture has fraudulently spent the loan
proceeds:
a. J Business Ventures LLC (“J Business Ventures”) is another entity controlled by
Lavanture. According to the New York Department of State Division of
Corporations, J Business Ventures was registered with the state on June 29, 2020,
listing Lavanture as its registered agent at his Saugerties residence.
b., On July 1, 2020, Lavanture opened an account at the JP Morgan Chase branch in
Kingston, New York, in the name of J Business Ventures, with account number
ending in 368 (the “Chase 368 Account”), with himself as the only signatory.
c. In July 2020, Lavanture transferred, to the Chase 368 Account, loan proceeds that
were originally deposited into BoA accounts controlled by him, including but not
limited to: $200,000 from Provident on July 1; $98,900 from Intrust on July 7
(check memo: “Back Rent”); $490,000 from Dreamcast Entertainment on July 13
(check memo: “Reimbursement Real Estate Closing”); $495,500 from Intrust on

July 13 (check memo: “Back Rent/Real Estate”); $305,000 from Provident on July
Case 1:20-mj-00452-CFH Document1 Filed 09/09/20 Page 10 of 10

23 (check memo: “Rent/Late Fees”); and $950,500 from Dreamcast Entertainment
on July 22 (check memo: “Real Estate Reimbursement”).

d. Lavanture drew on the loan proceeds transferred into the Chase 368 Account when,
on July 29, 2020, he wired $952,000 to an attorney trust account, in reference to
the purchase of a large estate in Byram Township, New Jersey, that has been
advertised for sale. A public real estate listing for the 5.6-acre property describes
it as having an 18-room Tuscan-style mansion.

e. Additionally, Lavanture drew on the loan proceeds transferred into the Chase 368
Account when, on or about July 14, 2020, he transferred $50,000 to a title company,
in reference to the purchase of a motel in Rockaway Beach, Missouri, that has been
advertised for sale.

Conclusion
21. respectfully submit that this affidavit supports probable cause for a criminal
complaint charging Jean R. Lavanture, a/k/a Rudy Lavanture, with committing bank fraud, in
violation of 18 U.S.C. § 1344.

Attested to by, the affiant:

FBI Special Agent

I, the Honorable Christi Hummel, United States Magistrate Judge, hereby acknowledge that
this affidavit was attested by\the affiant by telephone on September 9, 2020 in accordance with
Rule 4.1 of the Federal Rules jof Criminal Procedure,

Hon, Christian F. Hummel!
United States Magistrate Judge


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