Criminal Complaint — United States v. Reddy Budamala (No. 2:22-cr-00077, C.D. Cal.)
Summary
A criminal complaint against Reddy Budamala, Case No. 2:22-mj-00758-duty, in the U.S. District Court for the Central District of California, filed February 24, 2022 as Document 1 in No. 2:22-cr-00077-ODW, charging wire fraud under 18 U.S.C. § 1343 on or about April 30, 2020. The affidavit of IRS-CI Special Agent Drew Cienfuegos states that the defendant submitted seven PPP and EIDL loan applications for Hayventure LLC, Pioneer LLC and XC International LLC, described as shell companies with no business operations, and that the IRS has no records for those companies. It describes a Hayventure PPP loan from Celtic Bank of $236,597 and forgiveness payroll summaries listing 13 employees. The affidavit states the proceeds funded a $1.247 million investment property, a $597,585 property in Malibu and a $970,000 investment in an EB-5 fund.
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Cite this document
“Criminal Complaint — United States v. Reddy Budamala (No. 2:22-cr-00077, C.D. Cal.).”
Original at archive.org. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/complaint-no-2-22-cr-00077-dkt-1-c-d-cal-a155af7e5b/
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Case 2:22-cr-00077-ODW Document 1 Filed 02/24/22 Page 1 of 26 Page ID #:1
AO 91 tRev. ll/11) Criminal Complaint(Rev. by USAO on 3/12/20) ❑Original ❑Duplicate Original
UNITED STATES DISTRICT COURT ,,,~ LODGED
CLERK,U.S. DISTRICT COURT
FILED
CLERK, U.S. D15rRf~,T CC~U1~T
for the 2/24/2022
(CENTRAL DISTRICT OF CALIFORNIA
Central District of Calif riii FEB L ~ '~~ ~ BY: ib DEPUTY
(;
United States of America, CENTRAL DIS~~~ F CALIr'~RN~p
V.
Case No. 2:22-mj-00758-duty
Reddy Budamala,
Defendant.
CRIMINAL COMPLAINT BY TELEPHONE
OR OTHER RELIABLE ELECTRONIC MEANS
I, the complainant in this case, state that the following is true to the best of my knowledge and belief.
On or about the date of April 30, 2020, in the counties of Los Angeles and Orange in the Central District of
California, the defendant violated:
Code Section Offense Description
18 U.S.C. § 1343 Wire fraud
This criminal complaint is based on these facts:
Please see attached affidavit.
❑
D Continued on the attached sheet.
/S/Drew Cienfuegos
Complainant's signature
IRS-CI Special Agent Drew Cienfuegos
Printed name and title
Attested to by the ap licant' accordance with the requirements of Fe R. Crim. P. 4.1 by telephone.
Date: ~- ~, 2~ ~(
i udge's ignature
I~~A~IA A. AUQ~RO
City and state: Los Angeles, California
Printed name and title
Case 2:22-cr-00077-ODW Document 1 Filed 02/24/22 Page 2 of 26 Page ID #:2
AFFIDAVIT
I, Drew Cienfuegos, being duly sworn, declare and state as
follows:
PURPOSE OF AFFIDAVIT
1. I make this affidavit in support of a criminal
complaint against and warrant to arrest REDDY BUDAMALA
(~~BUDTS~A") for a violation of 18 U.S.C. § 1341 (wire fraud).
2. The facts set forth in this affidavit are based on my
personal observations, training and experience, and information
obtained from other agents and witnesses. The beliefs I express
in this affidavit are based on my training, experience,
knowledge of the investigation, and reasonable inferences I have
drawn from the foregoing sources of information.
3. This affidavit is intended to show only that there is
sufficient probable cause for the requested criminal complaint
and warrant and does not purport to set forth all of my
knowledge of or investigation in this case.
4. Unless stated otherwise, all conversations and
statements described in this affidavit are related in substance
and in part only. Further, unless stated otherwise, all dates
and amounts in this affidavit are approximations, and the words
"on or about" and "approximately" are omitted for clarity.
BACKGROUND OF AFFIANT
5. I am a Special Agent with the Internal Revenue
Service, Criminal Investigation (~~IRS-CI") I have been with
IRS-CI since October 2017 and have been a special agent since
March 2019. As an IRS-CI agent, I have conducted and
Case 2:22-cr-00077-ODW Document 1 Filed 02/24/22 Page 3 of 26 Page ID #:3
participated in investigations concerning violations of criminal
tax, fraud, and money laundering statutes. I have executed
search warrants, interviewed witnesses, and conducted
surveillance.
6. My education includes a bachelor's degree in
accounting and a master's degree in taxation from the University
of Washington. I am a licensed certified public accountant in
the State of New York. I attended the Criminal Investigator
Training Program and the Special Agent Basic Training program at
the Federal Law Enforcement Training Center. I have attended
trainings on cyber-dependent and cyber-enabled criminal
activity. Through my training, education, and experience, I am
familiar with the methods financial criminals use to plan,
execute, and conceal their illicit activities.
