Criminal Complaint — United States v. Lloyd (D. Or., Document 1)

Summary

A criminal complaint with supporting affidavit against Andrew Aaron Lloyd and Russell A. Schort in the U.S. District Court for the District of Oregon, filed 01/05/21 as Document 1 in Case 6:21-cr-00198-MC, citing 18 U.S.C. § 1343 (Wire Fraud), 18 U.S.C. § 1344 (Bank Fraud) and 18 U.S.C. § 1957 (Money Laundering). In the affidavit, FBI Special Agent Timothy W. Suttles states that the defendants obtained EIDL and/or PPP loans using false payroll information, and that proceeds had bought securities worth more than $11 million as of January 4, 2021. It describes a $979,100 PPP loan to Keystone Pacific Management, Inc., and a $610,552 PPP loan to Schort Lee Construction listing the same employees as an Albany Home Care Services application. The complaint was sworn by telephone before Mustafa T. Kasubhai, U.S. Magistrate Judge, on January 5, 2021.

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Case 6:21-cr-00198-MC Document1 Filed 01/05/21 Page 1of12

AO 91 (Rev. 11/11) Criminal Complaint

UNITED STATES DISTRICT COURT

for the
District of Oregon
United States of America )
:21-mj- 1
ANDREW AARON LLOYD and ) Case No. 6:21-mj-0000
RUSSELL A. SCHORT,
)
)

Defendant(s)
CRIMINAL COMPLAINT
BY TELEPHONE OR OTHER RELIABLE ELECTRONIC 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 April 2020 in the county of Linn in the
District of Oregon , the defendant(s) violated:
Code Section Offense Description
18 U.S.C. § 1343 Wire Fraud
18 U.S.C. § 1344 Bank Fraud
18 U.S.C. § 1957 Money Laundering

This criminal complaint is based on these facts:

The attached affidavit of Timothy W. Suttles, which is incoporated herein

C Continued on the attached sheet.

/s/ Timothy W. Suttles, Per Rule 4.1

Complainant’s signature

Timothy W. Suttles, Special Agent FBI

Printed name and title

Attested to by the applicant in accordance with the requirements of Fed. R. Crim. P. 4.1 by

telephone at _12:14pma.m./p.m.
Pog
Date: January 5, 2021 a

Drudge’ S signature

City and state: Eugene, Oregon Mustafa T. Kasubhai, U.S. Magistrate Judge

Printed name and title
Case 6:21-cr-00198-MC Document1 Filed 01/05/21 Page 2 of 12

DISTRICT OF OREGON, ss: AFFIDAVIT OF TIMOTHY W. SUTTLES
Affidavit in Support of a Criminal Complaint, Arrest Warrant, and Seizure Warrant
I, Timothy W. Suttles, being duly sworn, do hereby depose and state as follows:
INTRODUCTION AND AGENT BACKGROUND

1. I am a Special Agent with the Federal Bureau of Investigation (FBI), and have
been since January 2001. I am assigned to the Eugene, Oregon Resident Agency of the FBI.
My responsibilities include the investigation of federal criminal offenses, to include 18 U.S.C. §
1343, Wire Fraud, 18 U.S.C. § 1344, Bank Fraud, and 18 U.S.C. § 1957, Money Laundering.

2. I submit this affidavit in support of a criminal complaint and arrest warrant for
ANDREW AARON LLOYD (LLOYD) and RUSSELL A. SCHORT (SCHORT) for a violation
of 18 U.S.C. § 1343, Wire Fraud, 18 U.S.C. § 1344, Bank Fraud, and 18 U.S.C. § 1957, Money
Laundering.

3. As set forth below, there is probable cause to believe, and I do believe, that
LLOYD and SCHORT committed the above-described offenses.

4. This affidavit is also being submitted in support of an Application for a Seizure
Warrant for the following assets controlled by LLOYD:

a. All funds and securities contained in Charles Schwab account number ending in
4724 in the name of ANDREW LLOYD and NANCY ELLEN LLOYD.

