Criminal Indictment — United States v. Shavonte Hill (District of Nevada)

Summary

A criminal indictment filed June 28, 2023 as Document 31 in United States of America versus Shavonte Hill, Case 2:23-cr-00119-APG-MDC, in the United States District Court for the District of Nevada, charging wire fraud under 18 U.S.C. §§ 1343 and 3147. The grand jury alleges that Hill, while serving a term of federal supervised release imposed in Case No. 2:17-cr-132, submitted PPP loan applications with a fake 2020 IRS Form 1040 Schedule C showing gross annual receipts of $65,000 for a barber business that did not exist. It states that Hill obtained two PPP loans totaling approximately $27,082 and that the SBA paid another $5,000 in fees to the lenders. Counts One and Two each rest on an application transmitted from Nevada to financial institutions outside Nevada.

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“Criminal Indictment — United States v. Shavonte Hill (District of Nevada).” Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/31-indictment-011d5a6828/, SHA-256 1666a2028ed2688beeb6cac11f520efdb3092e4321760a20b87f4290e90c44c6.

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Case 2:23-cr-00119-APG-MDC Document 31 _ Filed 06/28/23 Page1of7

FILED RECEIVED

| ___ENTERED SERVED ON
JASON M. FRIERSON —_ COUNSELPAPTIES OF RECORD
United States Attorney
Nevada Bar No. 7709 JUN 28 2023
KIMBERLY M. FRAYN Se dhuer
JESSICA OLIVA CLERKS ON
Assistant United States Attorneys DISTPH sors
501 Las Vegas Boulevard South, Suite 1100 _ __ DEPUTY}

Las Vegas, Nevada 89101 Leer
Tel: (702) 388-6336

Fax: (702) 388-6418

Kimberly.Frayn@usdoj.gov

Attorneys for the United States

UNITED STATES DISTRICT COURT

DISTRICT OF NEVADA
UNITED STATES OF AMERICA, CRIMINAL INDICTMENT
Plaintiff, Case No.: 2:23-cr- 00119-APG-VCF
vs. VIOLATIONS:
SHAVONTE HILL, 18 U.S.C. §§ 1343 and 3147 — Wire Fraud.
Defendant.

THE GRAND JURY CHARGES THAT:

Introductory Allegations

At all times relevant to the Indictment, unless otherwise stated:

1. Defendant Shavonte Hill (“Hill” or “defendant”) was a United States citizen
residing in Las Vegas, Nevada, who was serving a term of federal supervised release
imposed in United States v. Shavonte Hill, Case No. 2:17-cr-132 in the United States District
Court for the District of Nevada.

Background Regarding the Paycheck Protection Program

2. The Coronavirus Aid, Relief, and Economic Security ("CARES") Act is a

federal law enacted in or around March 2020 and is designed to provide emergency
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Case 2:23-cr-00119-APG-MDC Document 31 _ Filed 06/28/23 Page 2of7

financial assistance to the millions of Americans who are suffering the economic effects
caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was
the authorization of up to $349 billion in forgivable loans to small businesses and sole
proprietorships for job retention and certain other expenses, through a program referred to
as the Paycheck protection Program (“PPP”). Subsequent legislation provided additional
funding for the PPP and extended its duration. Businesses and eligible individuals could
apply for PPP loans through May 31, 2021.

3, In order to obtain a PPP loan, a qualifying business, independent
contractor/self-employed individual, or sole proprietorship was required to submit a PPP
loan application signed by an authorized representative of the business. The PPP loan
application required the applicant (through its authorized representative) 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 applicant (through its authorized
representative) was required to state, among other things, its: (a) average monthly payroll
expenses; and (b) number of employees. Applicants who did not have employees and who
filed an IRS Form 1040, Schedule C could report gross income instead of payroll. These
figures were used to calculate the amount of money the applicant was eligible to receive
under the PPP. In addition, businesses or sole proprietorships applying for a PPP loan were
required to provide documentation showing their eligibility and qualifying payroll amount.

4, A participating financial institution (the lender) processed a PPP loan
application. If the lender approved a PPP loan application, it funded the PPP loan using its
own monies, which the Small Business Administration (“SBA”) guaranteed 100%. If the
lender made a PPP loan to the applicant, the SBA paid the lender a processing fee, which

was calculated based on the amount of the loan. The lender transmitted information to the
10

Small Business Administration in the course of processing the loan data from the
application, including information about the borrower, the total amount of the loan, and the
listed number of employees. The SBA oversees the PPP, which has authority over all loans.
Over 5,000 lending institutions, mostly banks and credit unions, have participated in the
PPP.

5. The business or individual receiving the PPP loan proceeds must spend the
funds on certain permissible expenses, such as payroll costs, interest on mortgages, rent, and
utilities. The PPP allows the interest and principal on the PPP loan to be entirely forgiven if
the loan proceeds are spent on permissible expense items within a designated period of time
and uses a specified portion of the PPP loan proceeds on payroll expenses. When a PPP

loan is forgiven, the SBA pays the lender the amount of the forgiven interest and principal.

Background Regarding the Economic Injury Disaster Loan Program

6. The Economic Injury Disaster Loan (“EIDL”) Program is a SBA program
that provides low-interest financing to small businesses, renters, and homeowners in regions
affected by declared disasters.

7. Another source of relief provided by the CARES Act was the authorization
for 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 was determined by the number
of employees that the applicant certified it had. The advances did not have to be repaid.