SUN~iARY OF PROBABLE CAUSE
7. Between January and August 2019, REDDY RP,GHAV BUD~11~+~A
("BUDA1~iLA") formed and acquired Hayventure LLC ("Hayventure"),
Pioneer LLC (~~Pioneer"), and XC International LLC (~~XC
International") (collectively ~~BUDAMP,LA's companies"), three
shell companies with no business operations.
8. Following the outbreak of COVID-19, BUDTs+il~A submitted
to the Small Business Administration (~~SBA") seven Paycheck
Protection Program (~~PPP") and Economic Injury Disaster Loan
("EIDL") loan applications on behalf of Hayventure, Pioneer, and
XC International (collectively the ~~SBA loans applications").
BUDAMALA falsely represented to the administrating banks (which
were all financial institutions under federal law) that his
Case 2:22-cr-00077-ODW Document 1 Filed 02/24/22 Page 4 of 26 Page ID #:4
companies employed dozens of individuals and earned millions of
dollars in revenue, and that he needed the money for payroll and
business expenses. The SBA and its lenders funded six of the
loans and disbursed $5,151, 497 to BUDF,NiI~A's companies. BUDA*~T.n
applied to have several of the loans forgiven and falsely
represented that he used the SBA money entirely for payroll.
9. The evidence overwhelmingly shows that the loan
applications were false. The listed addresses for the companies
are bogus, nonexistent, or residential. Though BUDP,Ml~p,
submitted IRS Forms 941 (employment tax returns) for each of his
companies in support of the applications, the IRS has no records
for Hayventure, Pioneer, or XC International. The states where
BUDAMALA's companies purportedly operated have no records of
those companies paying wages to any employees. Bank records for
the companies reflect no significant business income or
operating expenses. And in February 2021, BUDT~'+IAT-A told a
special agent from the State Department that he wanted a United
States passport because he thought it would help him get a job.
10. Once the SBA loans were funded, BUDAI~A used the
money for personal expenditures. For instance, BUDANlAL•A used the
loan proceeds to fund the purchase of a $1.247 million
investment property in Los Angeles,l the purchase of a $597,585
property in Malibu, a $970,000 investment in an EB-5 fund, a
$250,000 private placement investment, and a nearly $3 million
investment in BUDF,MI~A's personal TD Ameritrade account.
1 Unless stated otherwise, all cities I refer to in this
affidavit are located in the Central District of California.
Case 2:22-cr-00077-ODW Document 1 Filed 02/24/22 Page 5 of 26 Page ID #:5
11. In February 2022, agents executed seizure warrants on
several of BUD~s+IP,T—A's financial accounts, search warrants on the
email accounts linked to BUDANlALA and his companies, and a
search warrant on BUDANIALA's residence on Almond Tree Lane in
Irvine, California (~~the Almond Tree Address") During the
execution of the Almond Tree search warrant, BUDTS?AT_A confessed
that the SBA loans he filed were false, that his companies had
no full-time employees, and that he spent the SBA loan proceeds
on personal expenditures. BUDr~+t7~A was detained when he
attempted to flee the country later that night.
STATEMENT OF PROBABLE CAUSE
12. Based on records, witness interviews, my review of
electronic communications, and my knowledge of this
investigation, I know the following:
I. The formation of XC International, Hayventure, and
Pioneer
13. On January 15, 2019, the Hayventure articles of
organization were filed with the California Secretary of State.
The address listed on the registration is 506 South Spring
Street, Unit 13308, Los Angeles, California ("the Spring Street
address"). There is a post office located at 506 South Spring
Street, and postal records show that at one point BUDn1~1A~
rented PO Box 50730 from that office, though never a PO Box with
the number 13308. Postal records show no accounts for Hayventure
in the area of the Spring Street office. Other than the articles
of organization, there are no other filings for Hayventure with
the California Secretary of State.
Case 2:22-cr-00077-ODW Document 1 Filed 02/24/22 Page 6 of 26 Page ID #:6
14. On April 17, 2019, articles of organization for XC
International were filed with the Wyoming Secretary of State. On
July 29, 2020, BUD~MA~, purchased XC International for $1,595,
listing his residence as house on Bright Hollow in Irvine,
California (~~the Bright Hollow address").z On August 10, 2020, XC
International filed resolutions to sell XC International,
appoint BUDT1'$PiT—A as manager, and authorize BUDT1'$AT•A to open a
bank account in the name of XC International. The next day
W yoming Corporate Services emailed BUDT1'+~T—A the XC International
corporate documents.
15. On August 22, 2019, the articles of organization for
Pioneer were filed with the Wyoming Secretary of State. On June
4, 2020, Wyoming Corporate Services invoiced BUD7~M~A for $1,035
for a California Aged LLC and sent an email to BUD~S+~A
confirming the purchase. BUDns+1AT—A used Citibank 4850 (BUD~S~A)
to pay the invoice.3 On June 4, 2020, Pioneer filed resolutions
to sell Pioneer, appoint BUDT1'+IAT—A as manager, and authorize
2 Evidence shows that BUDr1riAT—A' s wife, with whom BUDrM1~A is
separated and in the process of divorcing, resides at the Bright
Hollow address. On October 26, 2020, a grant deed was filed with
Orange County transferring the Bright Hollow property from
BUDn~'+1I~A and Individual 1 (described as husband and wife and
joint tenants) to Individual 1 as her sole and separate
property. Moreover, expenses from BOA 8343, one of BUD~I~II~A's
bank accounts (described below), suggest that BUDANIALA divorced
or is divorcing his wife. For example, between May 26, 2020 and
November 18, 2020, there are seven transactions from this
account to "online divorce service."
