Criminal Complaint — U.S. v. Giraldo Caraballo (S.D. Fla.)

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A criminal cover sheet, criminal complaint and supporting affidavit against Giraldo Caraballo, Case 1:21-mj-02014-JB, in the United States District Court for the Southern District of Florida, entered on the docket January 6, 2021. The complaint charges false statements to a lending institution under 18 U.S.C. § 1014, bank fraud under 18 U.S.C. § 1344 and transactions in unlawful proceeds under 18 U.S.C. § 1957(a). In the affidavit, FBI Special Agent Andrea L. Rivers-McCullough states that Caraballo's company, Professional Skills Inc., received a $50,900 EIDL and a $420,000 PPP loan after applications claiming four and then 28 employees and average monthly payroll of $168,000, when the company had no employees. It states that Caraballo used proceeds for personal expenses and transferred $239,000 to a new personal account on June 26, 2020.

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Case 1:21-mj-02014-JB Document1 Entered on FLSD Docket 01/06/2021

Page 1 of 11

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA

Case No.

1:21mj02014 Becerra

UNITED STATES OF AMERICA
GIRALDO CARABALLO,

Defendant
/

CRIMINAL COVER SHEET

1. Did this matter originate from a matter pending in the Northern Region of the United States

Attorney's Office prior to August 9, 2013 (Mag. Judge Alicia O. Valle)?

__ Yes X_No

2. Did this matter originate from a matter pending in the Central Region of the United States
Attorney’s Office prior to August 8, 2014 (Mag. Judge Shaniek M. Maynard)?_ Yes X No

3. Did this matter originate from a matter pending in the Central Region of the United States
Attorney's Office prior to August 8, 2019 (Mag. Judge Jared M. Strauss)? __ Yes X_ No

By:

Respectfully submitted,

ARIANA FAJARDO ORSHAN
UNITED STATES ATTORNEY

ELI S. RUBIN’

Assistant United States Attorney
Court ID No. A5502535

99 Northeast 4" Street

Miami, FL. 33132-2111

Tel: (305) 961-9247

Email: Eli.Rubin @usdoj.gov
Case 1:21-mj-02014-JB Document1 Entered on FLSD Docket 01/06/2021 Page 2 of 11

AO 9] (Rev. 11/11) Criminal Complaint

UNITED STATES DISTRICT COURT

for the
Southern District of Florida

United States of America

v.
Case No. 1:21mj02014 Becerra

GIRALDO CARABALLO

Defendant(s)
CRIMINAL COMPLAINT BY TELEPHONE OR OTHER RELIABLE ELECTORNIC MEANS

I, the complainant in this case, state that the following is true to the best of my knowledge and belief.

On or about the date(s) of June 23, 25, and 26, 2020 in the county of Miami-Dade in the
Southern District of Florida _ _ , the defendant(s) violated:
Code Section Offense Description
18 U.S.C. § 1014 False Statement to Lending Institution
18 U.S.C. § 1344 Bank Fraud
18 U.S.C. § 1957(a) Engaging in Transactions in Unlawful Proceeds

This criminal complaint is based on these facts:

SEE ATTACHED AFFIDAVIT.

@M Continued on the attached sheet.

Complainant's signature

FBI Special Agent Andrea L. Rivers-McCullough

Printed name and title

Attested to by the Applicant in accordance with the requirements of Fed.R.Crim. 4.1 by Telephone.

Date: Jan. 6, 2021 |

dge 's signature

City and state: Miami, Florida Hon. Jacqueline Becerra, U.S. Magistrate Judge
- Printed name and title
Case 1:21-mj-02014-JB Document 1 Entered on FLSD Docket 01/06/2021 Page 3 of 11

AFFIDAVIT IN SUPPORT OF A CRIMINAL COMPLAINT

I, Andrea L. Rivers-McCullough, being first duly sworn, hereby depose and state as
follows:

AGENT BACKGROUND AND INTRODUCTION

l. I am a Special Agent with the Federal Bureau of Investigation (“FBI”). I have been
employed with the FBI since March 15, 2019. I am currently assigned to investigate, among other
offenses, bank fraud, money laundering, and other frauds.

2. This affidavit is made in support of a criminal complaint charging GIRALDO
CARABALLO (“CARABALLO”) with violations of Title 18, United States Code, Sections 1014
(False Statement to a Lending Institution), 1344 (Bank Fraud), and 1957(a) (Engaging in
Transactions in Unlawful Proceeds).