8. In order to obtain an EIDL and advance, a qualifying business is required to
submit an application to the SBA and provide information about its operations, such as the

number of employees, gross revenues for the 12-month period preceding the disaster, and
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cost of goods sold in the 12-month period preceding the disaster. In the case of EIDLs for
COVID-19 relief, the 12-month period was that preceding January 31, 2020. The applicant
must also certify that all the information in the application is true and correct to the best of
the applicant’s knowledge.

9. EIDL applications are submitted directly to the SBA and processed by the
agency with support from a government contractor, Rapid Finance, via a server in Des
Moines, Iowa. The amount of the loan, if the application was approved, was determined
based, in part, on the information provided by the application about employment, revenue,
and cost of goods, as described above. Any funds issued under an EIDL or advance are
issued directly by the SBA. EIDL funds can be used for payroll expenses, sick leave,
production costs, and business obligations, such as debts, rent, and mortgage payments. If
the applicant also obtained a loan under the PPP, the EIDL funds cannot be used for the
same purpose as the PPP funds.

Hill’s Scheme to Defraud

14. | Beginning on a date unknown, but no later than June 2020, and continuing
until on or about June 3, 2021, Hill participated in and devised and intended to devise a
scheme and artifice to defraud, and for obtaining money and property by means of

materially false and fraudulent pretenses, representations, and promises, as further set forth

| below.

Purpose of Hill’s Scheme to Defraud

15. It was the purpose of the scheme for Hill to unjustly enrich himself and others
by fraudulently obtaining loans, to which Hill knew he was not entitled, intended to help
small businesses suffering economic harm caused by the COVID-19 pandemic. It was part

of the scheme that Hill submitted or caused to be submitted loan applications on behalf of
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Case 2:23-cr-00119-APG-MDC Document 31 Filed 06/28/23 Page5of7

businesses that did not exist, which contained materially false and fraudulent information,
including but not limited to: (a) false revenue amounts for these non-existent companies;
and (b) and false certifications that Hill would spend the loan money as was specified in the
Covid relief programs on certain permissible business expenses, such as payroll costs,
interest on mortgages, rent, and utilities. Hill also provided fake documentation in support
of his loan applications purporting to show gross annual receipts in year 2020 for the
nonexistent businesses.

Manner and Means of Hill’s Scheme to Defraud

16. Prior to the PPP loan applications described in paragraphs 17 and 18, and
starting in or around June 2020, Hill submitted, or caused to be submitted, at least three
EIDL applications to the SBA by way of interstate wire communications via the internet
that contained materially false and fraudulent statements, promises, and misrepresentations,
regarding (among other things) the existence of certain businesses, the number of people
employed by those businesses, and the businesses’ gross revenue. As a result of one of these
applications, he obtained from SBA approximately $10,000 in Covid relief funds that he was
not eligible to receive.

17. On or about April 11, 2021, Hill submitted, or caused to be submitted, an
online PPP loan application to Financial Institutions 1 and 3 claiming that he was the sole
proprietor for a barber business that made $65,000 in gross revenue during the year 2020.

18. Onor about April 13, 2021, Hill submitted an online PPP loan application to
Financial Institutions 2 and 3 that contained those same false claims.

19. To document his claimed revenue, Hill provided a fake 2020 IRS Form 1040

Schedule C along with each application, bearing his name and social security number,
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Case 2:23-cr-00119-APG-MDC Document 31 _ Filed 06/28/23 Page 6of7

purporting to show gross annual receipts of $65,000 for the applicant barber business. Hill
did not have a barber business in 2020 and Hill filed no such IRS Form.

20. Asa result of these two PPP loan applications, Hill obtained two PPP loans
totaling approximately $27,082 in Covid relief funds that he was not eligible to receive. In

addition, the SBA paid another $5,000 in fees to the financial institutions that issued the

loans.
COUNTS ONE AND TWO
Wire Fraud
(18 U.S.C. §§ 1343, 3147)
21. The allegations in paragraphs 1 through 20 are re-alleged and incorporated as
if fully set forth herein.

22. Onor about the dates set forth below, within the State and Federal District of

Nevada and elsewhere,
SHAVONTE HILL,

defendant herein, while on release pursuant to the Bail Reform Act in United States v. Hill,
No. 2:17-cr-132, in the District of Nevada, and having been notified of the potential effect
of committing a felony offense while on release, having devised and participated in the
above-described scheme and artifice to defraud, and to obtain money and property by
means of false and fraudulent pretenses, representations, and promises, did, for the purpose
of executing the scheme and artifice, transmit and cause to be transmitted by means of
wire, radio, and television communication in interstate and foreign commerce, writings,
signs, signals, pictures, and sounds, as further described below, with each wire
communication constituting a separate violation of Title 18, United States Code, Section

1343:
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Case 2:23-cr-00119-APG-MDC Document 31 _ Filed 06/28/23 Page 7 of 7

COUNT APPROX. DESCRIPTION OF WIRE
DATE
Avril 11 a PPP Loan application electronically transmitted by
ONE 5021 , HILL from Nevada to Financial Institutions 1 and 3
outside of Nevada
April 13 a PPP Loan application electronically transmitted by
TWO 5021 , HILL from Nevada to Financial Institutions 2 and 3

outside of Nevada

DATED: this 28th day of June, 2023.

A TRUE BILL:

JASON M. FRIERSON
United States Attorney

FOREPERSON OF THE GRAND JURY

KIMBERLY M. FRAYN

JESSICA OLIVA
Assistant United States Attorneys

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