Factual Basis — United States v. Stacy V. Santemore, Sr. (Dkt. 16, filed 04/27/22)

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A Factual Basis filed 04/27/22 as Document 16 in United States of America v. Stacy V. Santemore, Sr., Criminal No. 22-38, Case 2:22-cr-00038-JCZ-MBN, U.S. District Court, Eastern District of Louisiana. The document states that the defendant has agreed to plead guilty to Counts One and Two of the Bill of Information, False Statements in violation of 18 U.S.C. § 1001 and Theft of Government Funds in violation of 18 U.S.C. § 641, and that the United States and the defendant stipulate that the stated facts are true and correct. It identifies Anna Mae Construction, LLC, formed in or around May 12, 2020, lenders including Kabbage, Inc. and Capital Plus Financial, LLC, and describes the CARES Act and the Paycheck Protection Program (PPP).

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Case 2:22-cr-00038-JCZ-MBN Document 16 Filed 04/27/22 Page 1 of 10

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

UNITED STATES OF AMERICA * CRIMINAL NO. 22-38
v. * SECTION: “A”
STACY V. SANTEMORE, SR. *
* * *
FACTUAL BASIS

The defendant, STACY V. SANTEMORE, SR. (“SANTEMORE”), has agreed to plead
guilty as charged to Counts One and Two of the Bill of Information, that is, False Statements, in
violation of Title 18, United States Code, Section 1001, and Theft of Government Funds, in
violation of Title 18, United States Code, Section 641, currently pending against him. This Factual
Basis does not attempt to set forth all of the facts known to the United States at this time. The
limited purpose of this Factual Basis is to demonstrate that there exists a sufficient legal basis for
SANTEMORFE’s guilty plea. The United States and SANTEMORE do hereby stipulate and agree
that the allegations in the Bill of Information and the following facts, which include relevant
conduct beyond what is charged, are true and correct and that, should this matter have proceeded
to trial, the government would have proven them beyond a reasonable doubt through the
introduction of competent testimony and admissible tangible and documentary exhibits.

Parties, Lenders, and Federal Programs

At all times material herein, SANTEMORE was a resident of Orleans Parish, Louisiana,
within the Eastern District of Louisiana, and he was employed by the National Railroad Passenger
Corporation, doing business as Amtrak (“Amtrak”), which Congress created as a private, for-profit
Government corporation, pursuant to the passage of the Rail Passenger Service Act of 1970, to

operate a nationwide system of passenger rail transportation.
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Anna Mae Construction, LLC (“Anna Mae Construction”) was a Louisiana corporation
formed in or around May 12, 2020. Anna Mae Construction purportedly operated as a construction
business. SANTEMORE was the registered agent and sole beneficial owner of Anna Mae
Construction.

Lender | (Kabbage, Inc.) was a financial institution headquartered in Atlanta, Georgia.
Lender 2 (Capital Plus Financial, LLC — Managed by Blueacorn) was a financial institution
headquartered in Bedford, Texas. Bank 1 (Regions Bank) was a financial institution headquartered
in Birmingham, Alabama, where its servers for electronic communications are also located.
SANTEMORE maintained multiple accounts at Bank 1, to include account number ending in
pT In addition, Anna Mae Construction maintained an account at Bank 1,
with an account number ending in BE Bank 2 (Navy Federal Credit Union) was a financial
institution headquartered in Vienna, Virginia. SANTEMORE maintained an account at Bank 2,
to include account number ending ina

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. As part of its efforts, the SBA provided business loans
through banks, credit unions, and other lenders. Those loans had government backed guarantees.
The SBA maintained servers for electronic communications in Sterling, Virginia.

The CARES Act
The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was a federal

law enacted in or about March 2020. The CARES Act provided emergency financial assistance to

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Defense Counsel Mil §
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the millions of Americans suffering the economic effects of 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”).

The PPP was overseen by the SBA, which had authority over all PPP loans. Individual PPP
loans, however, were issued by approved private lenders, who received and processed PPP loan
applications and supporting documentation and, following SBA approval, made loans using the
lenders’ own funds. To obtain a PPP loan, a qualifying business had to submit a PPP loan
application 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
to make affirmative certifications to be eligible for the PPP loan. For example, in the PPP loan
application (SBA From 2483), the business, through its authorized representative, had to state its
average monthly payroll expenses and number of employees. In addition, businesses had to
provide documentation showing their payroll expenses, as part of the PPP loan application process.
These figures were used to calculate the amount of money the small business was eligible to
receive under the PPP.

Among the type of businesses eligible for a PPP loan were individuals who operated under
a “sole proprietorship” business structure. In order to be eligible to receive such a PPP loan,
individuals had to report and document their income and expenses from the sole proprietorship, as
typically reported to the Internal Revenue Service (“IRS”) on Form 1040, Schedule C, fora given
year. The lending institution or loan processor used this information and documents to calculate

the amount of money the individual was entitled to receive under PPP.

