Factual Basis for a Guilty Plea — United States v. Eric Alexander McMiller (Dkt. 88, September 22, 2021)
Summary
Factual Basis for a Guilty Plea filed by the United States in United States v. Eric Alexander McMiller, No. 1:20-cr-00340-WO, in the U.S. District Court for the Middle District of North Carolina, Document 88, dated September 22, 2021. After background on the CARES Act, PPP and EIDL, it states that from at least in or around May 2020 into June 2020 McMiller, David Christopher Redfern, Joseph Marsell Cartlidge, Jesse Kendall Griffin and others conspired to submit false PPP applications. It states that a PPP application in the name of McMiller Enterprises LLC was denied by letter dated June 5, 2020, that McMiller attempted on or about June 10, 2020 to deposit a $250,000 check, and that McMiller, Redfern, Cartlidge and Griffin collectively sought approximately $2,326,874 in PPP funds.
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“Factual Basis for a Guilty Plea — United States v. Eric Alexander McMiller (Dkt. 88, September 22, 2021).”
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IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
UNITED STATES OF AMERICA :
:
v. : 1:20CR 340-3
:
ERIC ALEXANDER MCMILLER :
FACTUAL BASIS FOR A GUILTY PLEA
NOW COME the United States of America, by and through Sandra J.
Hairston, Acting United States Attorney for the Middle District of North
Carolina, and Joseph S. Beemsterboer, Acting Chief, Criminal Division, Fraud
Section, and state that the factual basis for a guilty plea is as follows:
Background
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security
(“CARES”) Act was signed into law in response to the economic fallout of the
COVID-19 pandemic in the United States. One source of relief provided by the
CARES Act was the authorization of up to $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 authorized over $300 billion in additional PPP funding.
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In order to obtain a PPP loan, a qualifying 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: (i) average
monthly payroll expenses; and (ii) 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.
PPP loan proceeds were required to be used by the business on certain
permissible expenses: payroll 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.
Another source of relief provided by the CARES Act was the expansion
of the Economic Injury Disaster Loan (“EIDL”) program administered by the
United States Small Business Administration (“SBA”), an agency of the
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executive branch of the United States Government. Specifically, the CARES
Act authorized the SBA to provide EIDLs of up to $2 million to eligible small
businesses experiencing financial disruption due to the COVID-19 pandemic.
The CARES Act also 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 the applicant
certified having. The advances did not have to be repaid.
In order to obtain an EIDL and advance, a qualifying business was
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 cost of goods sold in the 12-month
period preceding the disaster. The applicant was also required to certify that
all of the information in the application is true and correct to the best of the
applicant’s knowledge. EIDL funds were permitted to be used for payroll
expenses, sick leave, production costs, and business obligations, such as debts,
rent, and mortgage payments.
PPP Conspiracy and Scheme to Defraud
From at least in or around May 2020, continuing up to and including in
or around June 2020, the defendant, ERIC ALEXANDER MCMILLER, David
Christopher Redfern, Joseph Marsell Cartlidge, Jesse Kendall Griffin, and
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others knowingly and intentionally conspired to devise a scheme to defraud
and to obtain money and property by means of materially false and fraudulent
pretenses, representations, and promises, by submitting and causing to be
submitted false and fraudulent loan applications in order to obtain funds
through the PPP.
During the course of the investigation, investigators interviewed a
confidential human source (“CHS 1”) regarding CHS 1’s involvement in the
PPP scheme. CHS 1 told investigators that CHS 1 used intermediaries to
recruit individuals to apply for false and fraudulent PPP loans and, in return
for preparing PPP loan application documentation for such individuals, sought
a portion of the fraudulently obtained loan proceeds. MCMILLER, Redfern,
Cartlidge, and Griffin each communicated with CHS 1 through one or more
intermediaries and agreed to participate in the scheme and conspiracy.
MCMILLER, Redfern, Cartlidge, and Griffin each utilized registered
businesses and claimed false business operations in furtherance of the fraud
scheme. MCMILLER, Redfern, Cartlidge, and Griffin also utilized or
attempted to utilize business and personal bank accounts at various financial
institutions for the purpose of receiving fraudulent loan proceeds. In
furtherance of the scheme, MCMILLER, Redfern, Cartlidge, and Griffin
provided information, including personal and business identifying
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information, to CHS 1 through one or more intermediaries in order to seek PPP
loans. CHS 1 then used such information to prepare and cause to be prepared
false and fraudulent supporting documentation, including bank account
statements and tax filings, for PPP applications on behalf of MCMILLER,
Redfern, Cartlidge, and Griffin.
During the course of the conspiracy, MCMILLER, in the Middle District
of North Carolina, caused the submission of one fraudulent PPP application.
Specifically, on or about June 3, 2020, MCMILLER caused the submission of a
PPP application seeking a loan in the name of McMiller Enterprises LLC
(“McMiller Enterprises”), a company that was registered with the North
Carolina Secretary of State on or about February 25, 2020 and listed
MCMILLER as the registered agent and owner. The registered business
address for McMiller Enterprises was in Greensboro, North Carolina. Prior to
the submission of the McMiller Enterprises PPP application, on or about May
6, 2020, MCMILLER opened a business account at bank branch located in High
Point, North Carolina in the name of McMiller Enterprises (“McMiller
Enterprises Account”), over which MCMILLER had sole signatory authority.