Aw This affidavit is based on my personal investigation and investigation by others,
including federal and local law enforcement officials whom I know to be reliable and trustworthy.
The facts: contained herein have been obtained by interviewing witnesses and examining
documents obtained in the course of the investigation as well as through other means. This
affidavit does not include every fact known to me about this investigation, but rather only those
facts sufficient to establish probable cause.

OVERVIEW OF CERTAIN CARES ACT RELIEF

4. The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Pub. L. 116-
136, 134 Stat. 281, is a federal law enacted in or around March 2020, which was designed to
provide emergency financial assistance to the millions of Americans who are suffering the
economic effects caused by the COVID-19 pandemic. Two sources of relief provided by the

CARES Act were the Economic Injury Disaster Loan (“EIDL”) program and the Paycheck
Case 1:21-mj-02014-JB Document1 Entered on FLSD Docket 01/06/2021 Page 4 of 11

Protection Program (“PPP”).

Si The EIDL program is run by the U.S. Small Business Administration (“SBA”) and
provides low-interest financing to small businesses, renters, and homeowners in regions affected
by declared disasters.

6. The CARES Act authorized the SBA to provide EIDLs of up to $2 million to
eligible smafl businesses experiencing substantial financial disruption due to the COVID-19
pandemic. In addition, the CARES Act 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 ne the applicant certified having. The advances did not have
to be repaid.

7 EIDL applications are submitted directly to the SBA and processed by the agency
with support from a government contractor, Rapid Finance. In order to obtain an EIDL and
advance, a qualifying business has 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 must also certify that all of the information in the application is true and correct to the
best of the applicant’s knowledge.

8. EIDL funds can be used for payroll expenses, sick leave, production costs, and
business ovtigations, such as debts, rent, and mortgage payments.

9. The PPP was designed to provide an incentive for small businesses to keep workers

on the payroll.
Case 1:21-mj-02014-JB Document1i Entered on FLSD Docket 01/06/2021 Page 5 of 11

10. Through the PPP, the CARES Act authorized up to $349 billion in forgivable loans
to small businesses for job retention and certain other expenses. In or around April 2020, Congress
authorized’ over $300 billion in additional PPP funding.

11.. ‘In order to obtain a PPP loan, a qualifying business had 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) must
have stated, among other things, its: (a) average monthly payroll expenses; and (b) number of
employees: These figures are used to calculate the amount of money the small business is eligible
to receive under the PPP. In addition, businesses applying for a PPP loan must have provided
documentation to the lending institution showing their payroll expenses. Typically, businesses
would suppty documents showing the amount of payroll taxes reported to the Internal Revenue
Service (“IRS”).

12. A PPP loan application was 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.

13... PPP loan proceeds must be used by the business on certain permissible expenses—
payroll costs, interest on mortgages, rent, and utilities. The PPP allows the interest and principal

on the PPv toan to be entirely forgiven if the business spends the loan proceeds on these expense
Case 1:21-mj-02014-JB Document1 Entered on FLSD Docket 01/06/2021 Page 6 of 11

items within a designated period of time after receiving the proceeds and uses a certain amount of
the PPP loan proceeds on payroll expense.
OVERVIEW OF THE SCHEME
Background of CARABALLO and Professional Skills Inc.

14.. The United States is investigating fraudulent EIDL and PPP applications
CARABALLO submitted on behalf of a company he controlled, Professional Skills Inc. (“PSI”).
Both applications were approved and funded. CARABALLO fraudulently procured and misused
over $470,000.

15. On April 15, 2019, CARABALLO formed PSI, a Florida corporation.
CARABALLO was listed as both the incorporator and registered agent in the company’s Articles
of Incorporation. He was the only listed officer. The company’s principal office, 13234 SW 200
Terrace, Miami, FL 33177, was CARABALLO’s home address.

16. On May 6, 2019, CARABALLO opened an account in the name “Professional
Skills Inc? ending in 2390 at Bank A (“Account 2390”). While opening the account,
CARABALLO reported that PSI had two employees and annual gross sales of $70,000.

Overview of the Scheme

17: On June 17, 2020, CARABALLO submitted an EIDL application on behalf of PSI.
CARABALLO stated that the company’s gross revenue between February 1, 2019, and January
31, 2020, was $180,000, and that, as of January 31, 2020, the company had four employees.

