Affidavit in Support of Criminal Complaint — United States of America v. Didier Kindambu, Case 1:20-mj-00286-MSN (Dkt. 4, E.D. Va.)

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An affidavit in support of a criminal complaint and arrest warrant against Didier Kindambu by Charles W. Sublett, a Special Agent of IRS Criminal Investigation, filed under seal on October 16, 2020 as Document 4 in Case No. 1:20-MJ-286, in the U.S. District Court for the Eastern District of Virginia, Alexandria Division. Sublett, a certified public accountant and fraud examiner, states that Kindambu fraudulently obtained two PPP loans and used part of the proceeds for items unconnected to payroll or permitted expenses. On or about April 6, 2020 Kindambu applied to Bank of America, N.A. on behalf of Papillon Holdings, Inc. for $702,450, supplying a spreadsheet that purported to list eighteen employees. It was sworn by telephone on October 16, 2020 before Magistrate Judge John F. Anderson.

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Case 1:20-mj-0O0286-MSN Document 4 Filed 10/16/20 Page 1 of 7 PagelD# 6

IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF VIRGINIA

ALEXANDRIA DIVISION
) UNDER SEAL
UNITED STATES OF AMERICA )
Vv. Case No. 1:20-MJ-286
DIDIER KINDAMBU

AFFIDAVIT IN SUPPORT OF CRIMINAL COMPLAINT AND ARREST WARRANT

I, Charles W. Sublett, being first duly sworn, hereby affirm and state:

INTRODUCTION AND AGENT BACKGROUND

1. I am currently employed as a Special Agent with the Internal Revenue Service,
Criminal Investigation (“IRS-CTI’), and have been so employed since August 2019. Iam
currently assigned IRS-CI’s Washington Field Office in the District of Columbia. I have
received 26 weeks of training in general law enforcement and criminal investigations into
violations of the Internal Revenue Code, financial crimes, and money laundering. In addition to
my law enforcement training, I am a Certified Public Accountant, Certified Fraud Examiner, and
hold a Master’s Degree in Accounting and Information Systems from Virginia Tech. Before
working for IRS-CI, I served as a Senior Forensic Accountant for Deloitte Financial Advisory
Services where I advised federal law enforcement agencies regarding complex third-party money
laundering investigations. In the course of my training and experience and in the course of
conducting criminal investigations, I have interviewed subjects and cooperating witnesses,
conducted physical surveillance, analyzed financial records, traced funds and illegal proceeds,
and prepared and executed seizure, search, and arrest warrants. I am assigned to this

investigation and have participated in it since initiation.
Case 1:20-mj-00286-MSN Document 4 Filed 10/16/20 Page 2 of 7 PagelD# 7

2. I respectfully submit this affidavit in support of an application for a criminal
complaint charging DIDIER KINDAMBU (“KINDAMBU’”) with one count of bank fraud, in
violation of 18 U.S.C. § 1344, and for an arrest warrant for KINDAMBU, pursuant to Federal
Rule of Criminal Procedure 4(a).

3. This affidavit is intended merely to show that there is sufficient probable cause
for the requested complaint and arrest warrant. Since this affidavit is submitted for the limited
purpose of obtaining the complaint and arrest warrant, I have not set forth each and every known
fact pertinent to this investigation and have included primarily those facts that I believe are
necessary to establish probable cause. The information provided is based on my personal
knowledge and observations during this investigation, information conveyed to me by other
officials, law enforcement officers, and my review of records, documents, and other evidence
obtained during this investigation.

4. Based on my training and experience and the facts set forth in this affidavit, I
submit that there is probable cause to believe that KINDAMBU has engaged in bank fraud, in
violation of 18 U.S.C. § 1344.

5. The criminal conduct under investigation relates to a suspected fraud committed
in connection with the Paycheck Protection Program (“PPP”) administrated by the Small
Business Administration (“SBA”). In or around March 2020, Congress passed the Coronavirus
Aid, Relief, and Economic Security (“CARES”) Act, of which the PPP was one component.
Through the PPP, Congress authorized the award of hundreds of billions of dollars in forgivable
loans to small businesses, for the purpose of enabling those businesses to continue to pay salary
or wages to their employees. To apply for a forgivable loan under the PPP, a business must

submit an application to a participating financial institution. If a PPP loan application is
Case 1:20-mj-0O0286-MSN Document 4 Filed 10/16/20 Page 3 of 7 PagelD# 8

approved, the participating lender funds the PPP loan using its own money. The SBA, in turn,
guarantees the repayment of the loan.

