Indictment — United States v. Katherine L. Liggins (Southern District of Illinois, Aug. 20, 2024)

Summary

An indictment filed August 20, 2024 in United States v. Katherine L. Liggins, Case 3:24-cr-30113-DWD, in the U.S. District Court for the Southern District of Illinois. It states that Liggins was a full-time employee of the Department of Veterans Affairs and charges that from at least April 25, 2021 through at least October 14, 2022, Liggins devised a scheme to defraud Benworth Capital Partners, LLC and the SBA through a PPP application claiming a business with $200,000 in 2020 gross revenue. The indictment states the application was supported by a Schedule C for a business called L'Lsheek Spa, that PPP loan proceeds of $20,833.33 were received and that the loan was forgiven on October 14, 2022. Count One charges wire fraud under 18 U.S.C. § 1343 and Count Two a material false statement under 18 U.S.C. § 1001(a)(2).

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Case 3:24-cr-30113-DWD Documenti_ Filed 08/20/24 Page1lof7 PageID#1

FILED

AUG 20 2024

IN THE UNITED STATES DISTRICT COURT _ cterk,u.s. DISTRICT COURT

STRICT OF ILLLINOIS
FOR THE SOUTHERN DISTRICT OF ILLINOIS SOUTHERN DISTRICT OF It

UNITED STATES OF AMERICA, )
)
Plaintiff, )
)
vs. ) Criminal No. QU —-Cf-Z0u3 = Dust)
)
KATHERINE L. LIGGINS, ) Title 18, United States Code, Sections
) 1001(a)(2) & 1343
Defendant. )
)
INDICTMENT
THE GRAND JURY CHARGES:
COUNT ONE
Wire Fraud — 18 U.S.C. § 1343
Ii, At times relevant to this indictment:
a. Defendant Katherine L. Liggins was a resident of Swansea, Illinois, within

the Southern District of Illinois.

b. Defendant Liggins was a full-time employee of the United States
Department of Veterans Affairs (“VA”). Liggins worked at the VA
Regional Office located in St. Louis County, Missouri.

C. Benworth Capital Partners, LLC, was a private lending institution located
in Florida which participated in the PPP program.

2. At times relevant to this indictment:

a. The Paycheck Protection Program (“PPP”) was a COVID-19 pandemic

relief program administered by the United States Small Business

Administration (“SBA”) that provided forgivable loans to small businesses
Case 3:24-cr-30113-DWD Document1 Filed 08/20/24 Page2of7 PageID#2

for job retention and certain other expenses. The PPP permitted
participating third-party lenders to approve and disburse SBA-backed PPP
loans to cover payroll, fixed debts, utilities, rent/mortgage, accounts
payable and other bills incurred by qualifying businesses during, and
resulting from, the COVID-19 pandemic. PPP loans were fully guaranteed
by the SBA.

b. To obtain a PPP loan, a qualifying business had to submit a PPP loan
application, which was signed by an authorized representative of the
business. The PPP loan application required the business (through its
authorized representative) to acknowledge the program rules and make
certain affirmative certifications to be eligible to obtain the PPP loan,
including that the business was in operation and either had employees for
whom it paid salaries and payroll taxes. A business applying for a PPP loan
was required to provide documentation showing its payroll expenses, such
as filed federal income tax documents.

c. Beginning in March 2021, SBA began allowing sole proprietors to calculate
the amount of the PPP loan they could receive using their gross income.
The maximum amount of a PPP loan that a sole proprietor with no
employees could receive was $20,833.33.

d. Once approved, the business received the PPP loan proceeds via an
electronic funds transfer from the third-party lender to a financial account

under the control of the business.
Case 3:24-cr-30113-DWD Document1 Filed 08/20/24 Page3of7 PageID#3

e. The proceeds of a PPP loan could be used for certain specified items, such
as payroll costs, costs related to the continuation of group health care
benefits, or mortgage interest payments. The proceeds of a PPP loan were
not permitted to be used by the borrowers to purchase consumer goods,
automobiles, personal residences, clothing, jewelry, to pay the borrower’s
personal federal income taxes, or to fund the borrower’s ordinary day-to-
day living expenses unrelated to the specified authorized expenses.

f. If the borrower made all of the required certifications on the loan application
form, and provided all of the required documentation, the lender issued the
SBA guaranteed PPP loan.

g. If, during the 8 to 24 week period after the loan was disbursed, the borrower
used the PPP loan to pay eligible payroll costs, business mortgage interest
payments, rent, or utilities, the borrower was eligible for forgiveness of their
PPP loan.

h. Borrowers who received PPP loans of $150,000 or less who were seeking
forgiveness of their loans were required to submit a “PPP Loan Forgiveness
Application Form” in which they certified that they used the funds for
eligible purposes.

i. Within 60 days of receiving a PPP Loan Forgiveness Application, the
lender was required to decide whether the borrower was eligible for
forgiveness of their PPP loan and submit its decision to the SBA. The lender

was also required to submit to the SBA at that same time its request for
Case 3:24-cr-30113-DWD Document1 Filed 08/20/24 Page4of7 PageID#4

payment on the loan. If approved by the SBA, the SBA reimbursed the
lender for 100% of the amount of the loan that was forgiven.

j. Borrowers who were ineligible to receive a PPP loan were not entitled to
receive loan forgiveness. In addition, borrowers who used PPP loan funds
for unauthorized purposes were not entitled to have their PPP loans
forgiven.

k. SBA had the authority and discretion to review any PPP loan at any time.
If the SBA chose to review a PPP loan, the lender was required to provide
to the SBA any documents related to the loan, including the Loan
Application, all supporting documentation for the loan application, the Loan
Forgiveness Application, and all supporting documentation for the loan
forgiveness application.

