Superseding Indictment — United States v. Demetrius Johnson (W.D. Tex., Dkt. 124, March 23, 2022)

Summary

Superseding Indictment, Case 1:20-cr-00229, Document 124, filed 03/23/22 (W.D. Tex.), against Demetrius Johnson. It alleges that Johnson, coconspirators Huong Le and Michael George McQuarn, and others devised a scheme to defraud financial institutions and the U.S. Small Business Administration (SBA) with false Paycheck Protection Program (PPP) loan applications, and that applications requesting more than $23,000,000 were submitted. Count One charges conspiracy to commit wire and bank fraud, Counts Two and Three charge wire fraud, and Count Four charges a monetary transaction in criminally derived property involving a $400,000 check. The Notice of Demand for Forfeiture includes a money judgment of $106,945.35.

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“Superseding Indictment — United States v. Demetrius Johnson (W.D. Tex., Dkt. 124, March 23, 2022).” Original at storage.courtlistener.com. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/court-filing-no-1-20-cr-00229-dkt-124-w-d-tex-86e92322f9/, SHA-256 7f75f2c7f0e59cd5b017430127763bf48640c3eb54308f4e76148117b9c516fe.

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Case 1:20-cr-00229-DII Document 124 Filed 03/23/22 Page 1 of 12
FILED
MAR23 2022
UNITED STATES DISTRICT COURT CLERK, Us. D$STRIC/T
WESTERN DISTRICT OF TEXAS WESTERN DISTOEXAS
AUSTIN DIVISION
PrDfLT\( CLERK

UNITED STATES OF AMERICA, § CRIMINAL NO. 20-CR-229-3
§
Plaintiff. §
§
§
v. § SUPERSEDING INDICTMENT
§
§
§
DEMETRIUS JOHNSON, (3) § [Vio: 18 U.S.C. § 1349 - Conspiracy to
a.k.a. "Slugger," "Slugga," "Bugg" § Commit Wire and Bank Fraud;
§ 18 U.S.C. § 1343 - Wire Fraud (2
Defendant. § counts);
§ 18 U.S.C. § 1957 - Engaging in Monetary
§ Transactions in Criminally Derived
§ Property;
§ 18 U.S.C. § 1028A - Aggravated Identify
§ Theft (2 counts)]
§

THE GRAND JURY CHARGES:

INTRODUCTION

Beginning in or about April 2020, and continuing until June 2020, in the Western

District of Texas and elsewhere, Defendant DEMETRIUS JOHNSON, a.k.a. "Slugger" and

"Slugga" and his coconspirators HUONG LE, a.k.a. Courtney Le and MICHAEL GEORGE

McQUARN, a.k.a. "MCQ" (who were charged in the original Indictment in this case), and others,

devised and executed a scheme to defraud, and attempted to defraud, one or more fmancial

institutions and the U.S. Small Business Administration (SBA), an agency of the United States

Government, in connection with stimulus and economic assistance programs created by the federal

government in response to the COVID-19 pandemic. JOHNSON did not communicate or share

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information directly with McQUARN, but both McQUARN and JOHNSON worked with LE

during the conspiracy.

2. Defendant JOHNSON, his co-defendants, and others, used false documents and

misrepresentations, including false and fraudulent loan applications and attachments thereto, to

influence and attempt to influence numerous financial institutions to approve and fund loans.

When successful, these false statements and misrepresentations influenced financial institutions to

issue funds that were 100% guaranteed by the SBA, and potentially forgivable. During the course

of the conspiracy, applications requesting more than $23,000,000 were submitted. JOHNSON was

not aware of all of the applications submitted by other members of the conspiracy.

SBA PAYROLL PROTECTION PROGRAM (PPP)

3. The Coronavirus Aid, Relief, and Economic Security ("CARES") Act was a federal

law enacted in or around March 2020 and designed to provide emergency financial assistance to

the millions of Americans who are suffering the economic effects caused by the COVID- 19

pandemic. The CARES Act appropriated $349 billion in forgivable loans to small businesses for

job retention and certain other expenses, through a program referred to as the Paycheck Protection

Program ("PPP"). In or around April 2020, Congress increased its appropriations to add an

additional $310 billion for additional PPP funding. The Economic Aid to Hard-Hit Small

Businesses, Nonprofits, and Venues Act was enacted on December 27, 2020 to continue assistance

under the PPP. Under the Economic Aid Act, the PPP was extended to provide additional funding

for guaranteed SBA loans. In March 2021, the American Rescue Plan Act provided an additional

$7 billion in program funding, which increased the total available PPP funding to about

$813 billion.

