Government's Position Regarding Sentencing — United States v. Aditya Raj Sharma (D. Minn., Dkt. 93)

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Government's Position Regarding Sentencing, Criminal No. 20-261 (DSD-TNL), Doc. 93, filed February 23, 2022, in United States v. Aditya Raj Sharma, in the U.S. District Court, District of Minnesota. The government requests a sentence of 70 months, which it describes as the midpoint of the applicable Guidelines range, and mandatory restitution in the agreed-upon amount of $1,773,600. It states that Sharma applied for at least $9,619,046.46 in PPP loans from ten different lenders and obtained $1,773,600, and it sets out the presentence report, the advisory Guidelines range and the sentencing factors, including deterrence. The signature block names Charles J. Kovats, Jr., Acting United States Attorney, with Matthew S. Ebert and Jordan L. Sing.

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CASE 0:20-cr-00261-DSD-TNL Doc. 93 Filed 02/23/22 Page 1 of 14

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Criminal No. 20-261 (DSD-TNL)

UNITED STATES OF AMERICA, )
)
Plaintiff, )
)
v. ) GOVERNMENT’S POSITION
) REGARDING SENTENCING
ADITYA RAJ SHARMA, )
)
Defendant. )

The United States of America, by and through its attorneys, Charles J. Kovats,

Jr., Acting United States Attorney for the District of Minnesota, and Matthew S.

Ebert and Jordan L. Sing, Assistant United States Attorneys, hereby submits this

position paper as to sentencing factors. The government respectfully requests that

the Court sentence defendant Aditya Sharma to a term of imprisonment of 70

months, which is the midpoint of the applicable Guidelines range. Such a sentence

is sufficient, but not greater than necessary, to achieve the goals of sentencing in light

of Sharma’s characteristics and conduct, which included lying repeatedly and

brazenly as part of his $9.6 million scheme to defraud the Paycheck Protection

Program of funds intended for eligible small businesses battered by the COVID-19

pandemic. Such a sentence also sends a much-needed deterrent message,

particularly given Sharma’s repeated demonstrations that he lacks respect for the

law.
CASE 0:20-cr-00261-DSD-TNL Doc. 93 Filed 02/23/22 Page 2 of 14

I. DEFENDANT SHARMA’S $9.6 MILLION SCHEME TO DEFRAUD COVID-19 RELIEF
FUNDS

In 2020, as the COVID-19 pandemic engulfed the country and devastated the

health and economic well-being of millions of Americans, the United States

government implemented various measures to aid struggling workers and small

businesses. Chief among these vital life-lines to the American economy was the

Coronavirus Aid, Relief, and Economic Security (“CARES”) Act enacted in March

2020, which included forgivable loans to small businesses to help pay payroll costs,

rent, utilities, interest on mortgages, and other permissible business expenses,

through a program referred to as the Paycheck Protection Program (“PPP”).

For many small businesses and their employees, the PPP was a critical source

of funding that enabled businesses harmed by the pandemic to stay afloat. However,

for unscrupulous and opportunistic fraudsters, like Sharma, the PPP was a lucrative

way to amass fraudulent proceeds, at the expense of American taxpayers and to the

detriment of deserving, hard-hit small businesses. From at least April 2020 through

November 2020, Sharma lied and defrauded—repeatedly and audaciously—with the

intent to steal PPP funds for his own benefit and enrichment. (PSR ¶¶ 15-17.) He

capitalized on the COVID-19 pandemic to exploit emergency funding for needy,

eligible small businesses by knowingly submitting sixteen false and fraudulent

applications to receive loan proceeds that Sharma knew he was not entitled to receive.

(Id. ¶ 17.) Sharma applied for at least $9,619,046.46 in such loans from ten different

lenders, of which he obtained and misappropriated $1,773,600 in fraud proceeds. (Id.)

