Indictment — United States v. Johnny Ho (E.D. Mich.)

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An Indictment in United States of America v. Johnny Ho, Case 2:22-cr-20021, in the U.S. District Court for the Eastern District of Michigan, Southern Division, filed January 12, 2022 as ECF No. 1 and assigned to Judge Gershwin A. Drain. Count 1 charges conspiracy to commit wire fraud under 18 U.S.C. § 1349, Counts 2-3 wire fraud under 18 U.S.C. § 1343, and Counts 4-5 money laundering under 18 U.S.C. § 1957. The grand jury alleges that Ho and others submitted at least 15 false PPP loan applications worth a total of $2,420,542 and at least 14 false EIDL loan applications worth a total of $1,734,300 for entities including DXX Enterprises, LLC and The Tax Wolf, LLC. It alleges false payroll, employee and revenue figures and transactions to conceal the loan proceeds, and includes forfeiture allegations.

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Case 2:22-cr-20021-GAD-EAS ECF No.1, PagelD.1 Filed 01/12/22 Page1of15

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION
UNITED STATES OF AMERICA CASE NO.
v. VIOLATION: 18 U.S.C. § 1349
18 U.S.C. § 1343
D-1 JOHNNY HO 18 U.S.C. §2
18 U.S.C. § 1957
Defendant. 18 U.S.C. § 982

Case: 2:22-cr-20021

Judge: Drain, Gershwin A.

MJ: Stafford, Elizabeth A.
Filed: 01-12-2022 At 03:59 PM
INDI USA V JOHNNY HO (SS)

INDICTMENT

THE GRAND JURY CHARGES:

At all times relevant to this Indictment:

GENERAL ALLEGATIONS

Payroll Protection Program Loans

1. 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 the economic
effects caused by the COVID-19 pandemic. One source of relief provided by the
CARES Act was the authorization of up to $349 billion in forgivable loans to small

businesses for job retention and certain other expenses, through a program referred
Case 2:22-cr-20021-GAD-EAS ECF No.1, PagelD.2 Filed 01/12/22 Page 2 of15

to as the Paycheck Protection Program (“PPP”). In or around Apmil 2020, Congress
authorized over $300 billion in additional PPP funding.

2. In order to obtain a PPP loan, a qualifying business was required to submit
a PPP loan application, which is signed by an authorized representative of the
business. The PPP loan application requires the business (through its authorized
representative) to acknowledge the program rules and make certain affirmative
certifications in order to be cligible to obtain the PPP loan. In the PPP loan
application, the small business (through its authorized representative) must state,
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 provide documentation showing their payroll expenses.

3. A PPP loan application had to be processed by a participating lender. Ifa
PPP loan application is approved, the participating lender funds the PPP loan using
its own monies, which are 100% guaranteed by Small Business Administration
(“SBA”). Data from the application, including information about the borrower, the
total amount of the loan, and the listed number of employees, 1s transmitted by the
lender to the SBA in the course of processing the loan.

4, PPP loan proceeds had 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
2
Case 2:22-cr-20021-GAD-EAS ECF No. 1, PagelD.3 Filed 01/12/22 Page 3of15

the loan proceeds on these expense items within a designated period of time after
receiving the proceeds and used a certain amount of the PPP loan proceeds on payroll
expenses.

Economic Injury Disaster Loans

5. The Economic Injury Disaster Loan (“EIDL”) program was an SBA
program that provided low-interest fmancing 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 small businesses experiencing substantial financial disruption due to the
COVID-19 pandemic. In addition, the CARES Act authorized the SBA to tssue
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 employees the
applicant certifies having. The advances did not have to be repaid.

7. In order to obtain an EIDL and advance, a qualifying business was required
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. In
the case of EIDLs for COVID-19 relief, the 12-month period was that preceding
January 31, 2020. The applicant had to also certify that all of the information in the

application was true and correct to the best of the applicant’s knowledge.
Case 2:22-cr-20021-GAD-EAS ECF No.1, PagelD.4 Filed 01/12/22 Page 4 of 15

8. EIDL applications were submitted directly to the SBA and processed by
the agency with support from a government contractor, Rapid Finance. The amount
of the loan, if the application is approved, was determined based, in part, on the
information provided in the application about employment, revenue, and cost of
goods, as described above. Any funds issued under an EIDL or advance were issued
directly by the SBA. EIDL funds could be used for payroll expenses, sick leave,
production costs, and business obligations, such as debts, rent, and mortgage
payments. If the applicant also obtained a loan under the Paycheck Protection
Program, the EIDL funds could not be used for the same purpose as the Paycheck
Protection Program funds.