3 For the purpose of this affidavit, I refer only to the
last four digits of account numbers and describe the names on
the accounts parenthetically.
Case 2:22-cr-00077-ODW Document 1 Filed 02/24/22 Page 7 of 26 Page ID #:7
BUDT~+~iT•A to open an account in the name of Pioneer. That day,
BUDAMAT—A emailed Wyoming Corporate Services to ask that the
address for Pioneer be changed from the Bright Hollow address to
1920 Hillhurst Avenue, Unit 1026, Los Angeles, California (~~the
Hillhurst Address") BUDAMAL•~ also provided Wyoming Corporate
Services with a copy of his identification and declared that
Pioneer's business purpose was technology consulting and
software services. In response Wyoming Corporate Services
emailed Pioneer's corporate documents to BUD~A. On June 5,
2020, a statement of information was filed with the California
Secretary of State listing BUDANlALA as manager and the business
location as the Hillhurst Avenue address. Records show that the
Hillhurst Avenue address was a private electronic PO Box
subscribed to ~~RAGHAV REDDY" who uses phone number 971-279-6878
(~~the 6878 number") and resides in Irvine, California.
II. SBA loan applications
a. Hayventure PPP loan (April 30, 2020)
16. On April 30, 2020, Hayventure applied to Celtic Bank
for a PPP loan. On the application BUDANIALA represented that
Hayventure operated in the financial industry, and had revenue
of $500,000, 10 employees, and monthly payroll of $94,639.
BUDAMAT—p, also reported that Hayventure was located at the Spring
Street location and that he was the sole owner of the company.
As the point of contact, BUDAI~,T—A stated that the Almond Tree
residence was his personal residence.
17. BUDA2~IT—A electronically initialed the SBA's standard
PPP certifications and signed the application. The
Case 2:22-cr-00077-ODW Document 1 Filed 02/24/22 Page 8 of 26 Page ID #:8
certifications generally provide that the company was in
operation on February 15, 2020, the company had wage-earning
employees, the loan proceeds would be used to retain employees
and for certain business expenses, and that the information on
the application and supporting documents was accurate (~~the PPP
certifications"). In addition to his identification, BUDrs+~A
provided the following documentation in support of the
Hayventure PPP loan application:
• What appeared to be a March 2020 bank statement from Azlo
5756 (Hayventure) The statement reflected a beginning
balance of $325,143, an ending balance of $345,133, and two
transactions (a credit for $145,123 and a debit for
$125,133). Records from this account show that the actual
March 2020 statement for Azlo 5756 reflected beginning and
ending balances of $0 with no transactions. The statement
BUDT~+IAT_A submitted appears on the left below. The actual
statement appears on the right.
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Summary of Accounts
pepn~lt Aeepr~li!OUrr Protluels
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eYll~Wwa~yMdN
• What appeared to be IRS Forms 941 for each quarter in 2019.
The forms reflected that each quarter Hayventure had 13
employees, and quarterly wages of $283,916.40. Each Form
941 lists BUDT1'+~AT—A as the president and bears BUDT1~lAT—A' s
signature. As described below, the IRS has no records for
Hayventure.
18. Celtic Bank approved the application and generated a
promissory note with a principal amount of $236,597. On April
Case 2:22-cr-00077-ODW Document 1 Filed 02/24/22 Page 9 of 26 Page ID #:9
30, 2022, BUDT~~AT~A electronically signed the note, certifying
that "all supporting documents and forms" used to obtain the
loan were ~~true and accurate in all material respects" and that
acknowledging that it was a crime to make ~~any known false
statements" in connection with the loan. On May 4, 2020, Celtic
Bank funded the loan via an electronic ACH transfer of $236,597
to Azlo 5756 (Hayventure).
19. On September 14, 2021, BUDTMAT—A signed and filed an
application to have the loan forgiven. BUD~s+~A represented that
Hayventure had 10 employees at both the time the loan was funded
and the time of the forgiveness application, and that he used
the entire loan amount for payroll. In support of the
forgiveness application BUD~~~A submitted the following payroll
summaries:
• The first summary covered the period from April 30, 2020 to
October 14, 2020. This summary listed 13 employees, with
names like "Clive Owens" and "Ron Hubert," but included no
social security numbers.4 BUDI+,t~~A is listed as an employee
on the summary, and every employee is listed as a business
process manager who worked 960 hours during the covered
period, had no paid time off or overtime, and made exactly
$39,705.60.
• The second summary covered the period January 1, 2020 to
December 31, 2020. This summary listed 13 employees with
the same names as the first summary. Each employee was
again listed as a business process manager, though on the
second summary the employees each worked 2,112 hours and
made $87,358.89.
4 BUDAN~,LA appears to have fabricated names or slightly
changed the names of famous people, like actor Clive Owen or
Scientology founder L. Ron Hubbard.
