Order on Motion to Dismiss Counts 10 and 11 — United States v. Fullerton (W.D. Tex.)

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An Order filed 09/20/23 as Document 188 in United States of America v. Michael Fullerton, Case No. 1:21-CR-216-RP, U.S. District Court for the Western District of Texas, Austin Division, on Defendant's Motion to Dismiss Counts 10 and 11 of the Indictment (Dkt. 166). The order states that the Court will deny Defendant's motion. It states that Counts 10 and 11 charge aggravated identity theft in violation of 18 U.S.C. § 1028A and recounts the Government's allegations about a scheme to obtain Payroll Protection Program (PPP) loans. It describes the Defendant's argument based on Dubin v. United States, 143 S. Ct. 1557 (2023), and the Government's response that Dubin requires a genuine nexus between the means of identification and the predicate offense.

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“Order on Motion to Dismiss Counts 10 and 11 — United States v. Fullerton (W.D. Tex.).” Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/court-filing-no-1-21-cr-00216-dkt-188-w-d-tex-f6e72e07ac/, SHA-256 40b4cdd00da958d768282363a3c677480af56a99a136d5046b14d6acc40cbc75.

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Case 1:21-cr-00216-RP Document 188 Filed 09/20/23 Page 1 of 9

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION

UNITED STATES OF AMERICA, §
§
Plaintiff, §
§
v. § 1:21-CR-216-RP
§
MICHAEL FULLERTON (1) §
§
§
Defendant. §

ORDER

Before the Court is Defendant Michael Fullerton’s (“Defendant”) Motion to Dismiss Counts

10 and 11 of the Indictment, (Dkt. 166), and the United States of America’s (“the Government”)

response, (Dkt. 171). Having reviewed the briefing, the record, and the relevant law, the Court will

deny Defendant’s motion.

I. BACKGROUND

The Government alleges that Defendant engaged in a fraudulent scheme with other

conspirators to apply for and receive Payroll Protection Program (PPP) loans during the COVID-19

pandemic. (Indictment, Dkt. 11). Defendant was first indicted by a federal grand jury on November

16, 2021, and charged with conspiracy to commit wire and bank fraud, bank fraud, wire fraud,

conspiracy to commit money laundering, engaging in monetary transactions in criminally derived

property, and aggravated identity theft. (Id.). A Third Superseding Indictment was then issued on

July 18, 2023, which added a second aggravated identity theft count against Defendant. (Dkt. 152).

Under the Third Superseding Indictment, Defendant is charged with two counts of

aggravated identity theft, in violation of 18 U.S.C. § 1028A, and these allegations comprise Counts

10 and 11. (Id.). PPP loans were designed to provide relief to small businesses during the COVID-19

pandemic by allowing businesses to continue to pay their workers. (Third Indictment, Dkt. 152, at
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2). To apply for a PPP loan, small business applicants had to state, among other things, their average

monthly payroll expenses and the number of their employees. (Id.). Applicants were also required to

provide supporting documentation showing their payroll expenses. (Id.). The Government alleges

that Defendant submitted fraudulent applications in the name of defunct businesses which were not

in operation at the time that the applications were submitted. (Resp., Dkt. 171, at 2). To do so,

Defendant allegedly used fraudulent documents to support the loan applications, including

fraudulent lists of employees and fraudulent tax documents. (Id. at 2–3).

With regard to Count 10, the Government alleges that Defendant created fake tax records to

attach to the fraudulent loan applications he submitted. (Id. at 3–4). As one example, in the PPP loan

application from Fullerton Consulting Group, LLC in April 2020 to Celtic Bank, Defendant

allegedly attached a fake Form 940, “Employer’s Annual Federal Unemployment (FUTA) Tax

Return,” and several fake Forms 941, “Employer’s Quarterly Federal Tax Return,” to the

application. (Id. at 4). On those forms, Defendant allegedly used the name and forged signature of a

certified public accountant, S.S., to indicate that the form had been completed by a tax preparer,

when in fact, S.S. did not prepare any of the forms for the PPP application. (Id.).

With regard to Count 11, the Government alleges that Defendant used the names and Social

Security numbers of six real people, EMPLOYEES 1–6, to support the fraudulent loan applications.

Under the PPP loan program, the loan amount that a business was eligible for was dependent upon

a business’s payroll expenses and the number of employees it employed. (Third Indictment, Dkt.