3. Beginning on at least April 25, 2021, and continuing until at least October 14, 2022,
at Swansea, in St. Clair County, within the Southern District of Illinois, and elsewhere,

KATHERINE L. LIGGINS,

defendant herein, knowingly devised and participated in a scheme to defraud Benworth Capital
Partners, LLC, and the SBA and to obtain money and property belonging to Benworth Capital
Partners, LLC, and the SBA by means of false and fraudulent pretenses, representations, and
promises.

4. It was the object of this scheme that LIGGINS would and did obtain more than
$20,000 in PPP loan funds that he was not entitled to receive.

5. It was a part of the scheme to defraud that on approximately April 25, 2021,

LIGGINS caused to be submitted to Benworth Capital Partners, LLC, a “Paycheck Protection
Case 3:24-cr-30113-DWD Document1 Filed 08/20/24 Page5of7 PagelID#5

Program Borrower Application Form for Schedule C Filers Using Gross Income.” LIGGINS
electronically signed this PPP application form and caused her initials to be electronically placed
next to the answers to certain questions and representations and certifications.

6. The PPP loan application that LIGGINS submitted falsely represented that
LIGGINS was the owner of a business located in Swansea that received $200,000 in gross revenue
in 2020.

7. On the PPP loan application, LIGGINS’ initials were placed next to a certification
which read: “Current economic uncertainty makes this loan request necessary to support the
ongoing operations of the Applicant.” This certification was false, as LIGGINS well knew.

8. On the PPP loan application, LIGGINS’ initials were also placed next to a
certification which read: “The funds will be used to retain workers and maintain payroll; or make
payments for mortgage interest, rent, utilities, covered operations expenditures, covered property
damage costs, covered supplier costs, and covered worker protection expenditures as specified
under the Paycheck Protection Program Rules. ...” This certification was false, as LIGGINS well
knew.

9. On the PPP loan application, LIGGINS’ initials were also placed next to a
certification which read: “I further 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.” This certification was false, as LIGGINS well knew.

10. _—_‘ It was further a part of the scheme to defraud that a fraudulent IRS form Schedule
C for the year 2020 was submitted to Benworth Capital Partners, LLC, in support of LIGGINS’
PPP loan application. This Schedule C represented that LIGGINS was the owner of a business

called L’Lsheek Spa. In addition, this Schedule C contained the following false statements: (a)
Case 3:24-cr-30113-DWD Document1 Filed 08/20/24 Page6of7 PageID#6

the business had gross receipt or sales totaling $200,000 in 2020; (b) the business had total
expenses of $47,000 in 2020; and (c) the business had a net profit of $124,000 in 2020.

11. LIGGINS’ PPP loan application was approved by Benworth Capital Partners, LLC.
As a result, LIGGINS received PPP loan proceeds in the amount of $20,833.33.

12. LIGGINS subsequently submitted to Benworth Capital Partners, LLC, a PPP Loan
Forgiveness Application. Benworth Capital Partners, LLC, approved LIGGINS’ application and
her PPP loan was forgiven on October 14, 2022.

13. Onor about May 7, 2021, defendant

KATHERINE L. LIGGINS,
for the purpose of executing the scheme to defraud described above, and attempting to do so,
knowingly did cause to be transmitted by means of a wire communication in interstate commerce,
from the state of Florida, to the state of Texas, certain signals, namely a wire transfer of funds in
the amount of $20,833;

All in violation of Title 18, United States Code, Sections 1343.
Case 3:24-cr-30113-DWD Document1 Filed 08/20/24 Page/7of7 Page|ID#7

COUNT TWO
Material False Statement — 18 U.S.C. § 1001(a)(2)

On or about April 25, 2021, at Swansea, in St. Clair County, within the Southern District

of Illinois,
KATHERINE L. LIGGINS,

defendant herein, did knowingly and willfully make, and cause to be made, a materially false,
fictitious, and fraudulent statement and representation in a matter within the jurisdiction of the
United States Small Business Administration (“SBA”), an agency within the executive branch of
the Government of the United States, namely the statement on a “Paycheck Protection Program
Borrower Application Form for Schedule C Filers Using Gross Income” that he was the owner of

a business located in Swansea, Illinois, that had gross income of $200,000 during the 2020 tax

year;
All in violation of Title 18, United States Code, Section 1001(a)(2).

RACHELLE AUD CROWE
United States Attorney

SCOTT A. VERSEMAN
Assistant United States Attorney

Recommended bond: Unsecured Bond


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