18 The SBA approved CARABALLO’s application. On June 20, 2020,
CARABALLO signed the corresponding promissory note. The IP address CARABALLO used to

sign the note, according to the relevant data provider, was assigned to “GIRALDO
Case 1:21-mj-02014-JB Document1 Entered on FLSD Docket 01/06/2021 Page 7 of 11

CARABALLO.” On June 23, 2020, the SBA deposited the proceeds of the loan, $50,900, into
Account 2390.

19. That same day, June 23, 2020, CARABALLO applied for a PPP loan with Loan
Processor A.

2u. ‘In his application, CARABALLO stated that PSI had 28 employees—24 more
employees than he stated approximately six days earlier. Further, CARABALLO stated that PSI’s
average monthly payroll was $168,000—$12,000 less than the company’s reported annual gross
revenue six days prior. CARABALLO stated that he needed the proceeds of the loan—
$420,000—«9 pay for payroll.

21.. ‘In the application, CARABALLO certified that “the information provided in this
application . . . is true and accurate in all material respects” and that he understood “that knowingly
making a false statement to obtain a guaranteed loan from SBA is punishable under the law [,] . .
if submitted to a federally insured institution, under 18 USC 1014 by imprisonment of not more
than thirty years and/or a fine of not more than $1,000,000.”

22. As part of his application, CARABALLO submitted three IRS Form 941s
(Employer’s Quarterly Federal Tax Returns) for the third quarter of 2019, the fourth quarter of
2019, and the first quarter of 2020. Each form stated that PSI had 28 employees and paid exactly
$504,000.00 in taxable social security wages every quarter. CARABALLO, however, only
completed the first page of each form, and none of the forms indicated how any employment taxes
were in fact being paid.

23. CARABALLO’s PPP application was submitted to Bank B and approved. On June

25, 2020, bank B deposited $420,000 into Account 2390.
Case 1:21-mj-02014-JB Document1 Entered on FLSD Docket 01/06/2021 Page 8 of 11

24 On June 30, 2020, CARABALLO received into Account 2390 a $4,000 EIDL
advance.

The Lending Bank for the PPP Loan

25. Bank B isa financial institution based in Salt Lake City, Utah, and federally insured
by the Federal Deposit Insurance Corporation (“FDIC”). Bank B participated in the SBA’s PPP
as a lender and, as such, was authorized to lend funds to eligible borrowers under the terms of the
PPP.

False Statements on the EIDL and PPP Applications

20, | CARABALLO made a number of false statements on both his EIDL and PPP
applications.

27. First, during the relevant time period, PSI did not have any employees. Therefore,
CARABALLO’s representations (i) on his EIDL application that the company had four employees,
and (ii) on his PPP application that the company had 28 employees, were both false and fraudulent.

28. A-review of PSI’s bank account, Account 2390, does not reveal any paychecks to
any employees of PSI. Nor are there any payments to payroll service providers. Rather, the
account records show that CARABALLO used company income to pay off personal credit card
bills, make mortgage payments, make car lease payments, make child support payments, and,
among other transactions, direct proceeds to other entities and accounts that CARABALLO
controlled.

2%.. Furthermore, records from the Florida Department of Revenue indicate that PSI did
not pay any employment taxes. In fact, PSI did not even register to pay employment taxes.

30, Second, and relatedly, the company’s average monthly payroll was not $168,000,

as stated in CARABALLO’s PPP application. The company’s monthly average of all debits of
6
Case 1:21-mj-02014-JB Document1 Entered on FLSD Docket 01/06/2021 Page 9 of 11

the company, for the four months preceding the PPP loan application, was $13,559.09. This figure
includes ali debits, including, for example, purchases at The Home Depot, McDonald’s, Wal-Mart
Super Center, Publix, and many others. As noted above, CARABALLO claimed that the
company’s average monthly payroll was approximately 12 times this figure—$168,000.

31. Third, CARABALLO filed false and fraudulent tax forms in support of his PPP
application. The three forms that CARABALLO submitted used an incorrect Federal Employer
Identification Number (“FEIN”) for PSI. On the IRS forms, CARABALLO listed PSI’s FEIN as
83-4441484. The IRS, however, has confirmed that PSI’s FEIN was 83-4441784, and that the
company did not file any tax returns in 2018, 2019, and the first two quarters of 2020.!