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4. In order to obtain a PPP loan, a qualifiing business was required 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 in order to be eligible to obtain the PPP

loan. In the PPP loan application, the small business (through its authorized representative) was

required to state, among other things, its: (a) average monthly payroll expenses; and (b) number

of employees. These figures were used to calculate the amount of money the small business was

eligible to receive under the PPP. In addition, businesses applying for a PPP loan were required

to provide documentation showing their payroll expenses.

5. A PPP loan application was required to be processed by a participating lender. If a

PPP loan application was approved, the participating lender funded the PPP loan using its own

monies, which were 100% guaranteed by the SBA. Data from the application, including

information about the borrower, the total amount of the loan, and the listed number of employees,

was transmitted by the lender to the SBA in the course of processing the loan.

6. PPP loan proceeds were required to be used by the business on certain permissible

expensespayroll costs, interest on mortgages, rent, and utilities. The PPP allowed the interest

and principal on the PPP loan to be entirely forgiven if the business spent the loan proceeds on

these expense items within a designated period of time after receiving the proceeds and used a

certain amount of the PPP loan proceeds on payroll expenses.

SCHEME

7. It was part of the scheme and artifice to defraud that Defendant and his

coconspirators prepared and helped prepare and submitted false and fraudulent PPP loan

applications to financial institutions, knowing those would in turn be submitted to the SBA. The

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fraudulent small business applicants were businesses whose registrations with the Texas Secretary

of State had expired, or were renewed shortly before an application was submitted after being

dormant for a long time. The false and fraudulent statements included, but were not limited to, the

following:

a. fabricated payroll expenses for each small business applicant;

b. false and fraudulent representations regarding employees, to include falsely

stating the number of employees and using false and fraudulent identification information to

identify alleged employees, most or all of whom were, in truth and fact, not employed by the small

business applicant and whose identification information had been stolen or misused, For example,

JOHNSON sent the name and social security numbers for A.S., R.Z., and K.W. via text message

to LE on April 24, 2020, which were fraudulently used in applications;

c. falsely and fraudulently stating that the loan proceeds would be used only

for the specified purposes set forth in the loan applications, when, in truth and fact, Defendant

JOHNSON and his coconspirators applied a portion of the loan proceeds for their own personal

use and benefit.

FALSE AND FRAUI)ULENT SBA PPP LOAN APPLICATIONS

8. Defendant JOHNSON and his co-defendants,

a. having devised and intended to devise the aforementioned scheme and

artifice to defraud to obtain money and property by means of false, misleading, and fraudulent

pretenses, representations, and promises, and omissions of material facts, namely, a scheme to

acquire SBA PPP funds as described above, did knowingly cause to be transmitted by wire, radio,

or television communication in interstate and foreign commerce, including via the internet, one or

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more electronic communications constituting and containing a writing, sign, signal, picture, and

sound for the purpose of executing and attempting to execute said scheme and artifice, and

b. knowingly executed and attempted to execute the aforementioned scheme

and artifice to defraud a financial institution, set forth above, and to obtain moneys, funds, credits,

assets, securities, and other property owned by, and under the custody and control of, said fmancial

institution by means of false, misleading, and fraudulent pretenses, representations, and promises,

and omissions of material facts, namely, the false and fraudulent SBA PPP loan applications set

forth below for the following small business applicants and loan amounts on the dates and to the

financial institutions listed below. The loan applications contained false and fraudulent statements

and representations, as set forth above.

Application Amount
Business Entity Financial Institution Requested
Date

Harvest Small Business
Vantastic Voyages April 25, 2020 $953,125.85
Finance, LLC

Harvest Small Business
Cosmosiurn Capital Group, LLC April 27, 2020 $391,681.00
Finance, LLC

Happy Days Movers, LLC April 29, 2020 TCF National Bank $1,299.456.75

Happy Days Movers, LLC April 29, 2020 Celtic Bank $1,299,456.75

Greater Nevada Credit
Happy Days Movers, LLC May 1, 2020 $1,299,456.75
Union

Happy Days Movers, LLC May 1, 2020 Customers Bank $1,273,722.00

Doc Z's Spectacles, LLC May 5, 2020 Celtic Bank $443,732.00

Maverick Motorworks, LLC May 5, 2020 Celtic Bank $1,233,600.00

Greater Nevada Credit
Maverick Motorworks, LLC May 5, 2020 $1,233,600.00
Union

Keeping It Tasty, LLC May 9, 2020 Celtic Bank $956,310.00

Page 5
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MUM Legacy Partners May 9, 2020 TCF National Bank $1,815,241.92