In the McMiller Enterprises PPP application, MCMILLER falsely
affirmed or caused to be affirmed, among other information, that McMiller
Enterprises had twenty-seven employees and an average monthly payroll of
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$229,144. The McMiller Enterprises PPP application appended as supporting
documentation: (i) false and fraudulent purported IRS Forms 941 for all four
quarters of 2019 showing $687,432.60 paid in wages to twenty-seven
employees per quarter; and (ii) a false and fraudulent bank statement for
McMiller Enterprises dated February 27, 2020, showing a balance of
$290,028.70.
The McMiller Enterprises PPP application was denied by letter dated
June 5, 2020. On or about June 11, 2020, MCMILLER emailed the financial
technology company that processed the McMiller Enterprises PPP application
to “clear up any problems” in connection with the denied application.
As a result of two false and fraudulent PPP application that Cartlidge
caused to be submitted, Cartlidge caused the disbursement by interstate wire
transfer of (i) $403,120 in loan funds to an account controlled by Cartlidge in
the name of Company 1, on or about June 2, 2020; and (ii) $463,530 in loan
funds to an account controlled by Cartlidge in the name of LBRNO LLC, on or
about June 3, 2020. On or about June 10, 2020, MCMILLER attempted to
deposit a $250,000 check drawn from the Company 1 account into the McMiller
Enterprises account. MCMILLER deposited the $250,000 check in person at a
bank branch located in High Point, North Carolina. Between June 3 and June
19, 2020, Cartlidge withdrew approximately $454,000 via cash and cashier’s
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check from the LBRNO account. Records obtained from Instagram reveal that
MCMILLER and Cartlidge tagged each other in various photographs and/or
Instagram stories during this time period. These photographs and videos show
MCMILLER and Cartlidge with large amounts of cash and/or making luxury
purchases.
Over the course of the conspiracy, MCMILLER, Redfern, Cartlidge, and
Griffin collectively sought to fraudulently obtain approximately $2,326,874 in
PPP funds. All of the relevant disbursements and subsequent transfers were
made by means of interstate wire to bank accounts controlled by MCMILLER
and his co-defendants.
EIDL Scheme to Defraud
MCMILLER also devised a scheme to defraud by submitting and causing
to be submitted false and fraudulent loan applications to the SBA in order to
obtain funds through the EIDL program. In particular, between in or around
June and August 2020, MCMILLER fraudulently sought one EIDL in the
name of McMiller Enterprises and two EIDLs in the name of an “Eric mcmiller
[sic]” sole proprietorship.
As a result of the first false and fraudulent EIDL application, submitted
on or about June 16, 2020 in the name of McMiller Enterprises, MCMILLER
caused the disbursement by interstate wire transfer, on or about June 18,
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2020, of $10,000 in EIDL advance funds from the SBA to the LBRNO account.
This was during the period that Cartlidge withdrew large sums from the
LBRNO account, and Instagram records show MCMILLER and Cartlidge with
large amounts of cash and/or making luxury purchases. This false and
fraudulent EIDL application was denied.
On or about June 23, 2020, MCMILLER opened an account in his name
(“McMiller account”), over which MCMILLER had sole signatory authority. As
a result of the second false and fraudulent EIDL application, submitted on or
about June 29, 2020 in the name of an “Eric mcmiller [sic]” sole proprietorship,
MCMILLER caused the disbursement by interstate wire transfer, on or about
June 30, 2020, of $10,000 in EIDL advance funds from the SBA to the McMiller
account. This second false and fraudulent EIDL application was denied.
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A third false and fraudulent EIDL application, also in the name of an
“Eric mcmiller [sic]” sole proprietorship, was submitted on or about August 14,
2020 and was subsequently flagged by the SBA as a duplicate application and
not funded.
This the 22nd day of September, 2021.
Respectfully submitted,
SANDRA J. HAIRSTON
Acting United States Attorney
/S/ NICOLE R. DUPRE
Assistant United States Attorney
NCSB: 41214
United States Attorney’s Office
Middle District of North Carolina
101 S. Edgeworth Street, 4th Floor
Greensboro, NC 27401
Phone: 336/333-5351
JOSEPH BEEMSTERBOER
Acting Chief, Fraud Section
United States Department of Justice
Criminal Division
/S/ JESSEE ALEXANDER-HOEPPNER
NYSB #4871406
Trial Attorney
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IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
UNITED STATES OF AMERICA :
:
v. : 1:20CR 340-3
:
ERIC ALEXANDER MCMILLER :
CERTIFICATE OF SERVICE
I hereby certify that on September 22, 2021, I electronically filed the
foregoing with the Clerk of the Court using the CM/ECF system, which will
send notification of such filing to the following: Robert McClellan, Esq.
Respectfully submitted,
SANDRA J. HAIRSTON
Acting United States Attorney
/S/ NICOLE R. DUPRE
Assistant United States Attorney
NCSB: 41214
United States Attorney’s Office
Middle District of North Carolina
101 S. Edgeworth Street, 4th Floor
Greensboro, NC 27401
Phone: 336/333-5351
Case 1:20-cr-00340-WO Document 88 Filed 09/22/21 Page 10 of 10
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