Case 2:22-cr-00077-ODW Document 1 Filed 02/24/22 Page 10 of 26 Page ID #:10
20. When applying for forgiveness, BUD~~i certified that
the money was used for business costs, that at least 60 percent
of the loan funds were used for payroll, and that the
forgiveness application was "true and correct in all material
respects." Celtic Bank approved the forgiveness.
b. Hayventure EIDL loan (June 18, 2020)
21. On June 18, 2020, BUDns+l1~T—A electronically submitted an
application for an EIDL loan on behalf of Hayventure. BUDANlALA
represented that Hayventure used Azlo 5756, was located at the
Spring Street address and used the 6878 phone number, and had 13
employees. BUDN+l~A also stated that he resided at the Bright
Hollow address, was a United States citizens and owned 90
percent of Hayventure. On June 22, 2020, the SBA disbursed the
loan proceeds in the amount of $149,900 to Hayventure via a
money transfer to Azlo 5756.
c. Pioneer PPP loan (first and second draw)
22. On June 10, 2020, BUDTl'$PiT•A electronically applied to
Radius Bank for a PPP loan on behalf of Pioneer. On the
application, BUDAI~T_~A represented that the company was located
at the Hillhurst Avenue address, had 33 employees and monthly
payroll of $264,000, was established on August 22, 2019, and
used the phone number 424-333-5458 ("the 5458 number"), which
AT&T records show to be subscribed to BUDT1'+~1~T•A. BUD~MA~, also
stated on the application that he resided at the Bright Hollow
address, and that he was the sole owner of Pioneer. BUD~s+I~A
5 Immigration records show that BUDTl'$AT_A is not a citizen.
Case 2:22-cr-00077-ODW Document 1 Filed 02/24/22 Page 11 of 26 Page ID #:11
initialed the PPP certifications and electronically signed the
application.
23. The documentation BUD~T•A submitted in support of the
loan application included his identification, Pioneer's
California Secretary of State registration, Pioneer's purported
operating agreement (dated January 20, 2020), and five Forms 941
for Pioneer that covered the quarters in 2019 and the third
quarter of 2020. Each Form 941 reflected that Pioneer had 33
employees and total quarterly wages of $792,000. Each Form 941
also bears BUDANAI,A's signature, his title as ~~director" of the
company, and the 5458 number as a means of contacting Pioneer.
As described below, Pioneer never filed any Forms 941 with the
IRS.
24. On June 19, 2020, Radius generated a promissory note
for a PPP loan in the amount of $660,000. BUD~1r1P,~,
electronically signed the note the same day. On June 24, 2020,
the loan proceeds were disbursed via ACH transfer to Azlo 7635
(Pioneer). On October 7, 2020, BUDANALA applied to have the loan
forgiven, representing that Pioneer had 33 employees both at the
time of the loan and forgiveness applications, and that Pioneer
used all proceeds of the loan on payroll costs. BUDJT~+jj~T_A
electronically signed the forgiveness certifications.
25. On January 20, 2021, BUDr1rlAT—A electronically submitted
an application for a second draw of PPP loan funding. The
information BUD7~1I~+~A represented on this application was almost
identical to the information on the first Pioneer loan
application, including that the company was located at the
Case 2:22-cr-00077-ODW Document 1 Filed 02/24/22 Page 12 of 26 Page ID #:12
Hillhurst Avenue address, and had 33 employees and monthly
payroll of $264,000, and that BUDAMP~T-A was the sole owner of
Pioneer. BUDTs+lI~A initialed the PPP certifications. This time
the supporting documentation consisted of a profit and loss
statement for Pioneer that reflected $1,027,026 of revenue and
$792,000 of wage expenses in the fourth quarter of 2019, and
$790,020 of revenue and $792,000 of wage expenses in the fourth
quarter of 2020. BUDAMALA electronically signed the PPP
certifications. On March 3, 2021, $660,000 in additional loan
proceeds were disbursed via ACH transfer to Azlo 7635 (Pioneer).
d. XC International PPP loan (first draw and attempted
second draw)
26. On August 6, 2020, BUDT~~IAT_A electronically applied to
Newtek Small Business Finance for a PPP loan on behalf of XC
International. On the application BUDT~T•A represented that the
company was located at 3200 Park Center Drive, Costa Mesa,
California ("the Park Center address"), had 42 employees and
monthly payroll of $637,000, and used the phone number 805-534-
5293 (~~the 5293 phone number"). 6 BUDT~T_A also stated on the
application that he resided at the Bright Hollow address and
owned 95 percent of XC International. BUD~~, initialed the PPP
certifications and electronically signed the application.
6 The Park Center address is an office building in Costa
Mesa. I reviewed the building directory and found no entry for
Hayventure, Pioneer, XC International, or BUD~1~1PaT—A. WeWork, a
shared office space, has a location in the building, though
WeWork has no records for BUDTl'+IAT_A~ s companies and only one
account for "Raghavender Reddy" located outside the United
States.