5. Based on information contained in this affidavit, there is probable cause to
believe, and I do believe, the above assets are property constituting or derived from proceeds
obtained directly or indirectly as a result of violations of 18 U.S.C. § 1343, Wire Fraud, and 18

U.S.C. § 1344, Bank Fraud, and is property involved in a violation of 18 U.S.C. § 1957 or

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traceable to such property. Furthermore, there is probable cause that the property is subject to
seizure pursuant to 18 U.S.C. § 981(b) and 21 U.S.C. § 853(f) and subject to forfeiture pursuant
to 18 U.S.C. §§ 981(a)(1)(A) & (C), 982(a)(1), 984, and 28 U.S.C. § 2461(c).

6. This affidavit is intended to show only that there is sufficient probable cause for
the requested warrants and does not set forth all of my knowledge about this matter. The facts
set forth in this affidavit are based on my own personal knowledge, knowledge obtained from
other individuals during my participation in this investigation, including other law enforcement
officers, interviews of witnesses, a review of records related to this investigation,
communications with others who have knowledge of the events and circumstances described
herein, and information gained through my training and experience.

APPLICABLE LAW

7. 18 U.S.C. § 1343, Wire Fraud, provides, in part: Whoever, having devised or
intending to devise any scheme or artifice to defraud, or for obtaining money or property by
means of false or fraudulent pretenses, representations, or promises, transmits or causes to be
transmitted by means of wire, radio, or television communication in interstate or foreign
commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such
scheme or artifice, shall be fined under this title or imprisoned not more than 20 years, or both.

8. 18 U.S.C. § 1344, Bank Fraud, provides, in part, that whoever knowingly
executes, or attempts to execute, a scheme or artifice (1) to defraud a financial institution; or (2)
to obtain any of the moneys, funds, credits, assets, securities, or other property owned by, or

under the custody or control of, a financial institution, by means of false or fraudulent pretenses,

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representations, or promises; shall be fined not more than $1,000,000 or imprisoned not more
than 30 years, or both.

9. 18 U.S.C. § 1957, Money Laundering, provides that whoever knowingly engages
or attempts to engage in a monetary transaction in criminally derived property of a value greater
than $10,000 derived from specific unlawful activity shall be punished with a fine,
imprisonment, or both.

STATEMENT OF PROBABLE CAUSE
Summary of the Investigation

10. ‘As set forth below, I have probable cause to believe that ANDREW AARON
LLOYD and RUSSELL A. SCHORT committed wire fraud, bank fraud, and money laundering.
LLOYD and SCHORT applied for and obtained Economic Injury Disaster Loans (EIDLs) and/or
Paycheck Protection Program (PPP) Loans from the U.S. Government using false payroll
information and by providing materially false information on their loan applications. LLOYD
and SCHORT then caused the proceeds of these loans to be transmitted by interstate wires, in
part to fund LLOYD’S personal online securities trading. Proceeds of the fraud, as of January 4,
2021, have been used to purchase securities worth more than $11 million.

Background of Economic Injury Disaster Loans and the Paycheck Protection Program

11. The Economic Injury Disaster Loan (“EIDL”) program is a Small Business
Administration (SBA) program that provides low-interest financing to small businesses, renters,
and homeowners affected by declared disasters.

12. On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and

Economic Security (CARES) Act into law. Pub. L. No. 116-136, 134 Stat. 281 (2020). That

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statute, along with the Coronavirus Preparedness and Response Supplemental Appropriations
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 issue advances of up to $10,000 to small businesses within
three days of applying for an EIDL. The amount of the advance is determined by the number of
employees the applicant certifies having. The advances do not have to be repaid.

13. In order to obtain an EIDL and advance, a qualifying business must 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 must also certify that all the
information in the application is true and correct to the best of the applicant’s knowledge.

14. The CARES Act also created the Paycheck Protection Program (PPP), which
authorized the SBA to guarantee loans of up to $10,000,000 to qualifying employers without
collateral or personal guarantees from the borrowers. The Act required lenders making loans
under the PPP to defer all repayment obligations for not less than six months on such loans and
required borrowers to certify, among other things, that the borrowed “funds [would] be used to
retain workers and maintain payroll or make mortgage payments, lease payments, and utility
payments.” CARES Act § 1102, 134 Stat. at 286-93.