6. An applicant seeking a PPP loan is required to disclose to participating lenders,
among other things, the applicant’s number of employees and average payroll expenses. The
applicant also must agree to use any funds disbursed through the program only “to retain workers
and maintain payroll or make mortgage interest payments, lease payments, and utility payments
as specified under the Paycheck Protection Program Rule.”

7. As described in more detail below, the government’s investigation indicates that
KINDAMBU fraudulently applied for and obtained two PPP loans, and then used the proceeds
of those loans, in part, for items unconnected to payroll or any permissible expense.

8. On or about April 6, 2020, KINDAMBU submitted a PPP loan application to
Bank of America, N.A. (“BOA”) on behalf of Papillon Holdings, Inc. (At all times relevant to
this investigation, the deposits of BOA were insured by the Federal Deposit Insurance
Corporation (“FDIC”); BOA therefore constituted a “financial institution” for purposes of 18
U.S.C. §§ 20 and 1344.) In that application, KINDAMBU claimed that Papillon Holdings, Inc.
had eighteen full-time employees with an average monthly payroll of $702,450. As a part of that
application process, KINDAMBU supplied BOA with an Excel spreadsheet file that purported to
be payroll records for employees of Papillon Holdings, Inc. This spreadsheet purported to
identify eighteen employees of Papillon Holdings, Inc. and listed total payroll expenses of
$7,181,522 for 2019.

9. There are several indications that these records are false, and that many if not all
of the claimed employees are fictitious. First, the spreadsheet claims that Papillon Holdings, Inc.

made over $600,000 in unemployment contributions in 2019 to the Commonwealth of Virginia,
Case 1:20-mj-00286-MSN Document 4 Filed 10/16/20 Page 4 of 7 PagelD# 9

but the Virginia Employment Commission has no record of any payments being made on behalf
of that entity. Second, the spreadsheet uses precisely the same formula to calculate the amount
of money allegedly withheld on behalf of each supposed employee. Legitimate payroll records
typically reflect varying rates of withholding, as employees often fall into different tax brackets
or elect different withholdings or exemptions. The spreadsheet also overstates the amount of
Social Security withholdings and contributions that legitimately would have been assessed
against employees making the amount of money claimed in the spreadsheet. Third, the
spreadsheet claims a total of over $7,000,000 in payroll expenses for Papillon Holdings, Inc. in
2019. But the total cumulative disbursements in 2019 reflected in all accounts identified so far
in this investigation held in the name of Papillon Holdings, Inc., was less than $2,500,000.
Fourth, the spreadsheet submitted by KINDAMBU claims that Papillon Holdings, Inc. withheld
$2,513,543.20 in federal income taxes from its supposed employees for 2019, and further claims
that it withheld $128,992.06 in federal income taxes from its supposed employees for the first
quarter of 2020. But the IRS has confirmed that, as of September 29, 2020, Papillon Holdings,
Inc. had not filed a quarterly payroll return, known as a Form 941, for any quarter in 2019 or
2020, and had not filed an annual unemployment tax return, known as a Form 940, for 2019 or
2020. (A Form 941 is a quarterly return through which an employer reports the amount of
federal income taxes, Social Security taxes, and Medicare taxes withheld on behalf of its
employees, and pays those amounts over to the IRS. A Form 940 is an annual unemployment
tax return wherein an employer lists, among other things, the total payments it made to its
employees for the reported year.)

10. Also on or about April 6, 2020, KINDAMBU applied for another PPP loan from

BOA, this time on behalf of Papillon Air, Inc. In that application, KINDAMBU falsely certified
Case 1:20-mj-00286-MSN Document 4 Filed 10/16/20 Page 5 of 7 PagelD# 10

that, “[d]uring the period beginning on February 15, 2020 and ending on December 31, 2020, the
Applicant has not and will not receive another loan under this program.” KINDAMBU
represented in that application that Papillon Air, Inc. had twenty-seven full-time employees with
an average monthly payroll of $1,980,000. As a part of that application process, KINDAMBU
later supplied BOA with an Excel spreadsheet file that purported to be payroll records for
employees of Papillon Air, Inc. The supporting Excel spreadsheet states that the employees were
employed by Papillon Air Inc. and were receiving wages as of March 27, 2020.