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CASE 0:20-cr-00261-DSD-TNL Doc. 93 Filed 02/23/22 Page 3 of 14

Sharma submitted these sixteen applications with numerous knowingly false

representations, examples of which include the following:

• Fraudulently submitting at least one loan application in the name of
Sharma’s wife without her knowledge or approval (Id. ¶ 16);

• Submitting falsified supporting documentation, such as forged tax
return documents or bogus bank account statements that Sharma
created (Id.);

• Falsifying the number of active employees on payroll and including
bogus monthly payroll figures to deceive lenders about the eligibility of
Sharma’s businesses (Id.);

• Misrepresenting information to qualify under PPP loan requirements,
such as corporate details and dates of incorporation to make it appear
as though Sharma’s entities—“Kloudgaze,” “Neoforma,” and
“Mokume”—had been operational as of February 15, 2020, and thus
potentially eligible for PPP funding when, in fact, Sharma created these
entities after the PPP funding was authorized by law (Id.);

• Surreptitiously applying for a PPP loan in the name of “Crosscode Inc.,
dba Kloudgaze,” even though Sharma knew he had no authority to take
action on behalf of Crosscode, and Crosscode never did business under
the name “Kloudgaze.”1

• Concealing from lenders that Sharma had previously applied for or
received other PPP funding in order to stave off lenders’ inquiries and
to enable Sharma to unlawfully “double dip” into PPP funds by receiving
a PPP loan for $474,900 for “Crosscode d/b/a Kloudgaze” on July 16,
2020, and receiving another PPP loan for $736,200 for Mokume on July

1 Crosscode, a cloud-based software development company originally headquartered
in Maple Grove, Minnesota, was founded by Sharma in 2015. (PSR ¶ 8.) After
Sharma subsequently held various positions at Crosscode, including Chief Executive
Officer and President, he was notified on or about November 13, 2019, that—effective
immediately—Crosscode’s board of directors had removed him as an officer of
Crosscode and terminated his employment for cause. (Id.); (Dkt. 68, Plea Agm’t at 2-
3.) Specifically, the Crosscode board had concerns about Sharma’s performance and
his failures to comply with agreements. (PSR ¶ 8.) In addition, a review of company
records revealed that Sharma fabricated Crosscode’s bookings and accounts
receivable, and falsified the company’s revenue and bank statements. (Id.)
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CASE 0:20-cr-00261-DSD-TNL Doc. 93 Filed 02/23/22 Page 4 of 14

26, 2020, even though Sharma had already received a PPP loan for
$562,500 on April 29, 2020 (Id. ¶ 15).

Due to Sharma’s various material falsehoods and omissions, between April and

July 2020, two lenders approved three of Sharma’s PPP applications and deposited

$1,773,600 in PPP funds into bank accounts that Sharma opened and controlled. (Id.

¶¶ 15, 17.) Sharma subsequently transferred the $1,773,600 in fraud proceeds to

various other bank accounts for the purpose of converting the money for his personal

benefit in violation of PPP requirements. (Id. ¶ 15.) Sharma transferred at least

$900,000 to personal bank accounts that he controlled, including, among other

unauthorized personal expenditures, to: (a) cover approximately $260,226 of

Sharma’s unrelated legal debts; (b) pay for home improvements to Sharma’s Maple

Grove residence, including the installation of a $64,300 pool in Sharma’s backyard

and landscaping projects totaling $24,600; (c) transfer approximately $14,000 to a

financial account in India; and (d) otherwise spend PPP money as seed money for

other new business ventures. (Id. ¶ 18.)

As a result of his Sharma’s criminal conduct, on November 13, 2020, he was

arrested pursuant to an indictment charging him with wire fraud. That same day,

federal agents contemporaneously executed a search warrant at Sharma’s residence

and executed seizure warrants to obtain the following fraud proceeds from Sharma’s

bank accounts:

a. $331,300 in funds seized from Old National Bank account
x1176 in the name of Mokume, LLC;

b. $245,138.49 in funds seized from Wells Fargo Bank
account x8780 in the name of Kloudgaze, Inc.;

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CASE 0:20-cr-00261-DSD-TNL Doc. 93 Filed 02/23/22 Page 5 of 14

c. $85,594.94 in funds seized from Old National Bank account
x6720 in the name of Kloudgaze, Inc.; and

d. $12,947.33 in funds seized from US Bank account x6963 in
Sharma’s name.