Case 2:22-cr-00077-ODW Document 1 Filed 02/24/22 Page 13 of 26 Page ID #:13
27. Regarding documentation, BUDTMI~A submitted his
identification, a forged letter purporting to be from Azlo
confirming that XC International's bank account number is
6769135756 (which records show to be Hayventure's account
number), a payroll summary for 42 employees covering 2019, and a
Form 941 for the first quarter of 2019 reflecting that XC
International had 42 employees and total quarterly wages of
$2.211 million.' The form bears the name and signature of partner
Kevin Diaz, and lists the 5293 number as Diaz's contact number.
Diaz's signature on the form is identical to BUD~T—A's
signature on other forms. On August 6, 2020, BUDT1~iT_A signed a
promissory note for the loan, which had a principal amount of
$1,592,500. Four days later the loan proceeds were deposited
into Azlo 5756 (Hayventure). The forged letter appears as
follows:
►~ ~ ~
XC Irrtemabortal
3200 Park Ceder Dr
Costa Mesa, CA 92626
~ .
Pirsuant to yar request. this Inter w~l cai'm Drat yar Azb aaou►rt. deramina~ed in IJSD, was opened an
April 18th, 2019_ The accord Harder is~756 and the ABA rouging cumber for yoir is
186. B ynu reed addiUonai hey. Pl~se let us luxrw.
Sir~caeN.
Rebeca Flefie~i
VP, Aalorrer Oper~tiorn
As described below, XC International has never actually
filed a tax return or Form 941.
Case 2:22-cr-00077-ODW Document 1 Filed 02/24/22 Page 14 of 26 Page ID #:14
28. On February 2, 2021, BUDANALA applied for a second
draw on the XC International loan in the amount of $1,592,500.
In support of this loan, BUDAMALA represented that XC
International was located at the Park Center address, had 42
employees and a monthly payroll of $637,000, and earned
$2,541,750 and $1,906,312.50 of revenue in the fourth quarter of
2019 and first quarter of 2020, respectively. BUDnMP~A also
provided that his address was the Bright Hollow residence
(spelled "Bright Holw" on the application), and that he was the
95 percent owner of XC International. BUDANlALP, initialed the PPP
certifications and electronically signed the application.
29. In support of the second draw BUD~s+IP,T—A submitted a
copy of his identification, the payroll summaries he provided
during the first draw application process, new payroll summaries
for 2020, the XC International operating agreement, profit and
loss statements for XC International dated October 1, 2020 and
December 31, 2020 that appeared identical (except for the
dates), and Forms 941 for each quarter in 2020.8 Each of the
Forms 941 reflected that XC International had 42 employees and
total quarterly wages of $2.211 million. Unlike the Forms 941
submitted for the first draw, the 2020 XC International Forms
e The payroll summaries would be unusual for a legitimate
company. The summary attached to the initial application
reflected only three positions -- specifically finance mangers,
senior managers, and directors -- who earned between $124,800
and $145,875 (i.e., every employee was at least a manager). The
payroll summary attached to the second draw application
reflected that finance managers earned $200,640 per year and
senior managers and directors earned $221,760 per year.
Case 2:22-cr-00077-ODW Document 1 Filed 02/24/22 Page 15 of 26 Page ID #:15
941 bear BUDrs~A's signature, BUD~s~A's title as manager, and
the same contact number listed for Kevin Diaz (the 5293 number).
30. Newtek noticed irregularities with the documents
gUD~Nf~r.A provided during the second draw process. On February
19, 2021, in a recorded conversation, a Newtek employee
confronted BUDFIM~~~i with the fact that the wages on the Forms
941 BUDAMALA provided add to approximately $8.8 million but that
the wages on the summaries totaled approximately $5.6 million.
BUDr1~ll~A responded that he would work with his ~~team" to resolve
the issue. Five days later, on February 24, 2021, BUD~s+I~A told
Newtek that the discrepancy was because the company "started in
April" 2019. When the Newtek employee asked for clarification on
what he meant by ~~started," BUDAMALA said that April 2019 was
when XC International "was established." The Newtek employee
pointed out that BUDr1~A submitted a Form 941 for XC
International that covered the first quarter of 2019 (which ends
in March) and that listed wages of $2.211 million. BUDr1~D~~i
responded that the company had changed its name, but confirmed
that each of his employees earned more than $100,000. On March
5, 2021, Newtek suspended BUD A's XC International account
and did not fund the second draw.
e. XC International second PPP loan
31. On March 19, 2021, BUDTI~IAT-A submitted an application
to Amur Equipment and Finance for a second PPP loan on behalf of
XC International. The application was similar to the second draw
request BUDAMALA submitted to Newtek. BUDn1~T—A represented that
XC International was located at the Park Center address, had 42
Case 2:22-cr-00077-ODW Document 1 Filed 02/24/22 Page 16 of 26 Page ID #:16
employees with an average monthly payroll of $737,000, was
established on April 17, 2019, used Azlo 5756 (which is
Hayventure's account), and earned $10.167 million of revenue in
2019 and $7,625,248 of revenue in 2020. BUD~~~A listed his
residence at the Park Center address, and represented that he
was the sole owner of XC International.