152, at 2). The Government alleges that Defendant used the names and Social Security numbers of

EMPLOYEES 1–6, in all five of the fraudulent PPP loan applications. (Resp., Dkt. 171, at 3). It also

alleges that he included fraudulent W-2 Wage & Tax Statements for each of the claimed employees.

(Id.).

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Defendant moves to dismiss Counts 10 and 11 of the Indictment arguing that they fail to

charge an offense. (Mot., Dkt. 166). Defendant’s motion hinges on Dubin v. United States, 143 S. Ct.

1557 (2023), a recently decided Supreme Court decision from June 2023, which narrowed the

applicability of 18 U.S.C. § 1028A. Defendant argues that Dubin held that a charge of identity theft

does not lie unless “the identity theft is the crux of the offense and not merely an ancillary feature of

an allegedly fraudulent scheme.” (Mot., Dkt. 166, at 1). Therefore, according to Defendant, Counts

10 and 11 fail to state a claim of aggravated identity theft because neither of the allegations in those

counts—the use of the accountant’s name and signature and the use of the employees’ names and

Social Security numbers—were the “crux” of the overall alleged scheme. (Id. at 2).

The Government responds that Counts 10 and 11 properly constitute charges of aggravated

identity theft under Dubin. The Government contests Defendant’s understanding of Dubin, arguing

that all that Dubin requires is that there be a “‘genuine nexus’ between the use of the means of

identification alleged in Counts 10 and 11 and the predicate offense.” (Resp., Dkt. 171, at 1) (quoting

Dubin, 143 S. Ct. at 1565).

II. LEGAL STANDARD

A criminal indictment is a “plain, concise and definite written statement of the essential facts

constituting the offense charged.” FED. R. CRIM. P. 7(c)(1). Federal Rule of Criminal Procedure 12

allows a party to “raise by pretrial motion any defense, objection, or request that the court can

determine without a trial on the merits.” FED. R. CRIM. P. 12(b)(1). These include motions that allege

“a defect in the indictment,” including “failure to state an offense.” FED. R. CRIM. P. 12(b)(3)(B)(v).

“In reviewing a challenge to an indictment alleging that it fails to state an offense, the court

is required to take the allegations of the indictment as true and to determine whether an offense has

been stated.” United States v. Suarez, 966 F.3d 376, 382 (5th Cir. 2020) (quoting United States v. Crow,

164 F.3d 229, 234 (5th Cir. 1999)). In general, an indictment is sufficient to survive a motion to

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dismiss “if it contains the elements of the charged offense, fairly informs the defendant of the

charges against him, and insures that there is no risk of future prosecutions for the same

offense.” United States v. Cavalier, 17 F.3d 90, 92 (5th Cir. 1994) (citing United States v. Arlen, 947 F.2d

139, 144 (5th Cir. 1991)). A court may rule on a pretrial motion to dismiss an indictment when the

alleged infirmity “is essentially one of law.” United States v. Fontenot, 665 F.3d 640, 644 (5th Cir. 2011).

“A defendant may not properly challenge an indictment, sufficient on its face, on the ground that

the allegations are not supported by adequate evidence, for an indictment returned by a legally

constituted and unbiased grand jury, if valid on its face, is enough to call for trial of the charge on

the merits.” United States v. Rafoi, 60 F.4th 982, 994 (5th Cir. 2023).

III. DISCUSSION

Defendant challenges two counts of the Indictment on the basis that Count 10 and 11 fail to

charge the offense of aggravated identity theft under 18 U.S.C. § 1028A.1 His motion is procedurally

proper because it alleges an infirmity that is based on law, see Fontenot, 665 F.3d at 644—namely, that

the allegations in Counts 10 and 11 cannot constitute aggravated identity theft under § 1028A after

the Supreme Court’s decision in Dubin. However, the Court disagrees with Defendant’s construction

of Dubin and instead finds the Government and the Eleventh Circuit’s analysis in United States v.

Gladden, 2023 WL 5281836, (11th Cir. Aug 17, 2023), to be persuasive. Accordingly, the Court finds

that Counts 10 and 11 properly state offenses under the Dubin framework of § 1028A.