II. PSR AND THE ADVISORY GUIDELINES RANGE

A. Sentencing Range

As set forth in the PSR, the base offense level for wire fraud is 7, pursuant to

U.S.S.G. § 2B1.1(a)(1). (PSR ¶ 25.)

Pursuant to U.S.S.G. § 2B1.1(b)(1)(K), the offense level is increased 20 levels

because his intended loss, $9,619,046, is more than $9,500,000 but less than

$25,000,000. Sharma readily concedes that $9,619,046 is the fraudulent loss that he

purposely intended to receive. (See PSR ¶ 21) (where, in his written statement,

Sharma acknowledged, “I fraudulently applied for at least $9,619,046.46 in COVID-

19 pandemic emergency funding … I submitted 16 false and fraudulent applications

to receive loan proceeds that I knew I was not entitled to receive.”) Under the

Guidelines, the district court must “make a reasonable estimate of the loss” by

considering “the greater of actual loss or intended loss.” U.S.S.G. § 2B1.1, cmt. n. 3(A),

(C). Intended loss is “the pecuniary harm that the defendant purposely sought to

inflict,” id. § 2B1.1, cmt. n. 3(A)(ii), and it includes actual losses suffered, see United

States v. Ware, 334 F. App’x 49, 50 (8th Cir. 2009) (per curiam).

Pursuant to U.S.S.G. § 2B1.1(b)(10)(C), the parties agree that Sharma’s offense

level is increased by 2 levels because Sharma’s fraud involved sophisticated means

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CASE 0:20-cr-00261-DSD-TNL Doc. 93 Filed 02/23/22 Page 6 of 14

(i.e., multiple entities, including shells, fictitious records, etc.). (Dkt. 68, Plea Agm’t

¶ 27.)

Thus, the advisory sentencing guideline range, with acceptance of

responsibility, is 63-78 months of imprisonment. (PSR ¶ 71.)

B. Restitution

The parties (and the PSR) agree that Sharma owes restitution in the amount

of $1,773,600. (Dkt. 68, Plea Agm’t ¶ 11; PSR ¶ 82.) Of that amount, Sharma owes

$562,500 to one defrauded lender. The remaining $1,211,100 that Sharma owes to a

second lender is instead now owed to the U.S. Small Business Administration. More

specifically, the Small Business Administrator for the second lender has confirmed

that Sharma did not provide the normal borrower payments and thus did not pay off

the two loans totaling $1,211,100. Once the second lender determined that Sharma’s

loans were fraudulent, they received a loan guarantee from the U.S. Small Business

Administration as part of the procedures of the PPP. In response to the default

caused by Sharma’s fraud, the U.S. Small Business Administration paid off the

$1,211,100 in Sharma’s fraudulent loans. As a result, Sharma owes $1,211,100 to

the U.S. Small Business Administration as well as $562,500 to the other defrauded

lender. This brings Sharma’s total restitution obligation to the agreed-upon amount

of $1,773,600. (Dkt. 68, Plea Agm’t ¶ 11; PSR ¶ 82.)

Moreover, pursuant to the Plea Agreement, Sharma agrees and understands

that the $674,980.76 in funds seized in November 2020 by the government (which

Sharma agrees constitute or are traceable to his wire fraud scheme) shall not be

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treated as satisfaction of any restitution ordered by the Court. (Dkt. 68, Plea Agm’t

¶ 17-22.)