The Defendant and Related Entities

It is relevant to the Indictment that during the above-listed time period:

9. Defendant Johnny HO (“HO”) was a resident of Oakland County within
the Eastern District of Michigan.

10. HO, and others known and unknown to the Grand Jury, were owners,
registered agents, banking signatories, and/or otherwise affiliated with the following
entities: (1) DXX Enterprises, LLC; (2) The Kongo Enterprise; (3) SFX
Transportation, Inc.; (4) Seven Investment Group, LLC; (5) Cabrejas Renovations,
LLC; (6) The Tax Wolf, LLC; (7) Diva Nails & Spa III, LLC; (8) Orcas, Inc.;
(9) S&V Alliance, LLC; (10) Express Property Preservation, LLC; (11) Bless My

Grind, LLC; (12) Cercle Interieur, Inc.; (13) The Black Wolf, Inc.; (14) Defined
4
Case 2:22-cr-20021-GAD-EAS ECF No.1, PagelD.5 Filed 01/12/22 Page 5of15

Jewelry, Inc.; (15) AMG Solutions, LLC; and (16) Kwatili, LLC (collectively, the
“Defendant Entities”). Each of the Defendant Entities were registered in the State
of Michigan and located within the Eastern District of Michigan.

COUNT 1

Conspiracy to Commit Wire Fraud
(18 U.S.C. § 1349)

11. Paragraphs 1 through 10 of the General Allegations section of this
Indictment are re-alleged and incorporated by reference as though fully set forth
herein.

12. Between approximately March 30, 2020 through August 27, 2020, in the
Eastern District of Michigan, and elsewhere, HO and others did knowingly combine,
conspire, confederate and agree, to commit certain offenses against the United
States, that is to violate Title 18, United States Code, section 1343, to knowingly and
with the intent to defraud devise and intend to devise a scheme and artifice to defraud
and for obtaining 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 knowingly transmit and
cause to be transmitted, by means of wire communication in interstate commerce,
writings, signs, signals, pictures, and sounds for the purpose of executing such

scheme and artifice.
Case 2:22-cr-20021-GAD-EAS ECF No. 1, PagelD.6 Filed 01/12/22 Page 6 of 15

Purpose of the Conspiracy

13. It was a purpose of the conspiracy for HO and others to unlawfully enrich
themselves by, among other things; (a) submitting, and causing the submission of
false and fraudulent PPP and EIDL loan applications; (b) concealing and causing the
concealment of the false and fraudulent PPP and EIDL loan applications and the
receipt and transfer of proceeds of the fraud; and (c) diverting fraud proceeds for the

personal use and benefit of HO and others.

Manner and Means of the Conspiracy

14, Between approximately April 19, 2020, through July 25, 2020, HO and
others submitted, and caused the submission of, at least 15 false and fraudulent PPP
loan applications worth a total of $2,420,542 on behalf of the of the Defendant
Entities (collectively, the “PPP Loans”). The PPP Loans are listed in the following

table by loan date and loan amount:

INo.| Approximate Defendant Entity Approximate
Loan Date Loan Amount
1 | April 19, 2020 | DXX Enterprise, Inc. $217,983.00
April 29, 2020 ; SFX Transportation, $206,100.00
Inc.
3 | April 29, 2020 Seven Investment $192,140.00
Group LLC
4; May2, 2020 | The Kongo Enterprise $198,100.00
5 | May 2, 2020 | Cabrejas Renovations $69,800.00
LLC

6
Case 2:22-cr-20021-GAD-EAS

ECF No. 1, PagelD.7 Filed 01/12/22 Page 7 of 15

6 | May 7, 2020 The Tax Wolf LLC $69,300.00
7 | May 15, 2020 | Diva Nails & Spa III $193,700.00
LLC
8 | May 15,2020 | Orcas, Inc. $111,100.00
9 | May 16, 2020 | S&V Alliance LLC $72,100.00
10} May 20, 2020 | Express Property $217,600.00
Preservation LLC
11] June 1, 2020 Bless My Grind LLC $195,383.00
12| June 3, 2020 Cercle Interieur, Inc. $195,383.00
13 | June 3, 2020 The Black Wolf, Inc. $195,383.00
14] June 8, 2020 Defined Jewelry, Inc. _ | $197,000.00
15| July 25,2020 | AMG Solutions, Inc. $89,470.00