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Once a qualifying business completed a PPP application, a participating lender processed
the application. If a PPP loan was approved, the participating lender funded the PPP loan using its
own monies, which the SBA guaranteed. In the course of processing the PPP loan, the lender
transmitted data from the loan application to the SBA, including information about the borrower,
the total amount of the loan, and the identified number of employees. Lender | and Lender 2 were
participating lenders in the PPP.

Proceeds from a PPP loan were legally required to be used only for certain permissible
business expenses, including payroll costs, mortgage interest, rent, and utilities. Under the
applicable PPP rules and guidance, the interest and principal on the PPP loan was eligible for
forgiveness if the business spent the loan proceeds on permissible items within a designated period
of time and used a certain portion of the loan toward payroll expenses.

The Economic Injury Disaster Loan Program

The Economic Injury Disaster Loan (“EIDL”) program was an SBA program that provided
low-interest financing to small businesses, renters, and homeowners in regions affected by
declared disasters. The CARES Act provided funding for EIDL loans for business affected by the
COVID-19 pandemic. In contrast to the PPP, EIDL loan amounts were determined based on the
recipient businesses’ historical revenue and disbursed directly to the recipient by the SBA.

CARES Act Funded Unemployment Insurance Program

Unemployment Insurance (UI) is a state-federal program that provides monetary benefits
to eligible lawful workers. Although State Workforce Agencies (‘SWAs”) administer their
respective UI programs, they must do so in accordance with federal laws and regulations. UI
payments (“benefits”) are intended to provide temporary financial assistance to lawful workers

who are unemployed through no fault of their own. Each state sets its own additional requirements

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for eligibility, benefit amounts, and length of time benefits can be paid. Generally, UI weekly
benefit amounts are based on a percentage of your earnings over a base period.

In the State of Louisiana, the Louisiana Workforce Commission (“LWC”) administers the
UI program. On March 13, 2020, the President declared the ongoing COVID-19 pandemic of
sufficient severity and magnitude to warrant an emergency declaration for all states, tribes,
territories, and the District of Columbia pursuant to section 501 (b) of the Robert T. Stafford
Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121-5207 (the “Stafford Act”). On
March 18, 2020, the President signed the Families First Coronavirus Response Act (“FFCRA”)
into law. The FFCRA provides additional flexibility for state UI agencies and additional
administrative funding to respond to the COVID-19 pandemic. The CARES Act was signed into
law on March 27, 2020. It expanded states’ ability to provide UI for many workers impacted by
COVID-19, including for workers who are not ordinarily eligible for UI benefits. The CARES Act
provided for three new UI programs: Pandemic Unemployment Assistance (“PUA”); Federal
Pandemic Unemployment Compensation (“FPUC”); and Pandemic Emergency Unemployment
Compensation (“PEUC”).

In Louisiana, a UI claim can be filed online on the LWC website. When an individual files
a Ul claim, the LWC automatically maintains certain information regarding the filing of the claim.
This information includes the date and time the claim was submitted, the name of the person for
whom the claim was filed, and the IP address of the computer, or ISP account, that was used to
file the claim. UI claimants must answer various questions to establish their eligibility for UI
benefits. Claimants must provide their name, Social Security Number, and mailing address. The
claimants must also identify a qualifying occupational status and/or COVID-19 related reason for

being out of work. After LWC accepts a UI claim, LWC typically deposits UI funds every two

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weeks in one of three ways selected by the claimant, e.g., Electronic Bill Payment (“EBP”) debit
card, direct deposit to the claimant checking or saving account, or physical check to be mailed via
U.S. Mail.

When receiving regular UI benefits, claimants must complete a rectification every two
weeks, under penalty of perjury, that they remain unemployed or otherwise eligible to receive UI
benefits. In addition, any wages earned by the claimant must be reported during this recertification
process,

Count One and Relevant Conduct

On or about July 3, 2020, SANTEMORE caused a false and misleading EIDL application
to be submitted to the SBA in the name of SANTEMORE’s company, Anne Mae Construction,
as 100% owner and sole guarantor, Social Security Number ending in | | seeking
approximately $10,000 in EIDL funds. The SBA EIDL Application contained purported yearly
gross earnings, monthly sales earnings, and the number of company employees employed by
SANTEMORE, that, if true and accurate, would of have supported a net gross advance loan
request of $10,000.

Documents and evidence would show that SANTEMORE?’s SBA EIDL application
falsely represented having ten employees, $75,000 in actual 2019 gross revenues, $75,000 in actual
2019 cost of goods sold, and $6,250 in monthly sales. In truth, the figures and Internal Revenue
Service (“IRS”) wage documents in SANTEMORE’s SBA EIDL application were falsified in
order to obtain the loan. SANTEMORE electronically submitted the SBA EIDL Application and
falsely certified that both the application and the information provided in the supporting documents

were true and accurate.