III. SENTENCING FACTORS

The government respectfully asserts that a sentence of 70 months’

imprisonment is appropriate. The sentencing factors under 18 U.S.C. § 3553 most

pertinent to this case—namely, (1) the nature and circumstances of the offense; (2)

defendant’s history and characteristics; and (3) the need for the sentence to promote

respect for the law and to afford adequate deterrence—are addressed below.

A. The Nature and Circumstances of Sharma’s Offense Warrant a
Sentence of 70 Months.

Sharma’s crime is particularly significant considering the massive fraud loss

he sought to inflict during a time of significant national need. He attempted to receive

more than $9.6 million in PPP loans, and actually defrauded the PPP of

approximately $1.7 million. (PSR ¶ 17.) And an intended loss of over $9.6 million is

not just large in the context of fraud cases involving the CARES Act—it is a large loss

in the context of all fraud cases. To frame Sharma’s fraud in a national context, his

loss amount alone makes this an exceptionally serious and significant crime. In fiscal

year 2020, federal district courts nationwide applied the fraud Guideline 4,449 times.

See United States Sentencing Commission, Use of Guidelines and Specific Offense

Characteristics, at 9–10, available at

https://www.ussc.gov/sites/default/files/pdf/research-and-publications/federal-

sentencing-statistics/guideline-application frequencies/

Use_of_SOC_Guideline_Based.pdf. Of those, only 76 involved a fraud loss over $9.5

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CASE 0:20-cr-00261-DSD-TNL Doc. 93 Filed 02/23/22 Page 8 of 14

million. (Id.) In other words, Sharma’s offense is in the rarified 2% of nationwide

federal fraud offenses nationwide involving such a significant amount at issue. The

fact that Sharma’s criminality exploited a national crisis simply renders it all the

more aggravating. Sharma’s sentence should therefore reflect the very serious nature

of his offense. See 18 U.S.C. § 3553(a)(2)(A).

Sharma’s fraud reveals not only his greed but also a pronounced callous

disregard for others. For example, knowing full well that pandemic emergency funds

were scarce and ear-marked for those truly in need, Sharma tried to line his pockets

with $9.6 million on the taxpayers’ dime. Sharma then shamelessly engorged himself

on $1.7 million in fraudulent proceeds meant for those struggling small businesses to

pay employees. He did so with no regard for the harm wrought by his crime. For

example, Sharma knowingly hijacked the name of his former company, Crosscode, to

pursue his fraudulent ends. Sharma’s conduct, among other harms, actively

prohibited Crosscode from seeking legitimate pandemic relief—as an entity can seek

only one PPP loan. (See Dkt. 92, Victim Impact Statement by Crosscode.) Sharma’s

disregard for others while seeking his own fulfillment extended even to his own wife,

whose name and identity Sharma shamelessly misappropriated in one of his

fraudulent applications without her knowledge or consent. (PSR ¶ 16.)

Given the magnitude of his fraud, the sheer number of lies on his multiple

fraudulent applications, and the manner in which he committed his fraud, a

substantial term of imprisonment is warranted. The government respectfully asserts

that a prison term of 70 months will reflect the seriousness of Sharma’s offense.

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B. A Guideline-Range Sentence of 70 Months Appropriately
Reflects Sharma’s History and Characteristics.

Sharma’s history and characteristics offer nothing that might mitigate his

criminal conduct and, instead, they highlight an individual driven by greed. Sharma

has benefited from significant opportunities in life. He enjoyed the benefit of a good

upbringing with a supportive family. (PSR ¶¶ 47-49.) The son of a high-ranking

government official in India, Sharma participated in sports as a youth and went on

to successfully graduate from high school. (Id. ¶¶ 47, 49.) Sharma graduated from

college with a Bachelor of Engineering degree, followed by a master’s degree. (Id. ¶¶

49, 58.) Approximately twenty years ago, Sharma married his wife, a physician, and

they emigrated from India to the United States. (Id. ¶ 50.) What followed was a

series of lucrative employment positions for Sharma in computer technology: IBM,

Computer Science Corporation, and Microsoft. (Id. ¶¶ 63-66.) In addition, Sharma

has a number of patents in the technology field. (Id. ¶ 66.) These professional and

academic achievements all demonstrate that Sharma possesses positive

characteristics, including intellect and drive, when he chooses to channel them

lawfully.

