Information — United States v. Daniel Hernandez (S.D. Fla., Dkt. 14)

Summary

An Information, Document 14, entered 11/04/2022 on the FLSD docket in Case 1:22-cr-20529-KMM, Case No. 22-20529-CR-MOORE/LOUIS, United States of America vs. Daniel Hernandez, in the United States District Court, Southern District of Florida. Count 1 charges conspiracy to commit wire fraud. It alleges that from in or around April 2020 through at least in or around July 2021 Hernandez, who worked at Bank 1 and earlier at Bank 2, conspired with Armando Ariel De Leon, Erich Javier Alfonso Barata and others to submit false PPP and EIDL loan applications and to pay and receive kickbacks. It alleges that the banks disbursed over $15,000,000 in PPP loan proceeds to accounts controlled by co-conspirators.

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“Information — United States v. Daniel Hernandez (S.D. Fla., Dkt. 14).” Original at archive.org. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/court-filing-no-1-22-cr-20529-dkt-14-s-d-fla-b92c488b6d/, SHA-256 b683a67100a8dadb656ecf919f7fe31287038184c8b05b5069ce74f3cb462ccf.

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Case 1:22-cr-20529-KMM Document 14 Entered on FLSD Docket 11/04/2022 Page 1 of 10

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
22-20529-CR-MOORE/LOUIS
Case No. - - - - - - - - - - -
18 u.s.c. § 1349
18 u.s.c. § 1343 DGJ
18.U.S.C. § 982
Nov 3, 2022
UNITED STATES OF AMERICA

MIA
vs.

DANIEL HERNANDEZ,

Defendant.
- - - - - - - - - - - - -I
INFORMATION

The United States Attorney charges that:

GENERAL ALLEGATIONS

At all times relevant to this Information:

The Small Business Administration

1. The United States Small Business Administration ("SBA") was an executive

branch agency of the United States government that provided support to entrepreneurs and small

businesses. The mission of the SBA was to maintain and strengthen the nation's economy by

enabling the establishment and viability of small businesses and by assisting in the economic

recovery of communities after disasters.

2. As part ofthis effort, the SBA enabled and provided for loans through banks, credit

unions, and other lenders. These loans had government-backed guarantees.
Case 1:22-cr-20529-KMM Document 14 Entered on FLSD Docket 11/04/2022 Page 2 of 10

The Paycheck Protection Program

3. 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").

4. 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 application (SBA Form 2483), 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.

5. 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.

2
Case 1:22-cr-20529-KMM Document 14 Entered on FLSD Docket 11/04/2022 Page 3 of 10

6. 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

7. 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.

8. 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.

3
Case 1:22-cr-20529-KMM Document 14 Entered on FLSD Docket 11/04/2022 Page 4 of 10

9. EIDL applications were received in and processed using computer servers located

in the states of Iowa, 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.

The Defendant and Related Individuals

10. Defendant DANIEL HERNANDEZ was a resident of Miami-Dade County,

Florida, and an employee of Bank 1.

11. Prior to working at Bank 1, DANIEL HERNANDEZ worked at Bank 2.

12. Armando Ariel De Leon was a resident of Miami-Dade County, Florida, and a co-

conspirator of the defendant. Until approximately January 2021 , Armando Ariel De Leon was an

employee of Bank 1.

13. Erich Javier Alfonso Barata was a resident of Miami-Dade County, Florida, and a

co-conspirator of the defendant. Erich Javier Alfonso Barata was a customer of Bank 1 and the

President of Black Hookah Inc., a Miami, Florida-based entity.

Relevant Banks

14. Bank 1 was a national bank based in New Jersey.

15. Bank 2 was a national bank based in North Carolina.

16. Both Bank 1 and Bank 2 were approved SBA lenders of PPP loans and insured by

the Federal Deposit Insurance Corporation ("FDIC").

COUNT 1
Conspiracy to Commit Wire Fraud
(18 u.s.c. § 1349)

1. The General Allegations section of this Information is re-alleged and incorporated

by reference as though fully set forth herein.

