Factual Proffer — United States v. Armando Ariel De Leon (S.D. Fla., Dkt. 53)

Summary

Factual Proffer in United States of America v. Armando Ariel De Leon, Case No. 22-20420-CR-JEM, in the U.S. District Court for the Southern District of Florida, entered 10/25/2022 as Document 53. The United States and the defendant agree that, were the case to proceed to trial, the United States would prove the facts described, which are sufficient to prove the sole count of the information. The proffer describes the Paycheck Protection Program and the Economic Injury Disaster Loan Program. It states that from January 2021 through at least July 2021 the defendant agreed with Daniel Hernandez and others to submit false and fraudulent EIDL and PPP applications, prepared and submitted over 50 false and fraudulent EIDL applications, and deposited a cashier's check for $29,400 as a commission on a PPP loan of $488,320.

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Case 1:22-cr-20420-JEM Document 53 Entered on FLSD Docket 10/25/2022 Page 1 of 4




                             UNITED STATES DISTRICT COURT
                             SOUTHERN DISTRICT OF FLORIDA

                                  CASE NO. 22-20420-CR-JEM

  UNITED STATES OF AMERICA

  v.

  ARMANDO ARIEL DE LEON,

                        Defendant.
  - - - - - - - - - - - - - -I
                                       FACTUAL PROFFER

         The United States of America (the "United States") and defendant Armando Ariel De Leon

  (the "defendant") agree that, were this case to proceed to trial, the United States would prove

  beyond a reasonable doubt the following facts, among others, which occurred in the Southern

  District of Florida and elsewhere:

                                 The Paycheck Protection Program

         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 were suffering from the economic effects caused by the COVID-19

  pandemic. One source of relief provided by the CARES Act was the authorization of forgivable

  loans to small businesses for job retention and certain other expenses, through a program referred

  to as the Paycheck Protection Program ("PPP").

         In order to obtain a PPP loan, a qualifying business submitted 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
Case 1:22-cr-20420-JEM Document 53 Entered on FLSD Docket 10/25/2022 Page 2 of 4




  application, the small business (through its authorized representative) was required to provide,

  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 confirming their payroll expenses.

         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. While it was

  the participating lender that issued the PPP loan, the loan was 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.

         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 and used a defined portion of the PPP loan

  proceeds on payroll expenses.

                            The Economic Injury Disaster Loan Program

         Another related response to the COVID-19 outbreak was an expansion of an existing

  disaster-related program - the Economic Injury Disaster Loan ("EIDL") - to provide for loan

  assistance (including $10,000 advances) for small businesses and other eligible entities for loans

  up to $2 million. The EIDL proceeds could have been used to pay fixed debts, payroll, accounts

  payable, and other bills that could have been paid had the disaster not occurred; however, such

  loan proceeds were not intended to replace lost sales or profits, or for the expansion of a business.



                                                   2
Case 1:22-cr-20420-JEM Document 53 Entered on FLSD Docket 10/25/2022 Page 3 of 4



         Unlike certain other types of SBA-guaranteed loans, EIDL funds were issued directly from

  the United States Treasury, and applicants applied for EIDL funds directly through the SBA via

  an online portal and application. The EIDL application process, which also used certain outside

  contractors for system support, collected information concerning the business and the business

  owner, including: information about the gross revenues for the business prior to January 31, 2020;

  and the cost of goods sold. Applicants electronically certified that the information provided was

  true and accurate and were warned that any false statement or misrepresentations to the SBA, or

  any misapplication of loan proceeds may result in sanctions, including criminal penalties.

         EIDL applications were received in and processed using computer servers located in the

  states oflowa, Virginia, and Washington. EIDL disbursement payments were initiated by the SBA

  using computer servers located in the state of Colorado, which transmitted the payment

  information to the Treasury using computer servers located in the state of Virginia.

                              Overview of the Defendant's Conspiracy

         From January 2021 through at least July 2021 , the defendant agreed with Daniel Hernandez

  ("Hernandez") and others to submit false and fraudulent EIDL and PPP applications and share in

  a percentage of the resulting fraudulent loans. The defendant and Hernandez had previously

  worked together at Bank 1 until the defendant's dismissal from the bank in January 2021. Bank 1

  was headquartered in New Jersey with branches in the Southern District of Florida. It was an

  approved SBA lender of PPP loans and insured by the Federal Deposit Insurance Corporation

  ("FDIC").

         The defendant executed a series of tasks in furtherance of the conspiracy, including but not

  limited to the following . The defendant helped co-conspirators open bank accounts at Bank 1 to

  allow them to apply for fraudulent PPP loans at the bank. The defendant prepared and submitted



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Case 1:22-cr-20420-JEM Document 53 Entered on FLSD Docket 10/25/2022 Page 4 of 4




  to the SBA over 50 false and fraudulent EIDL applications on behalf of co-conspirators. The

  defendant monitored the conspiracy' s fraudulent PPP and EIDL applications, maintaining

  spreadsheets that catalogued the relevant information of each application. And the defendant

  received, on behalf of himself and Hernandez, certain commissions from co-conspirators who

  received fraudulent loans. For example, on approximately February 25, 2021 , the defendant

  deposited into a bank account he controlled at Bank 2 and ending in 1225 a cashier' s check from

  Bank 1 for $29,400. The check had been purchased by the owner of AC Export Express Corp.,

  which had recently received a fraudulent PPP loan from Bank 1 in the amount of $488,320. The

  cashier's check was the defendant and Hernandez' s commission for their assistance with securing

  the fraudulent loan.

          The parties agree that these facts, which do not include all facts known to the United States

  and the defendant, are sufficient to prove the sole count of the information.




                                        By:
                                                E
                                                A


                                        By:
                                                PAUL PE   ZZI
                                                COUNSEL FOR DEFENDANT


  Date:                                 By: ~

                                              DEFENDANT




                                                    4


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