11. The evidence indicates that these records also are fraudulent. First, the
spreadsheet represents that Papillon Air, Inc. made over $400,000 in unemployment
contributions in 2019 to the Commonwealth of Virginia, but the Virginia Employment
Commission has no record of any payments being made on behalf of that entity. Second, the
spreadsheet uses precisely the same formula to calculate the amount of money allegedly withheld
on behalf of each supposed employee and overstates the amount of Social Security withholdings
and contributions that legitimately would have been assessed against employees being paid the
asserted amounts. As noted above, this is not consistent with legitimate payroll records. Third,
the spreadsheet claims a total of over $10,000,000 in payroll and independent contractor
expenses for 2019. But the total cumulative disbursements in 2019 reflected in all accounts
identified so far in this investigation held in the name of Papillon Air, Inc., was approximately
$800,000. Fourth, the spreadsheet submitted by KINDAMBU claims that Papillon Air, Inc.
withheld $1,806,749 in federal income taxes from its supposed employees for 2019, and further
claims that it withheld $451,687.25 in federal income taxes from its supposed employees for the

first quarter of 2020. But the IRS has confirmed that, as of September 29, 2020, Papillon Air,
Case 1:20-mj-0O0286-MSN Document 4 Filed 10/16/20 Page 6 of 7 PagelD# 11

Inc. had not filed a Form 941 for any quarter in 2019 or 2020, and had not filed a Form 940 for
2019 or 2020.

12. Onor about May 6, 2020, BOA disbursed approximately $2,126,753 in PPP loan
funds to BOA account number 435043410536 held in the name of Papillon Air Inc. (“BOA
0536”). On or about May 14, 2020, BOA disbursed approximately $375,000 in PPP loan funds
to BOA account number 435037906713 held in the name of Papillon Holdings Incorporated
(“BOA 6713”). An analysis of bank and other financial and business records shows that, after
receiving these proceeds, KINDAMBU spent a substantial portion of the proceeds on items
unrelated to payroll, mortgage interest payments, lease payments, or utility payments. For
example, as described in more detail below, financial records show that KINDAMBU
subsequently used the fraud proceeds towards the purchase of all or part of a Lexus automobile,
and all or part of a Cessna 172S aircraft. Financial records show that KINDAMBU also
transferred some of the fraud proceeds into an account in the name of “Papillon Air
Maintenance,” and subsequently spent some of those proceeds on payroll for that entity. But
records from the Virginia Corporation Commission show that Papillon Maintenance Services,
Inc. was not formed until April 28, 2020, after KINDAMBU applied for both loans from BOA.
Payroll records from Paychex, a payroll processing company, further show that the payroll
disbursements made by KINDAMBU through Papillon Maintenance Services, Inc. were for
employees who do not appear to have been hired until June 2020, whose names do not match the
suspected fraudulent names in the spreadsheets provided to BOA, and who are being

compensated far less than the salaries represented for the suspected fraudulent spreadsheets.
Case 1:20-mj-0O0286-MSN Document 4 Filed 10/16/20 Page 7 of 7 PagelD# 12

13. Based on the forgoing, as well as the training and experience of other law
enforcement agents with whom I have spoken and my own experience, I respectfully submit that
there is probable cause to believe that DIDIER KINDAMBU committed bank fraud, in violation
of 18 U.S.C. § 1344.

Respectfully submitted,

Digitally signed b
4) S U b | ett Sublett Charles w
: Charles W i35735-0000"

Charles W. Sublett
Special Agent
IRS-CI

Subscribed and sworn to in accordance with
Fed. R. Crim. P. 4.1 by telephone on October 16, 2020

Digitally signed by John F.
Joh n F. Anderson

Date: 2020.10.16 16:29:25
Anderson “ory

The Honorable John F. Anderson
United States Magistrate Judge
Eastern District of Virginia


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