MGM Legacy Partners May 9, 2020 Northeast Bank $1,704,258.40

Greater Nevada Credit
King Sun, DBA King Hair May 9, 2020 $1,668,901.00
Union

King Sun, DBA King Hair May 10, 2020 Celtic Bank $1,606,402.00

Cool Kids Entertainment Group, Celtic Bank $1,720,735.00
May 11, 2020
LLC

Blue Flying Spur, LLC May 14, 2020 Celtic Bank $365,867.00

Greater Nevada Credit
Next Parking Solutions, LLC May 14, 2020 $394,995.00
Union

Greater Nevada Credit
Kapolei Tower Partners, LLC May 15, 2020 $1,720,735.00
Union

MGM Legacy Partners May 15, 2020 Customers Bank $1,720,985.00

9. The Maverick Motorworks SBA PPP loan application to Greater Nevada Credit

Union listed above was approved on May 22, 2020 and funded in the amount of $1,233,599 on

May 27, 2020 sent to BancorpSouth Bank account ending in #6403. That SBA PPP loan money

was used to fund the check described in Count One. JOHNSON in fact knew that these funds

involved criminally derived property.

COUNT ONE
Conspiracy to Commit Fraud
[18 U.S.C. § 1349]

10. Paragraphs 1 through 9 of this Indictment are realleged and incorporated as though

fully set forth herein.

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11. Beginning as early as April 2020, the exact date being unknown to the Grand Jury,

and continuing until on or about June 18, 2020, in the Western District of Texas and elsewhere,

the Defendant,

DEMETRIUS JOHNSON,

did knowingly and intentionally conspire with one or more other persons known and unknown to

the Grand Jury, to commit one or more offenses against the United States, namely:

a. Bank Fraud, in violation of 18 US. C. § 1344, that is knowingly executing,

or attempting to execute, a scheme and artifice to obtain any of the moneys, funds, credits, assets,

securities, and other property owned by, and under the custody and control of, a financial

institution, by means of false and fraudulent pretenses, representations, promises, and omissions

of material facts, namely, a scheme to acquire SBA PPP funds as described above, in violation. of

Title 18, United States Code, Section 1344; and

b. Wire Fraud, in violation of 18 US.C. § 1343, that is, having devised and

having intended to devise a scheme and artifice to defraud, and to obtain money and property by

means of materially false and fraudulent pretenses, representations, promises, and omissions of

material facts, namely, a scheme to acquire SBA PPP funds as described above, for the purpose of

executing the scheme and artifice, transmitted and caused to be transmitted by means of wire, radio

and television communication in interstate commerce certain writings, signs, signals, pictures and

sounds.

All in violation of Title 18, United States Code, Section 1349.

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COUNTS TWO AND THRIE
Wire Fraud
[18 U.S.C. § 1343]

12. Paragraphs 1 through 9 of this Indictment are realleged and incorporated as though

fully set forth herein.

13. From in or about April 2020, the exact date being unknown to the Grand Jury, and

continuing until on or about June 18, 2020, in the Western District of Texas and elsewhere, the

Defendant,

DEMETRIUS JOHNSON,

having devised and intended to devise a scheme and artifice to defraud to obtain money and

property by means of false, misleading, and fraudulent pretenses, representations, and promises,

and omissions of material facts, namely, a scheme to acquire SBA PPP funds as described above,

and aiding and abetting the same, did knowingly cause to be transmitted by wire, radio, or

television communication in interstate and foreign commerce, including via the internet, one or

more electronic communications constituting and containing a writing, sign, signal, picture, and

sound for the purpose of executing and attempting to execute said scheme and artifice, or aid and

abet the same:

Count Date (on or about) Description of Wire Transmission

Transmission via the internet of a SBA PPP loan application
from the Western District of Texas to the Greater Nevada
2 May 5, 2020
Credit Umon, in the District of Nevada, for a loan in the
. . . .

amount of $1,233,600.00.

Transmission via the internet of a SBA PPP loan application
from the Western District of Texas to Celtic Bank, Salt Lake
3 May 10, 2020
City, Utah, in the District of Utah, for a loan in the amount of
$1,606,402.00.

All in violation of Title 18, United States Code, Section 1343 and 2.

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COUNT FOUR
Engaging in Monetary Transaction in Criminally Derived Property
[18 U.S.C. § 19571

14. Paragraphs 1 through 9 of this Indictment are realleged and incorporated as though

fully set forth herein.

15. On or about June 15, 2020, in the Western District of Texas, the Defendant,

DEMETRIUS JOHNSON

did knowingly engage and attempt to engage in, a monetary transaction in criminally derived

property of a value greater than ten thousand dollars ($10,000.00), namely,

Maverick Motorworks wrote a check from BancorpSouth Bank account ending in #6403
in the amount of $400,000 on June 11, 2020. This check was deposited by JOHNSON and
LB into United Heritage Credit Union account number ending in #743 0 on or about June
15, 2020,

which property was derived from specified unlawful activity, namely, Wire Fraud, contrary to

Title 18, United States Code, Section 1343, as described above in this Superseding Indictment,

and did aid and abet said offense.