15. Additionally, between approximately March 30, 2020, through August 27,
2020, HO and others submitted, and caused the submission of, at least 14 false and
fraudulent EIDL loan applications worth a total of $1,734,300 on behalf of the
Defendant Entities (collectively, the “EIDL Loans”). The EIDL Loans are listed in

the following table by loan date, the Defendant Entity for which the loan application

was submitted, and loan amount.:

o.| Approximate | Defendant Entity Approximate
Loan Date Loan Amount

1 | March 30, The Kongo Enterprise | $10,000.00
2020

2 | June 23,2020 | Seven Investment $10,000.00

Group LLC

3 | June 25,2020 | DXX Enterprise, Inc. $160,000.00

4 | June 25, 2020 | AMG Solutions LLC $160,000.00

5 | June 26, 2020 | Kwatili LLC $160,000.00

6 | June 26,2020 |S&V Alliance LLC $160,000.00

7 | June 30, 2020 —‘[ Cercle Interieur, Inc. $10,000.00

8 | June 30,2020 | Defined Jewelry, Inc. $114,300.00

7
Case 2:22-cr-20021-GAD-EAS ECF No. 1, PagelD.8 Filed 01/12/22 Page 8 of 15

9 | July 9, 2020 Orcas, Inc. $160,000.00
10] July 11, 2020 _| Bless My Grind LLC __ | $160,000.00
11} July 15, 2020 The Tax Wolf LLC $160,000.00
12| July 31,2020 | The Black Wolf, Inc. $160,000.00

13| August 14, SFX Transportation, $150,000.00
2020 Inc.

14] August 27, Cabrejas Renovations | $160,000.00
2020 LLC

16. The funds for the PPP and EIDL loans were disbursed to HO and others.
The funds were sent via ACH wire transfer to bank accounts that HO and/or his co-
conspirators controlled.

17. In each of the applications for the PPP loans, HO and others falsely
represented the amount of payroll and the number of employees working for the
Defendant Entities, and the gross revenue for the Defendant Entities. Similarly, for
each of the applications for the EIDL loans, HO and others falsely represented the
number of employees working for the Defendant Entities and the gross revenue and
cost of goods sold for the Defendant Entities.

18. Specifically, HO and his co-conspirators obtained payroll information
pertaining unrelated entities and then used the unrelated entities’ payroll information
to support applications he submitted, or caused to be submitted, on behalf of the
Defendant Entities

19. The false and fraudulent payroll information contained in the PPP loan

applications was material insofar as it was capable of inducing financial institutions
Case 2:22-cr-20021-GAD-EAS ECF No. 1, PagelD.9 Filed 01/12/22 Page 9of15

to disburse funds to the Defendant and his co-conspirators that they were not eligible
to receive.

20. The false and fraudulent gross revenue, cost of goods sold, and employee
information in the EIDL applications was material insofar as it was capable of
inducing the SBA to disburse funds to the Defendant and his co-conspirators that
they were not eligible to receive.

21. Each of the false and PPP and EIDL loan applications set forth herein were
submitted through wire communications used in interstate commerce.

22. Upon receipt of the fraudulently obtained loan funds, the Defendants and
others undertook to conceal the nature and source of the funds by, among other
things, fraudulently establishing accounts with payroll processing companies and
engaging in financial transactions designed to conceal that the loan proceeds were
fraudulently obtained.

All in violation of Title 18, United States Code, Section 1343.

COUNTS 2-3

(Wire Fraud)
(18 U.S.C. 8 1343)

23. Paragraphs 1 through 10 of the General Allegations section of this
Indictment are reallaged and incorporated by reference as though fully set forth

herein.
Case 2:22-cr-20021-GAD-EAS ECF No.1, PagelD.10 Filed 01/12/22 Page 10 of 15

The Scheme to Defraud

24. The scheme and artifice to defraud set forth in Paragraph 12 of this
Indictment is reallaged and incorporated by reference as though fully set forth
herein.

25. On or about each of the dates set forth below, in the Eastern District of
Michigan, and elsewhere, JOHNNY HO, for the purposes of executing and
attempting to execute the scheme to defraud as described above, knowing caused to
be transmitted by means of wire communications in interstate commerce, writings,
signs, signals, and sounds, in violation of Title 18, United States Code, Section 1343,

the following transmissions:

Count Defendant Approximate Date Transmission

Application for

PPP loan in the

2 JOHNNY HO May 15, 2020 amount of

$193,700 submitted
to Citizens Bank.

Application for
EIDL loan in the
amount of
3 JOHNNY HO August 14, 2020 $150,000 submitted
to the Small
Business
Administration.

All in violation of Title 18, United States Code, Sections 1343 and 2.

10
Case 2:22-cr-20021-GAD-EAS ECF No.1, PagelD.11 Filed 01/12/22 Page 11 of 15

COUNTS 4-5
(Money Laundering)
(18 U.S.C. § 1957)

26. Paragraphs 1 through 10 and 13 through 22 of this Indictment are
| reallaged and incorporated by reference as though fully set forth herein.
27. On or about the dates set forth below, in the Eastern District of Michigan
and elsewhere, HO, and others acting at his direction, did knowingly engage and
attempt to engage in the following monetary transactions by, through, or to a
financial institution, affecting interstate or foreign commerce, in criminally derived
property of a value greater than $10,000, that is, the payment of funds, such property

having been derived from a specified unlawful activity, that is, wire fraud:

Count Defendant Approximate Date Transaction
Transfer of $16,500
4 JOHNNY HO June 8, 2020 from Citizens Bank

account x5489 to
Paychex, Inc.