Section 1028A makes it a crime for a person to “knowingly transfer[], possess[], or use[],

without lawful authority, a means of identification of another person” “during and in relation to” a

predicate offense. The provision applies in regard to numerous predicate offense, including bank

1 Defendant cites Federal Rule of Criminal Procedure 12(b)(2) for the basis of his Motion. (Mot., Dkt. 166, at

1), which allows a party to raise a motion that the “court lacks jurisdiction.” Because Rule 12(b)(2) is
inapplicable in this instance, the Court will construe Defendant’s Motion as one pursuant to Rule
12(b)(3)(B)(v), which allows a motion for “failure to state an offense.”

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fraud and wire fraud. § 1028A(c). In Dubin v. United States, the Supreme Court narrowed the

applicability of § 1028A after noting how “boundless” some interpretations of the statute had

become. 143 S. Ct. at 1563. The Court’s aim was to correct an understanding of § 1028A such that it

would no longer “apply automatically any time a name or other means of identification happens to

be part of the payment or billing method used in the commission of a long list of predicate

offenses.” Id. at 1564–65. Instead, it held that:

A defendant “uses” another person's means of identification “in
relation to” a predicate offense when this use is at the crux of what
makes the conduct criminal. To be clear, being at the crux of the
criminality requires more than a causal relationship, such as facilitation
of the offense or being a but-for cause of its success. Instead, with
fraud or deceit crimes . . ., the means of identification specifically must
be used in a manner that is fraudulent or deceptive. Such fraud or
deceit going to identity can often be succinctly summarized as going to
“who” is involved.

Id. at 1573 (internal citation omitted).

The Eleventh Circuit, the only circuit court to have thus far interpreted Dubin, explained the

Court’s decision as having limited § 1028A’s reach to situations where “‘a genuine nexus’ exists

between the use of a means of identification and the predicate offense.” Gladden, 2023 WL 5281836,

at *7 (quoting Dubin, 143 S. Ct. at 1565). The Eleventh Circuit held that under Dubin, § 1028A “still

proscribes ‘use[s] [of a means of identification] involving fraud or deceit about identity[.]’ Dubin thus

redirects the statute’s focus to ‘offenses built around what the defendant does with the means of

identification in particular. In other words, the means of identification specifically [must be] a key

mover in the criminality.’” Id. (quoting Dubin, 143 S. Ct. at 1568–70) (alterations in original)

To explain the sort of offenses that would still fall under § 1028A after Dubin and which

offenses would not, the Supreme Court used this heuristic: § 1028A covers activities that

“misrepresent[] who received a certain service,” but it does not cover “fraudulent claims

regarding how or when a service was performed.” Dubin, 143 S. Ct. at 1565 (emphasis in original). For

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example, in Dubin, the defendant committed healthcare fraud by submitting a false reimbursement

claim to Medicaid for psychological testing that inflated the reimbursement rate by overstating the

qualifications of the service provider and changing the date of the examination. Id. at 1563. The

Court held that Dubin’s actions could not be a basis for conviction under § 1208A because the use

of the patient’s name was not at the crux of what made the underlying scheme fraudulent; it was

instead an “ancillary feature” of the fraudulent billing scheme. Id. at 1574–55. In other words,

“[Dubin’s] fraud was in misrepresenting how and when services were provided to a patient, not who

received the services.” Id. at 1575.

The Eleventh Circuit’s holding in Gladden also illustrates this dichotomy. In Gladden, the

court upheld one defendant’s conviction under § 1028A but reversed a second defendant’s

conviction because it no longer fit within the meaning of the statute after Dubin. Gladden, 2023 WL

5281836, at *7–11. The fraudulent scheme at issue in the case was a plot by pharmacy employees to

defraud pharmacy networks by billing for medically unnecessary and fraudulent prescriptions. Id. at

*1. The court upheld an aggravated identity theft conviction for the defendant, Linton, who used the

identities of patients to submit and bill for prescriptions that those patients were not aware of nor

received. Id. at *7. The court reasoned that Linton’s forgery of the patients’ identities was “at the

heart of the deception” and because the “deception centered on the identity of the individual

receiving the product,” she had committed identity theft. Id. at *8. In contrast, the Eleventh Circuit

reversed the conviction for a second defendant, Gladden, whose misrepresentations involved only

whether the prescriptions were medically necessary. Id. at *11. The court found that Gladden’s use

of patients’ identifying information was “merely ancillary to the deception” because at no point did

Gladden misrepresent who received the prescriptions; instead, the fraudulent actions centered on how

the prescription billing was fraudulent. Id.