4
Case 1:22-cr-20529-KMM Document 14 Entered on FLSD Docket 11/04/2022 Page 5 of 10

2. From in or around April 2020, continuing through at least in or around July 2021 ,

in Miami-Dade County, in the Southern District of Florida, and elsewhere, the defendant,

DANIEL HERNANDEZ,

did willfully, that is, with the intent to further the object of the conspiracy, and knowingly combine,

conspire, confederate, and agree with Armando Ariel De Leon, Erich Javier Alfonso Barata, and

others to knowingly, and with the intent to defraud, devise, and intend to devise, a scheme and

artifice to defraud, and to obtain money and property by means of materially false and fraudulent

pretenses, representations, and promises, knowing that the pretenses, representations, and

promises were false and fraudulent when made, and, for the purpose of executing the scheme and

artifice, did knowingly transmit and cause to be transmitted, by means of wire communications in

interstate and foreign commerce, certain writings, signs, signals, pictures, and sounds, in violation

ofTitle 18, United States Code, Section 1343 .

PURPOSE OF THE CONSPIRACY

3. It was the purpose of the conspiracy for the defendant and his co-conspirators to

unjustly enrich themselves by, among other things: (a) submitting and causing the submission of

false and fraudulent applications for loans and grants made available through the SBA to provide

relief for the economic effects caused by the COVID-19 pandemic, namely, PPP and EIDL loans;

(b) offering, paying, and receiving kickbacks in return for referring other individuals for the

submission of false and fraudulent loan applications; and (c) diverting fraud proceeds for the

defendant's and co-conspirators' personal use, the use and benefit of others, and to further the

conspiracy.

MANNER AND MEANS OF THE CONSPIRACY

The manner and means by which the defendant and his co-conspirators sought to

accomplish the object and purpose of the conspiracy included, among others, the following:

5
Case 1:22-cr-20529-KMM Document 14 Entered on FLSD Docket 11/04/2022 Page 6 of 10

4. In or around April 2020, DANIEL HERNANDEZ agreed with Erich Javier

Alfonso Barata to prepare and submit false and fraudulent PPP loan applications.

5. Between in or around April 2020, and in or around July 2021, DANIEL

HERNANDEZ directed his co-conspirators to submit the PPP loan applications through interstate

wire communications at Bank 1 or Bank 2.

6. Between in or around April 2020, and in or around July 2021, DANIEL

HERNANDEZ, Erich Javier Alfonso Barata, and other co-conspirators submitted and caused the

submission of false and fraudulent PPP applications at Bank I and Bank 2, including a false and

fraudulent PPP loan application on behalf of Black Hookah Inc. at Bank I . The applications,

among other things, falsely and fraudulently represented each company's number of employees

and amount of monthly payroll.

7. Between in or around April 2020, and m or around July 2021 , DANIEL

HERNANDEZ and his co-conspirators submitted and caused the submission of false and

fraudulent information and documentation in support of the PPP loan applications, including

falsified Internal Revenue Service ("IRS") forms and falsified bank statements,

8. In or around January 2021, Armando Ariel De Leon joined the conspiracy. In

furtherance of the conspiracy, Armando Ariel De Leon submitted and caused the submission of

false and fraudulent EIDL applications on behalf of Florida-based entities that co-conspirators

controlled. Armando Ariel De Leon agreed with DANIEL HERNANDEZ to share in a

percentage of any resulting loans proceeds.

9. As a result of the false and fraudulent PPP loan applications submitted as part of

this scheme, Bank 1 and Bank 2 approved PPP loans to entities belonging to the defendant 's

6
Case 1:22-cr-20529-KMM Document 14 Entered on FLSD Docket 11/04/2022 Page 7 of 10

conspirators and disbursed, via interstate wire transmission, over $15 ,000,000 in loan proceeds

into bank accounts controlled by the defendant's co-conspirators.

10. As a result of the false and fraudulent EID L loan applications submitted as part of

this scheme, the SBA approved EIDL loans to entities belonging to the defendant's co-conspirators

and disbursed EIDL loan proceeds to bank accounts controlled by the defendant's co-conspirators,

via interstate wire transmission.

11. Co-conspirators paid DANIEL HERNANDEZ, Armando Ariel De Leon, Erich

Javier Alfonso Barata, and others a kickback based on each false and fraudulent loan funded.

12. The defendant and his co-conspirators used the proceeds from the fraudulent

scheme to enrich themselves and others, and to further the conspiracy.

All in violation of Title 18, United States Code, Section 1349.