To be clear, Sharma had every opportunity to succeed through honest work,

and Sharma certainly did not initiate his fraudulent scheme in response to economic

hardship. Recent tax filings reveal that Sharma has earned annual adjusted income,

together with his spouse, as follows: $524,587 (2017), $1,262,795 (2019), and

$1,732,069 (2020). (Id. ¶ 68.) Clearly, Sharma affirmatively chose dishonesty and

fraud—not to avoid deprivation—but to use taxpayer money to pay his legal bills,

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CASE 0:20-cr-00261-DSD-TNL Doc. 93 Filed 02/23/22 Page 10 of 14

finance a backyard pool, and ostensibly to have the public subsidize his next business

venture. (Id. ¶ 18.)

It is significant and revealing that Sharma committed this crime without the

usual financial hardships or lack of opportunities that might cause some to resort to

crime. See, e.g., United States v. Anderson, 517 F.3d 953, 966 (7th Cir. 2008) (noting

that district court considered that “[w]hile many criminals commit crimes from lack

of opportunity and desperation, [defendant] acted out of greed.”). As Judge Posner

aptly noted about defendants like Sharma:

… no “middle class” sentencing discounts are authorized. Business criminals
are not to be treated more leniently than members of the “criminal class” just
by virtue of being regularly employed or otherwise productively engaged in
lawful economic activity. (Citation omitted.). It is natural for judges, drawn
as they (as we) are from the middle or upper-middle class, to sympathize with
criminals drawn from the same class. But in this instance we must fight our
nature. Criminals who have the education and training that enables people to
make a decent living without resorting to crime are more rather than less
culpable than their desperately poor and deprived brethren in crime.

United States v. Stefonek, 179 F.3d 1030, 1038 (7th Cir. 1999).

That Sharma certainly had the education, training, and means to live beyond

what many could imagine, without resorting to crime, makes his $9.6 million fraud

all the more aggravating. The government respectfully submits that a sentence of 70

months will account for Sharma’s history and characteristics.

C. A Guideline-Range Sentence of 70 Months Appropriately
Reflects the Need for the Sentence Imposed to Afford Adequate
Deterrence and Promote Respect for the Law.

A substantial guideline-range sentence is appropriate to afford specific and

general deterrent and to promote respect for the law. Despite generally admitting to

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his conduct and lacking a criminal history, Sharma has struggled to abide by his most

basis release conditions, which makes plain that he requires clear deterrence given

his lack of accountability and his disrespect for the law.

In February 2021, while on pretrial release in this case, Sharma’s minor son

called the police to report that Sharma had assaulted his wife. (PSR ¶ 44.) This

abuse by Sharma included: twice slapping her face, grabbing her hair, pushing her

head into a wall, throwing her to the ground, and hitting the back of her head multiple

times. (Id.) Sharma’s wife reported to responding officers that Sharma threatened to

kill her and that his behavior is unpredictable when he is intoxicated. (Id.) During

an on-site interview with officers, Sharma admitted to assaulting his wife, and the

event unfortunately was witnessed by Sharma’s two sons (then aged 7 and 18). (Id.)

Sharma’s resulting domestic assault and disorderly conduct charges violated not just

the law, but also his pending pretrial release conditions, which resulted in a Petition

for Action by U.S. Probation in March 2021 that, among other things, required

Sharma to report any future contact with law enforcement within 72 hours to U.S.

Probation. (Dkt. 35.)

Just six months later, Sharma again violated his release conditions. (Dkts. 73,

74, 75.) As detailed in U.S. Probation’s 11/24/2021 Violation Report, Sharma was

served a Harassment Restraining Order because he repeatedly harassed a woman

throughout August and September 2021—just after he pled guilty in this case. (Dkt.