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After receipt of the information, the SBA EIDL Application was approved. On or about
July 7, 2020, the SBA distributed $10,000 through a wire/direct deposit transfer sent to
SANTEMORE?’s Account ending mm. Bank 1. On or about July 7, 2020, and various dates
thereafter, SANTEMORE, after receiving $10,000 through a wire/direct deposit transfer, caused
SBA EIDL proceeds from the Account ending ae. Bank | to be transferred and used for
personal and unauthorized expenses.

Santemore’s PPP Loans

On or about July 11, 2020, SANTEMORE caused another false and misleading PPP loan
application to be submitted to Lender | in the name of Anna Mae Construction seeking
approximately $89,583 in PPP funds. Documents and evidence would show that SANTEMORE?’s
PPP loan application for Anna Mae Construction falsely represented having twelve employees,
and $35,834 average monthly payroll. Documents and evidence would show _ that
SANTEMORE’s PPP loan application for Anna Mae Construction included a 2019 Internal
Revenue Service W-3 Transmittal of Wage and Tax Statements form claiming $430,000 in wages,
tips, other compensation; however, the W-3 Form was fictitious in that no earnings were ever
grossed. SANTEMORE electronically signed the Lender | PPP Application and falsely certified
that both the application and the information provided in the supporting documents were true and
accurate.

The Lender | PPP Application was approved and on or about July 14, 2020, Lender |
distributed approximately $89,583 through a wire/direct deposit transfer sent to SANTEMORE?’s
Account ending | Bank 1. On or about July 14, 2020, and various dates thereafter,

SANTEMORE, after receiving $89,538 through a wire/direct deposit transfer, caused PPP loan

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proceeds from the Account ending ae: Bank | to be transferred and used for personal and
unauthorized expenses. !

On or about April 19, 2021, SANTEMORE caused a second false and misleading PPP
loan application to be submitted to Lender 2, in the name of “Stacy Santemore, Sole Proprietorship
(unregistered)” seeking approximately $20,287 in PPP funds. The Lender 2 PPP Application
contained 2019 purported gross earnings, that, if true and accurate, would of have supported a loan
request of $20,287. Documents and evidence would show that SANTEMORE electronically
signed the Lender 2 PPP Application and falsely certified that both the application and the
information provided in the supporting documents were true and accurate. Documents and
evidence would show that the IRS 2019 Schedule C Form 1040 or 1040-SR Profit or Loss From
Business (Sole Proprietorship) appended to the application by SANTEMORE falsely represented
$97,385 in gross receipts or sales for “Stacy Santemore Sr., Sole Proprietorship,” a purported
construction business or profession; however, the Schedule C form was fictitious in that no
earnings were ever grossed,

The Lender 2 PPP Application was approved and on or about April 19, 2021, Lender 2
distributed $20,287 through a wire/direct deposit transfer sent to SANTEMORE?’s Account
ending | om Bank 2. On or about April 19, 2021 and various dates thereafter, SANTEMORE,
after receiving $20,287 through a wire/direct deposit transfer sent to the Account ending iat

Bank 2, caused PPP loan proceeds from the Account ending | om Bank 2 to be transferred and

used for personal and unauthorized expenses.

' Kabbage, Inc/Lender | subsequently found problems with the loan application and clawed back $54,995.36 before
SANTEMORE could spend it.

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Count Two

On or about April 3, 2020, in the Eastern District of Louisiana and elsewhere,
SANTEMORE, knowingly made a materially false and fraudulent statement and representation
in a LWC UI claim filed in the name of “Stacy Santemore,” in connection with a CARES Act
benefit provided by the United States described above, which was authorized and paid in
connection with a major disaster declaration and emergency declaration and was a thing of value
of the United States in the form of wages. Specifically, SANTEMORE falsely affirmed that he
was unemployed or otherwise eligible for UI benefits from the LWC because of the COVID-19
pandemic when in truth, the defendant was fully employed by Amtrak. As a result of the UI
application, LWC paid a total $22,725 over a forty-eight week time period via direct deposit to
SANTEMORE?’s Account ending a: Bank 2. During the course of the forty weeks,
SANTEMORE was required and completed twenty-four (24) bi-weekly re-certifications that he
was unemployed under penalty of perjury to remain eligible for UI funds from the LWC. The
statements on the twenty-four (24) bi-weekly re-certifications by the defendant were false in that
SANTEMORE remained fully employed by Amtrak during the relevant time period.

Additional evidence, including fraudulent SBA submissions, bank records, records from
Lenders, the Louisiana Secretary of State, and the IRS and other documents, would be introduced

at trial to prove the facts as set forth above. In addition, the testimony of employees and agents of

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Amtrak — OIG and the Department of Labor - OIG, and other competent witnesses would be

introduced at trial to prove the facts set forth above.

APPROVED AND AGREED TO:

EDWARD J. RIVERA Date | }

Assistant United States Attorney

ROGER TORDAW/ JR. Date i
Attorney for Defendant
“STACY V. SANTEMORE, SR. Date

Defendant


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