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Here, Defendant bases his challenge to Counts 10 and 11 of the Indictment on an argument

that Dubin requires that identity theft be “the crux of the offense and not merely an ancillary feature

of an allegedly fraudulent scheme.” (Mot., Dkt. 166, at 1). However, as explained above and as the

Government responds, that is not quite what the Dubin Court held. Instead, the main issue is

whether Defendant’s use of another person’s means of identification is “the crux of what makes the

conduct criminal,” meaning that the means of identification were “used in a manner that is

fraudulent or deceptive” that gets to “who” is involved. Dubin, 143 S. Ct. at 1573. Under that proper

construction of the statute, it is clear that Defendant’s alleged uses of others’ means of identification

as described in Counts 10 and 11 properly constitute aggravated identity theft charges under Dubin.

To start with Count 10, the Government alleges that Defendant used the name and signature

of a certified public accountant, S.S., on fake tax records to lend credibility to fraudulent loan

applications. (Third Indictment, Dkt. 152, at 11; Resp., Dkt. 171, at 3–4). Defendant contends that

this count fails under Dubin because the use of S.S.’s identity was limited to this alleged purpose and

this purpose was not the “crux” of the overall alleged fraudulent scheme. (Mot., Dkt. 166, at 2).

However, it is hard to identify a clearer allegation of identity theft. Under these facts, Defendant

stole an accountant’s identity and forged his signature for the purpose of signifying that the tax

records were properly prepared. This action directly legitimized the loan applications and increased

the likelihood that they would be approved by the appropriate financial institutions. Defendant’s

alleged action is thus unlike Dubin’s ancillary use of a patient’s name in his fraudulent

misrepresentation about the qualifications of a medical provider. Instead, it mirrors the actions of

defendant Linton from Gladden: Like Linton, Defendant misrepresented who performed the service

of preparing the tax form. His fraud thus centered on “who” was involved in the fraudulent action.

Because his use of S.S.’s identity was “used in a manner that is fraudulent or deceptive,” Dubin, 143

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S. Ct. at 1573, Count 10 properly states facts that would constitute a charge of aggravated identity

theft under § 1028A.

Count 11 fares no differently. Under this count, the Government alleges that Defendant

used the names and Social Security numbers of six employees of another business on loan

applications and fake W-2 forms in order to claim them as employees of his business. (Third

Indictment, Dkt. 152, at 11–12; Resp., Dkt. 171, at 3). Defendant similarly argues that Count 11 fails

because the “only purpose” of this information was “to complete fully the PPP applications and

maximize the amount loaned,” which “was not the crux of the alleged scheme.” (Mot., Dkt. 166, at

2). However, Defendant fails to recognize that this purpose is sufficient to charge an offense of

aggravated identity theft under Dubin. His alleged use of the six employees’ information was “used in

a manner that is fraudulent or deceptive,” Dubin, 143 S. Ct. at 1573, because the employees did not

work at his business nor did their information actually appear on W-2 forms in connection to his

business. Instead, the use of the information was crucial to being able to fill out the fraudulent loan

applications because the amount of the PPP loans so heavily depended on the number of employees

that a business had. If Defendant did not include the employees’ information, he would have been

unable to secure the loans. Further, this use of their information falls under Dubin because PPP

loans were, among other things, supposed to be used to pay the salaries of an applicant business’s

employees. By allegedly asserting that EMPLOYEES 1–6 worked at his business, Defendant’s

misrepresented who was to be receiving the PPP funds. In this way, Defendant’s actions are again

comparable to defendant Linton in Gladden because his fraud misrepresented “who” would be

receiving the service at issue. Therefore, Defendant’s alleged use of the employees’ information

under Count 11 of the Indictment also properly constitutes a charge of aggravated identity theft

under § 1028A.

IV. CONCLUSION

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For these reasons, IT IS ORDERED that Defendant’s Motion to Dismiss Counts 10 and

11 of the Indictment, (Dkt. 166), is DENIED.

SIGNED on September 20, 2023.

_____________________________________
ROBERT PITMAN
UNITED STATES DISTRICT JUDGE

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