32. In support of the loan BUDAN~iLP, provided his
identification, a purported February 2020 XC International bank
statement for Azlo 5756 showing a beginning balance of
$2,219,720.63 and a payroll transaction of $737,000, Forms 941
for each quarter of 2020, purported copies of XC International's
Forms 1120 (corporate income tax returns) for 2019 and 2020, XC
International's Wyoming Secretary of State registration, the
forged letter from Azlo stating that XC International's bank
account ended in 5756, and profit and loss statements for XC
International dated October 1, 2020 and December 31, 2020 that
BUDAMPiLA signed.
33. The February 2020 bank statement was forged. I
acquired the actual February 2020 statement for Azlo 5756. The
account was opened in the name of Hayventure (not XC
International), had a zero balance at the beginning of the
month, and had no transactions in February 2020. Moreover, as
described below, XC International has never filed a tax return,
nor is there any record of the company doing business in
Case 2:22-cr-00077-ODW Document 1 Filed 02/24/22 Page 17 of 26 Page ID #:17
Wyoming. The forged statement appears on the left, and the real
statement appears on the right.
~',°,~„~~ BBVA
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Transactlon History
TRANSACTIONS
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FaC 18 P oI1D stt "Batch 2002424" ACH DWn -S?37.000.0~
3 4. The Forms 941 BUDAMALA provided reflect that for each
quarter, XC International had 42 employees and quarterly wages
o f $2.211 million. The forms also displayed BUDT1KPiT—A~s signature
and reflected that he was the managing partner of XC
International. The profit and loss statements appeared to be
identical except for the dates. The only expense listed on the
s tatements were wages, which conflicts with the Forms 1120
BUDAMP~A provided for XC International, which report costs of
goods sold, rent, advertising, and miscellaneous deductions. On
March 24, 2021, Amur generated a promissory note for $1,842,500.
BUDTl'$PaT_A electronically signed the note the same day. On March
3 0, 2021, the loan proceeds were credited to Azlo 5756
( Hayventure) .
III. IRS records
3 5. In late 2021, an order pursuant to 26 U.S.C. § 6103(1)
was served on the IRS for records pertaining to BUDn1~T~i,
Hayventure, Pioneer, and XC International. The order requested
t ax returns and return information for the tax years 2019 to
Case 2:22-cr-00077-ODW Document 1 Filed 02/24/22 Page 18 of 26 Page ID #:18
2021. I provided the employer identification numbers (~~EINs")
for reference. In February 2022, the IRS responded that it had
no records, including filed tax returns or Forms 941, for
Hayventure, Pioneer, or XC International.
IV. State employment records
36. I requested from the California Employment Development
Department (~~EDD") any records pertaining to Hayventure,
Pioneer, or XC International, providing the EINs for reference.
EDD had no record that BUDrs+~A's companies ever operated or
paid wages in California.
37. I also requested from the Wyoming Department of
Revenue and the Wyoming Department of Workforce Security any
records pertaining to Hayventure, Pioneer, and XC International,
again providing the EINs for reference. The Wyoming departments
had no records pertaining to BUDAMALA's companies.
V. Passport interview
38. BUDI~,MI~A was born in Hyderbad, India in 1986. He has
an Indian passport and was issued an H4 visa on June 21, 2019.
The H4 was set to expire on September 18, 2021, but the State
Department revoked the visa when BUDnMAT—A admitted that he
submitted fraudulent documents to the government in support of a
passport application.
39. On February 19, 2021, a special agent from Diplomatic
Securities Services interviewed BUDAi~LA. When the agent asked
BUD~~+1~A why he applied for the passport, BUDANALA responded,
"To get a job. I thought I would have a better chance of getting
a job." BUDANlALA made this admission only a few days after
Case 2:22-cr-00077-ODW Document 1 Filed 02/24/22 Page 19 of 26 Page ID #:19
applying for the second draw on the Pioneer loan and before he
applied for the second draw on the XC International loan.
VI. Disposition of loan proceeds
40. In total, six SBA loans were disbursed to BUD~Nl~A's
companies worth $5,151,497. The proceeds moved through two
business accounts at Azlo,9 two personal accounts at Bank of
America (~~BOA"), two personal accounts at Citibank, a business
account at Citibank, and a personal TD Ameritrade investment
account.10 The records show no substantial business revenue,
payroll expenses, or other operating expenses. Instead, BUDAMALA
used the majority of the money to fund the purchase of a $1.247
million investment property in Los Angeles, the purchase of a
$597,585 property in Malibu, a $970,000 investment in an EB-5
fund, a $250,000 private placement investment, and a nearly $3
million investment in his TD Ameritrade account. 11
a. Azlo 7635 (Pioneer)
41. On June 9, 2020, BUD~s~A opened Azlo 7635, a business
checking account in the name of Pioneer. Between the day
BUD~I~~A opened the account and March 17, 2021, BUDT~$AT-A
conducted 21 transactions with Azlo 7635, including the two SBA
loan credits for $1.32 million (representing proceeds of the
9 PNC Bank acquired Azlo in 2021.
to All of the accounts referred to in this affidavit are
domiciled in the Central District of California.
11 The figures in this section are based on a draft
financial analysis and are subject to change as the
investigation continues. Moreover, this section does not recount
all evidence related to the financial accounts.