FORFEITURE ALLEGATIONS

1. The allegations contained in this Information are hereby re-alleged and by this

reference fully incorporated herein for the purpose of alleging forfeiture to the United States of

certain property in which the defendant, DANIEL HERNANDEZ, has an interest.

2. Upon conviction of a violation of a criminal conspiracy to violate Title 18, United

Sates Code, Sections 1349 and 1343, as alleged in this Information, the defendant shall forfeit to

the United States any property constituting, or derived from, proceeds the person obtained directly

or indirectly, as the result of such offense, pursuant to Title 18, United States Code, Section

982(a)(2)(B).

7
Case 1:22-cr-20529-KMM Document 14 Entered on FLSD Docket 11/04/2022 Page 8 of 10

All pursuant to Title 18, United States Code, Section 982(a)( l), and the procedures set forth

at Title 21 , United States Code, Section 853, as incorporated by Title 18, United States Code,

Section 982(b)(l).

!STANT

8
Case 1:22-cr-20529-KMM Document 14 Entered on FLSD Docket 11/04/2022 Page 9 of 10
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA

UNITED STATES OF AMERICA CASE 0. :

v.
DANIEL HERNANDEZ,
CERTIFICATE OF TRIAL ATTORNEY*

- - - - - - - - - - - - - -I Superseding Case Information:
Defendant.
Court Division (select one) New Defendant(s) (Yes or No)
El Miami O Key West □ FTP Number of New Defendants
□ FTL O WPB Total number of New Counts

I do hereby certify that:
I. I have carefully consi dered the all egations of the indictment, the number of defendants, the number of probable
witnesses and the legal complexities of the Indi ctment/Information attached hereto.

2. I am aware that the information supp li ed on this statement will be relied upon by the Judges of this Court in setting
their calendars and scheduling crimi nal trials under the mandate of the Speedy Trial Act, Title 28 U.S.C . §3 161.

3. Interpreter: (Yes or No) _No__
List language and/or dialect: _ _ _ _ _ _ __
4. Thjs case will talce_O__ days for the parties to try.

5. Pl ease check appropriate category and type of offense li sted below:
(Check only one) (Check only one)
I 0 0 to 5 days □ Petty
II O 6 to 10 days D Minor
III D 11 to 20 days D Misdemeanor
IV D 21 to 60 days [Z] Fe lony
V D 61 days and over

6. Has this case been previously filed in this District Court? (Yes orNo) _Nn_
If yes, Judge__________ Case No. _ _ _ _ _ _ _ __
7. Has a complaint been filed in this matter? (Yes or No) Yes
If yes, Magistrate Case No. 22-3333-MJ-EGT
8. Does this case relate to a previously filed matter in this Di strict Court? (Yes or o) Yes
If yes, Judge Martinez Case No. 22-20420-CR-JEM; 22-20194-CR-JEM
9. Defendant(s) in federal custody as of
----------------
10. Defendant(s) in state custody as of
- - - - - -- - - - - - - -- - -
11. Rule 20 from the District of
12. Is this a potential death penalty case? (Yes or No) No
13. Does this case originate from a matter pending in the Northern Region of the U.S. Attorney's Office
prior to August 8, 20 14 (Mag. Judge Shaniek Maynard? (Yes or No) _Nn_
14. Does this case originate from a matter pending in the Central Region of the U.S . Attorney's Office
prior to October 3, 20 19 (Mag. Judge Jared Strauss? (Yes orNo) _o_

By:

Ass istant United States A
Court ID No. A5502535
Case 1:22-cr-20529-KMM Document 14 Entered on FLSD Docket 11/04/2022 Page 10 of 10

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA

PENALTY SHEET

Defendant's ame: _D_AN
__ IE_L_H
_ERN
__ AN_D_E_z_ _ _ _ _ _ _ _ _ __ _ _ __ __ _

Case No : - - -- - - - -- - - - - - - - -- - -- -- -- - - - - - -

Count #: I

Conspiracy to Commit Wire Fraud, 18 U.S.C. §§ 1343, 1349

* Max. Term of Imprisonment: 20 years
* Mandatory Min. Term of Imprisonment (if applicable): N/A
* Max. Supervised Release: 3 years
* Max. Fine: $250 000

*Refers only to possible term of incarceration, supervised release and fines. It does not include
restitution, special assessments, parole terms, or forfeitures that may be applicable.

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