CARABALLO MISUSED AND LAUNDERED LOAN PROCEEDS

32. | CARABALLO misused and laundered much of the EIDL and PPP loan proceeds.

33. As noted above, on June 23, 2020, CARABALLO received into Account 2390 the
proceeds of the EIDL.

| 34. The following day, June 24, 2020, CARABALLO (i) wrote himself a check for
$9,000 drawn on Account 2390; (ii) paid a personal Visa credit card bill of $7,023.87 with
proceeds trom Account 2390; and (iii) wrote a check to “Galenos Services” drawn on Account
2390. Galenos Services Inc. is a Florida corporation CARABALLO formed in 2006. The

company was administratively dissolved in September 2008.”

7 Elsewnere, CARABALLO has used a third FEIN: In PSI’s Annual Report for 2020, filed with the Florida
Division of Corporations, CARABALLO listed PSI’s FEIN as 83-4444148. It is possible, though unlikely,
for a company such as PSI to have more than one FEIN.

a On June 25, 2020, CARABALLO deposited the check into an account at Bank 3 ending in 7442 that he
controlled.
Case 1:21-mj-02014-JB Document1 Entered on FLSD Docket 01/06/2021 Page 10 of 11

35; On June 25, 2020, CARABALLO withdrew $9,700 in U.S. currency from Account
2390 and, with additional proceeds from Account 2390, made his monthly car lease payment: a
$929.39 payment for his 2019 Mercedes-Benz GLC 300.

36. Also on June 25, 2020, CARABALLO received into Account 2390 the proceeds of
the PPP loau: $420,000.

37 The very next day, June 26, 2020, CARABALLO opened a new personal checking
account i his name at Bank A. The account number ended in 7455 (“Account 7455”).
CARABALLO used his Florida Driver’s License to open the account.

38. Later that day, CARABALLO transferred $239,000 from Account 2390 into his
new persot...| account, Account 7455.

CONCLUSION

39. Based on my training and experience, and the information provided in this affidavit,
I respectfully submit that there is probable cause to believe that:

e On or about June 23, 2020, in the Southern District of Florida and elsewhere, the
defendant, GIRALDO CARABALLO, did knowingly make a false statement and
report for the purposes of influencing the action of a financial institution whose
deposits are insured by the Federal Deposit Insurance Corporation in connection
with a loan application, in that the defendant falsely represented on his application
for a PPP loan to Bank B that the average monthly payroll for Professional Skills
Inc. was approximately $168,000.00, in violation of Title 18, United States Code,
Section 1014.

e On or about June 25, 2020, in the Southern District of Florida and elsewhere, the
defendant, GIRALDO CARABALLO, did knowingly, and with intent to defraud,
execute and attempt to execute, and cause the execution, of a scheme and artifice
to defraud one or more financial institutions, which scheme and artifice employed
a material falsehood, and did knowingly, and with intent to defraud, execute, and
attempt to execute, and cause the execution of a scheme and artifice to obtain any
of the moneys and funds owned by, and under the custody and control of Bank B,
by means of false and fraudulent pretenses, representations, and promises relating
to a material fact, that is, by causing Bank B to deposit $420,000.00 into an account
Case 1:21-mj-02014-JB Document1 Entered on FLSD Docket 01/06/2021 Page 11 of 11

controlled by the defendant, in violation of Title 18, United States Code, Section
1344.

e On or about June 26, 2020, in the Southern District of Florida, and elsewhere, the
defendant, GIRALDO CARABALLO, did knowingly engage and attempt to
engage in a monetary transaction affecting interstate and foreign commerce in
criminally derived property of a value greater than $10,000, which the defendant
knew was derived from a specified unlawful activity, to wit: the transfer of
$239,000.00 between two accounts at Bank B, the proceeds of which represented
the proceeds of funds obtained through Bank Fraud, in violation of Title 18, United
States Code, Section 1957.

FURTHER YOUR AFFIANT SAYETH NAUGHT.

A a
Andrea L. Rivers-McCullough

Federal Bureau of Investigation
Special Agent

Attested to by the applicant in accordance with the requirements of Fed. R. Crim. P. 4.1 by
Telephone on this __6th_ day of January, 2021, in Miami, Florida.

INE BECERRA
AGISTRATE JUDGE

HONORABLE JA
UNITED STATES


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