Case 2:22-cr-00077-ODW Document 1 Filed 02/24/22 Page 20 of 26 Page ID #:20
false SBA loans), a $400 payment for credit repair, and 16
transfers to BUDN~A's other bank accounts.
42. No business income or expenses appear in the Azlo 7635
records, and on March 17, 2021, Azlo closed the account with a
zero balance.
b. Azlo 5756 (Hayventure)
43. On March 4, 2019, BUDAMALA opened Azlo 5756, a
checking account in the name of Hayventure.
44. Between May 4, 2020 and March 30, 2021, there were
only 17 credits to Azlo 5756, including two credits from TD
Ameritrade totaling 45 cents to validate the account, and seven
transfers from Azlo 7635 (Pioneer) totaling $1.035 million and
the five PPP loan credits described in this affidavit totaling
$3,831,497 (representing fraudulent SBA loan proceeds).
45. BUDAMAT•A then transferred $2.835 million to TD
Ameritrade 8743 (BUDANIALA), transferred $912,152.55 to Citibank
4850 (BUDANlALA), transferred $95,131.51 to unknown parties, made
a $20,000 payment to Bluevine (Celtic's partner), and spent
$11,313.19 on retailers, including Apple.com, Corporations
Today, Expedia, BestBuy, Tempurpedic, Target, Amazon, and hotels
(e.g., the Las Vegas Wynn Hotel).
46. On March 31, 2020, Azlo 5756 was closed. At the time,
the balance of the account was $992,500, which Azlo provided to
BUDns+i~A in the form of a cashier's check. BUD7+,l~~A deposited
that check, which represented fraudulent SBA loan proceeds, to
Citibank 6558 (Hayventure) .
Case 2:22-cr-00077-ODW Document 1 Filed 02/24/22 Page 21 of 26 Page ID #:21
c. BOA 8343 and 7430 (BUD~]~~A)
47. On August 13, 2020, BUDN~A signed the signature card
for BOA 8343, which he opened in his own name. The reason why
BUDANlALA dated the signature card in August 2020 is not clear
since the activity begins on December 28, 2019.
48. Nonetheless, between January 1, 2020 and October 25,
2021, the account had only three sources of funding: $505,000
from TD Ameritrade 8743, $19,000 from Citibank 4850 (BUDTI~~T—A~ ,
and $83,379.04 from payroll and unknown deposits.
49. Moreover, between January 1, 2020 and October 25,
2021, BUDr1~7~A used the money credited to BOA 8343 on what
appear to be personal expenditures, including:
• $243,589.34 to BOA 7430 (BUDANIALA).
• $22,727.15 in credit card payments.
• $23,165.82 in what appear to be vehicle-related expenses.
• $93,475.81 via international wires or WorldRemit to an
individual who appears to be BUDT1~~aT_A~s former spouse for
~~POP Family Support" and other unknown beneficiaries.
• $64,927.29 in what appear to be divorce expenses.
• $69,409.41 in domestic wires to unknown beneficiaries.
• $9,998 in payments to Gemini Trust, a known cryptocurrency
platform.
• More than $40,000 in retail, service provider, travel,
restaurant expenses, rent, utility and condominium
expenses.
50. The activity for the linked savings account, BOA 7430,
began on December 28, 2019. Other than the money from the BOA
Case 2:22-cr-00077-ODW Document 1 Filed 02/24/22 Page 22 of 26 Page ID #:22
8343, only $1,908.68 went into BOA 7430. From the savings
account BUDA*~T•A transferred $20,000 to Citibank 4850
(BUD~?~A), $4,000 to unknown beneficiaries, and $138,013.75 via
international wire to a Bank of India account in BUDT1~D~iT_A~ s name
that's domiciled in India.
d. Citibank 4850 and 3772 (BUDIINl~A) and Citibank 6558
(Hayventure)
51. On January 16, 2019, BUDT~'+7~T_A opened Citibank 4850, a
personal account. The account had only five sources of funding:
$3.250 million from TD Ameritrade 8743 (BUDAN~iLA), $912,152.55
from Azlo 5756 (Hayventure), $175,000 from Azlo 7635 (Pioneer),
$20,000 from BOA 7430 (BUDANALA), and $14,737.30 in tax refunds
and interest.
52. BUDANIALA moved a large percentage of the money out of
the account via the following wires and personal expenditures:
• $1,247,757.30 to First American Title Company (for "1857
Phillips Way" in Los Angeles). Records show that this
expenditure was for the purchase of a property at 1857
Phillips Way in Los Angeles. The Phillips Way address is a
single-family residence that BUDAMALA purchased as an
investment property (BUDTI~T_A stated on closing documents
that he would not reside in the home).
• $970,000 to CMB Infrastructure Investment Group 75 LP (for
~~Beneficiary EB5-Raghavender Reddy BUDAI~~LA") Records show
that CMB is a EB-5 investment fund of which BUDn1~T—A now
owns 2.76 percent.
• $835,460.95 for the purchase of the Almond Tree residence.
Records show that BUDANALA closed this property on March
22, 2021, then made two wire transfers totaling $835,460.95
from Citibank 4850 (BUDANALA) to purchase the Almond Tree
residence.