All in violation of Title 18, United States Code, Sections 1957 and 2.

COUNT FIVE
Aggravated Identity Theft
[18 U.S.C. §1O28A & 2]

16. Between on or about April 25, 2020, and on or about May 15, 2020, in the Western

District of Texas and elsewhere, the Defendant,

DEMETRIUS JOHNSON,

did knowingly use, without lawful authority, a means of identification of another person, to wit, a

name and preparer tax identification number belonging to D.B., a payroll business owner and

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person known to the Grand Jury, during and in relation to a felony violation enumerated in Title

18, United States Code, Section 1 028A(c), to wit: Conspiracy to Commit Wire Fraud and Bank

Fraud, and Wire Fraud, as charged in Counts One through Three of this Superseding Indictment,

knowing that the means of identification belonged to another actual person, and did aid and abet

the commission of said offense.

All in violation of Title 18, United States Code, Sections 1028A(a)(1) and 2.

COUNT SIX
Aggravated Identity Theft
[18 U.S.C. § 1028A & 21

17. Between on or about April 25, 2020, and on or about May 15, 2020, in the Western

District of Texas and elsewhere, the Defendant,

DEMETRIUS JOHNSON,

did knowingly use, without lawful authority, a means of identification of another person, to wit,

the nanie and social security number of A.S., R.Z., and K.W. persons known to the Grand Jury,

during and in relation to a felony violation enumerated in Title 18, United States Code, Section

1 028A(c), to wit: Conspiracy to Commit Wire Fraud and Bank Fraud, and Wire Fraud, as charged

in Counts One through Three of this Superseding Indictment, knowing that the means of

identification belonged to another actual person, and did aid and abet the commission of said

offense.

All in violation of Title 18, United States Code, Sections 1028A(a)(1) and 2.

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NOTICE OF UNITED STATES OF AMERICA'S DEMAND FOR FORFEITURE
[See FED. R. CRIM. P. 32.21

Fraud & Monetary Transaction Violations and Forfeiture Statutes
[18 U.S.C. § 1343, 1349, and 1957
subject to forfeiture pursuant to 18 U.S.C. § 982(a)(1) & (2)1

As a result of the foregoing criminal violations set forth in Counts One to Four, the United

States gives notice to the Defendant of its intent to seek the forfeiture of property, including any

items listed below, upon conviction and as a part of sentence pursuant to FED. R. CIUM. P. 32.2 and

18 U.S.C. § 982(a)(1), which state:

18 U.S.C. § 982. Criminal Forfeiture
(a)(1) The court, in imposing sentence on a person convicted of an offense in violation
of section . . . 1957 . . . of this title, shall order that the person forfeit to the United
States any property, real or personal, involved in such offense, or any property traceable
to such property.
(2) The court, in imposing sentence on a person convicted of a violation of, or a
conspiracy to violate
(A) section. . . 1343, or 1344 of this title, affecting a financial institution.

shall order that the person forfeit to the United States any property constituting, or
derived from, proceeds the person obtained directly or indirectly, as the result of such
violation.

This Notice of Demand for Forfeiture includes but is not limited to the following items.

II.
Properties

Accounts

1. $726,153.65 from BancorpSouth Bank (BSB), Account Number XXXX64O3;

2. $500.00 from BancorpSouth Bank (BSB), Account Number XXXX598O; and

3. $400,000.00 from United Heritage Credit Union (EJHCU), Account Number
XX7430.

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III.
Money Judgment

Money Judgment: A sum of money equal to $106,945.35 which represents the value of
the property involved in the Defendant's monetary transaction violations that was not
recovered by the government and for which the Defendant is liable,

Iv.
Substitute Property

If any property involved in the monetary transaction violations, as a result of any act or

omission of the Defendant

(A) cannot be located upon the exercise of due diligence;
(B) has been transferred or sold to, or deposited with, a third party;
(C) has been placed beyond the jurisdiction of the court;
(D) has been substantially diminished in value; or
(E) has been commingled with other property which cannot be divided without difficulty;

it is the intent of the United States to seek the forfeiture of any other property of the Defendant, up

to the value of the money judgment, as substitute property pursuant to Title 21 U.S.C. § 853(j,)

and FED. R. CRIM. P. 32.2(e).

A TRUE BILL:

ORIGINAL SIGNATURE
REDACTED PURSUANTT
ACT OF 2002

ASHLEY C. HOFF
United States Attorney

By:
TTHEW DEVLIN
MICHAEL GALDO
Assistant United States Attorneys

SUPERSEDING INDICTMENT I JOHNSON Page 12

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