73.) Attached as Exhibit 1 to the government’s sentencing position is the victim’s

Harassment Restraining Petition (and resulting Order) that triggered the U.S.

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Probation 11/24/2021 Violation Report. The details of Sharma’s harassment are

disturbing and clearly demonstrate that he has not been meaningfully deterred by

this prosecution. (See Ex. 1.) Despite unequivocal statements from Sharma’s victim

that she wanted him to leave her alone, Sharma repeatedly persisted in invading the

woman’s life. (Id.) In doing so, just weeks after pleading guilty before this Court in

July 2021, Sharma specifically mischaracterized and minimized his pending criminal

fraud case in his efforts to victimize someone else. (Id.) Specifically, his victim’s no-

contact petition notes that Sharma told his victim repeatedly in September 2021 that

“his federal case was finished and he was no longer under any legal action” that

should prevent her from “enter[ing] into a relationship with him.” (Id.) Sharma

thereafter “continued to try to convince [her] that his federal case was resolved and

there was no reason for [her] to refuse [Sharma] anymore.” (Id.) Sharma’s conduct

once again violated his release conditions, which required him to be admonished

before the Court on November 24, 2021, and to have his conditions modified

accordingly (Dkts. 73, 74, 75, 80, 81).

This is a troubling record. Sharma knowingly disavowed the impact of this

prosecution in furtherance of additional unlawful conduct, which, in turn, violated his

release conditions. His conduct while on release raises the real concern that Sharma

has not learned from his actions and has not acquired any respect for the law and

that, consequently, he might resort to more (and worse) crime if he does not receive

a sufficient punishment.

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Moreover, the fact of his $9.6 million fraud scheme further requires a lengthy

sentence because the message must be amplified generally to deter any other party

like Sharma that such crimes will be met with a severe sanction. White-collar

criminals, like Sharma, “act rationally, calculating and comparing the risks and the

rewards before deciding whether to engage in criminal activity.” United States v.

Warner, 792 F.3d 847, 860–61 (7th Cir. 2015). They are, therefore, “prime candidates

for general deterrence.” Id. at 860 (quoting United States v. Peppel, 707 F.3d 627,

637 (6th Cir. 2013)). See United States v. Musgrave, 761 F.3d 602, 609 (6th Cir. 2014)

(noting that “economic and fraud-based crimes are more rational, cool, and calculated

than sudden crimes of passion or opportunity”) (quotation omitted); see also United

States v. Edwards, 595 F.3d 1004, 1021 (9th Cir. 2010) (“White collar crime . . .

usually requires a well-schooled, intelligent criminal, capable of gauging the upside

of how others will be gulled by his well-honed fables. This ability to foresee extends

also to the possible downside of his fraud: apprehension, conviction, and

punishment.”).

If Sharma’s conduct is not punished adequately, it encourages the like-minded

to weigh the rewards with the risk of apprehension and punishment and to conclude

ultimately that a fraud offense like Sharma’s remains worth it. However, a

substantial sentence here will help disabuse the like-minded of that flawed notion.

Given his ongoing actions, a downward departure or low-end sentence would miss the

mark and only incentive Sharma and others to engage in fraud. For these reasons, a

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significant guideline-range sentence of 70 months is necessary to achieve the goals of

deterrence and to promote respect for the law.

IV. CONCLUSION

For the reasons set forth above, the government respectfully recommends that

the Court sentence defendant to a 70-month term of imprisonment and order him to

pay mandatory restitution in the agreed-upon amount of $1,773,600.

Dated: February 23, 2022 Respectfully submitted,

CHARLES J. KOVATS, JR.
Acting United States Attorney

/s/ Matthew S. Ebert
BY: MATTHEW S. EBERT
JORDAN L. SING
Assistant U.S. Attorneys

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