Case 2:22-cr-00077-ODW Document 1 Filed 02/24/22 Page 23 of 26 Page ID #:23
• $595,965 to West Coast Escrow (for "Escrow Number 4510321-
06240"). Records show that this expenditure is for the
purchase of a property at 1300 Latigo Canyon Road in
Malibu.
• $250,000 to NHK Mansfield, LP (for "Credit to Raghavender
BUD~S~A") Records show that NHK is a private placement
investment.
• $69,999.96 to BUDANlALA's Bank of India account, which is
domiciled in India.
• $43,585.35 to Escrow Heights (for "Reference Information:
17327-CP").
• $25,993 to unknown beneficiaries.
• $150,000 in a 529 Investment Plan with the State of New
York.
• More than $10,000 to miscellaneous retail, service
providers, and restaurants.
53. On May 7, 2021, BUDANIALA opened Citibank 3772, a
personal savings account. The only sources of money that went
into the account were $200,000 from Citibank 4850, $187,978.46
from Bluevine in refunded loan repayments, and $77.26 in earned
interest. In terms of expenditures, BUDTI~T_A wired $39,999.97
from Citibank 3772 to his Bank of India account.
54. On April 19, 2021, BUD~MP,~, opened Citibank 6558, a
business account in the name of Hayventure. On the application,
$jJDAMAT.A reported to Citibank that Hayventure was located at the
Bright Hollow address, the source of the money that went into
Citibank 6558 was BUD~1~~A's savings, Hayventure had only one
employee, and that the company earned $5 million in revenue and
$2.5 million in net profits per year.
Case 2:22-cr-00077-ODW Document 1 Filed 02/24/22 Page 24 of 26 Page ID #:24
55. Records show that Citibank 6558 had only two funding
sources: $992,500 from Azlo 5756 (Hayventure) in the form of a
cashier's check and $2,000 in interest. As described above,
BUDTI~~A derived the money credited to Azlo 5756 entirely from
fraudulent SBA loan proceeds.
56. From July 7, 2021 to November 30, 2021, BUDl•1l+jj~7.A
conducted 16 debit transactions from Citibank 6558 totaling
$170,270.03, including:
• $156,426.37 in loan payments to Bluevine.
• $4,900.47 in apparently personal retail expenses.
• $4,200 in legal expenses to Mandarich Law Group LLP for
"Trust T09."
• $4,743.19 in payments to software and technology expenses.
e. TD Ameritrade 8743 (BUDAN~,LA)
57. On August 31, 2012, BUDANg+,LA opened TD Ameritrade
8743.12 As of April 1, 2020, TD Ameritrade 8743 had a balance of
$0.00. Between April 7, 2020 and March 30, 2021, TD Ameritrade
8743 only had two sources of funding. First, BUDANlALA
transferred $144,000 into the account from Citibank 4850
(BUDT~T_A~ Second, BUDn1~1A~, transferred $2.835 million into the
account from Azlo 5756 (Hayventure). Thus, BUDAM~A derived all
of the money that went into TD Ameritrade 8743 from SBA loans
described in this affidavit.
12 ScottTrade initially held the account under a different
number. TD Ameritrade purchase ScottTrade in 2017 and assigned
the current account number.
Case 2:22-cr-00077-ODW Document 1 Filed 02/24/22 Page 25 of 26 Page ID #:25
58. BUDAMP~A then executed a series profitable trades from
TD Ameritrade 8743, and by the end of November 2021, using the
stolen loan money, made in excess of $3.5 million. BUD~~+I~A has
since transferred $505,000 from TD Ameritrade 8743 to BOA 8343
(BUD~~,) and $3.25 million to Citibank 4850 (BUD~I~T—A).
V22. The Almond Tree search warrant
59. On February 23, 2022, agents executed a federal search
warrant on the Almond Tree residence and encountered BUDns~A.
During the execution of the warrant, agents read BUDAMALA
Miranda rights. BUDn1~1AT—A at first stated that he wanted to speak
to an attorney about the SBA loans. In response, an agent told
BUDAN~,LA that they would need to stop the interview, at which
point BUDANIALA re-initiated contact with the agents and stated
that he would talk about certain topics. The case agent then
suggested a five minute break. After the break, BUDTI~T-A waived
his right to counsel, and the agents commenced the interview.
60. After BUDANIALA re-initiated the interview, BUDTl'$AT-A
made a series of incriminating statements. In particular,
BUD~I~F~A admitted that the SBA loans he filed in the names of
Hayventure, Pioneer, and XC International were false, that his
had no full-time employees, and that he spent the SBA loan
proceeds on personal expenditures, including real estate and
investment funds.
61. Later on the night of February 23, 2022, BUDANlALA was
detained when he attempted to abscond from the country via the
San Ysidro border crossing.
CONCLUSION
Case 2:22-cr-00077-ODW Document 1 Filed 02/24/22 Page 26 of 26 Page ID #:26
62. Based on the foregoing, there is probable cause to
issue the requested criminal complaint and arrest warrant.
Attested to by the applicant in
accordance with the requirements
of Fed. R. Crim. P. 4.1 by
telephone on this day of
2022.
THE HONORABLE
UNITED STATES MAGISTRATE JUDGE
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