Cashier’s check
from Chase Bank
5 JOHNNY HO August 4, 2020 account x9151

made payable to
“AMG Solutions.”

All in violation of Title 18, United States Code, Sections 1957 and 2.

11
Case 2:22-cr-20021-GAD-EAS ECF No.1, PagelD.12 Filed 01/12/22 Page 12 of 15

FORFEITURE ALLEGATIONS

18 U.S.C. § 982(a)(2)(a) and 18 U.S.C. § 981(a)(1)(c) with 28 U.S.C. § 2461

28. The above allegations contained in this Indictment are incorporated by
reference as if set forth fully herein for the purpose of alleging forfeiture pursuant to
the provisions of 18 U.S.C. § 982(a)(2)(a) and 18 U.S.C. § 981(a)(1)(c) with 28
U.S.C. § 2461.

29. As a result of violating 18 U.S.C. §§ 1343 and 1349, as set forth in this
Indictment, the Defendant shail forfeit to the United States any property, real or
personal, which represents or is traceable to the gross proceeds obtained, directly or
indirectly, as the result of his violations of 18 U.S.C. §§ 1343 and 1349.

30. Substitute Assets: If all or any of the forfeited sums:

a. cannot be located upon the exercise of due diligence;

b. has been transferred or sold to, or deposited with, a third

party;
c. has been placed beyond the jurisdiction of the Court;

d. has been substantially diminished in value; or

e. has been commingled with other property that cannot be
subdivided without difficulty;

it is the intent of the United States, pursuant to 21 U.S.C. § 853(p), as incorporated
by 18 U.S.C. § 982(b), to seek forfeiture of any other property of HO up to the value

of the forfeitable property described above.

12
Case 2:22-cr-20021-GAD-EAS ECF No.1, PagelD.13 Filed 01/12/22 Page 13 of 15

31. Money Judgment. A sum of money equal to an amount as is proved at

trial in this matter, representing the total amount of gross proceeds obtained as a

result defendant’s violations, as alleged in this Indictment.

THIS IS A TRUE BILL. s/Grand Jury Foreperson
Grand Jury Foreperson

13
Case 2:22-cr-20021-GAD-EAS ECF No.1, PagelD.14 Filed 01/12/22 Page 14 of 15

DAWN ISON JOSEPH S. BEEMSTERBOER
United States Attorney Acting Chief
Eastern District of Michigan Fraud Section, Criminal Division

United States Department of Justice

/s/John K. Neal /s/ Patrick J. Suter
JOHN K. NEAL PATRICK J. SUTER
Assistant United States Attorney Trial Attorney

Chief, White Collar Crime Unit
Eastern District of Michigan

14
Case 2:22-cr-20021-GAD-EAS ECF No.1, PagelD.15 Filed 01/12/22 Page 15 of 15.

ORIGINAL,

United States District Court Criminal Case Co' a.
Eastern District of Michigan Case: Fe een A
udge: Drain,

MJ: Stafford, Elizabeth A.
NOTE: It Is the responsibility of the Assistant U.S. Attomey signing this form to com Filed: 01-12-2022 At 03:59 PM

INDI USA V JOHNNY HO (SS)

:| Companion Case Number: 2-24-cr-20613

Judge Assigned: Nancy G. Edmunds
Yes LI No AUSA’s Initials: (“3

Case Title: USA v. Johnny Ho

County where offense occurred : Oakland County

“ Indictment/ Information — no prior compiaint.
Indictment/ Information -— based upon prior complaint [Case number: ]
Indictment/ Information -— based upon LCrR 57.10 (d) [Complete Superseding section below].

Superseding Case Information

Superseding to Case No: Judge:

L_]Corrects errors; no additional charges or defendants.
[_]Involves, for plea purposes, different charges or adds counts.
[_]Embraces same subject matter but adds the additional defendants or charges below:

Defendant name Charges Prior Complaint {if applicable)

Please take notice that the below listed Assistant United States Attorney is t

the above captioned case.
January 12, 2022 s/Patrick J. sue LO

Date

Patrick J. suteCrrial Attorney

211 West Fort Street, Detroit, Ml 48226
Phone: (202) 679-1430

| Fax: (313) 226 - 0816

E-Mail address: Patrick.Suter2@usdoj.gov

Attorney Bar #: CA 242494

1 Companion cases are matters in which it appears that (1) substantially similar evidence will be offered at trial, or (2) the same
or related parties are present, and the cases arise out of the same transaction or occurrence. Cases may be companion cases
2ven though one of them may have already been terminated.


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