15. Unlike PPP loan applications, which were submitted directly to participating
lenders, EIDL applications are submitted electronically to the SBA through servers in Colorado

and processed by the agency with support from a government contractor, Rapid Finance. The

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amount of an EIDL, if the application is approved, is 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 are issued directly by the SBA.
EIDL funds can be used for payroll expenses, sick leave, production costs, and business
obligations, such as debts, rent, and mortgage payments. If the applicant also obtains a loan
under the Paycheck Protection Program, the EIDL funds cannot be used for the same purpose as
the Paycheck Protection Program funds.

Investigation to Date

16. In October 2020, I initiated an investigation concerning LLOYD and SCHORT
based on a review of documents received from financial institutions that indicated that LLOYD
and SCHORT may have fraudulently obtained Paycheck Protection Program (PPP) loans from
JP Morgan Chase Bank, Umpqua Bank, and U.S. Bank, as well as Economic Injury Disaster
Loans (“EIDLs’’).

17. A review of JP Morgan Chase bank records revealed that on April 7, 2020,
LLOYD, doing business as Albany Home Care Services, 40394 Hilltop Drive, Lebanon, Oregon,
97355, received a PPP loan in the amount of $642,507. Proceeds from the loan were deposited
into a JP Morgan Chase checking account in the name of LLOYD DBA Albany Home Care
Services, account number ending in 0829. Included with the loan application package, which was
submitted electronically, was an IRS form 944 listing 2019 wages in the amount of $3,084,046.
Form 944 is the Employer’s Annual Federal Tax Return that lists the amount of wages paid and
taxes withheld from employee paychecks. The loan package also included the names of fifty-six

Albany Home Care Services employees and the amount paid to each employee.

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18. A review of Umpqua Bank records revealed that on April 14, 2020, Keystone
Pacific Management, Inc., 3714 Long Street, Sweet Home, Oregon 97386, received a PPP loan
in the amount of $979,100. Umpqua Bank operated as the lending institution, and proceeds from
the loan were disbursed to LLOYD’S USAA checking account ending in 9873. The President of
Keystone Pacific Management was listed as LLOYD, home address 40394 Hilltop Drive,
Lebanon, Oregon 97355. Included with the loan application package, which was submitted
electronically, was an IRS form 944 listing 2019 wages in the amount of $4,701,168. The loan
package included the names of sixty-four Keystone Pacific Management employees. The list
included the same fifty-six employees in the same order that were listed in the Albany Home
Care Services application plus eight additional names that were added at the bottom of the list.

19. A review of U.S. Bank records revealed that on May 8, 2020, SCHORT, DBA
Schort Lee Construction, 3714 Long Street, Sweet Home, Oregon 97386, received a PPP loan in
the amount of $610,552. Proceeds from the loan were disbursed to a U.S. Bank business
checking account ending in 0514 in the name of SCHORT, DBA Schort Lee Construction.
Included with the loan application package, which was submitted electronically, was an IRS
form 944 listing 2019 wages in the amount of $3,084,046, and a list of fifty-six employees and
the amount paid to each employee. The total amount of earnings, the employee names, and the
amount of earnings paid to each employee, was exactly the same as the list Albany Home Care
Services PPP Loan Application submitted to JP Morgan Chase Bank.

20. On May 11, 2020, three days after receiving the PPP loan proceeds, SCHORT
transferred via wire $307,000 from his U.S. Bank account referenced above to a Pentagon

Federal Credit Union account ending in 1890 in the name of Andrew LLOYD, 40394 Hilltop

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Drive, Lebanon, OR 87355. Pentagon Federal Credit Union uses data servers for processing
incoming wire transfers that are located in Ashburn, Virginia. After receiving the $307,000,
LLOYD transferred funds to an E*TRADE account in his name and purchased securities.

21. Based on the fact that SCHORT submitted the same list of employees as Albany
Home Care Services in order to qualify for the PPP loan, and that after receiving the loan he
transferred roughly half of the loan proceeds to LLOYD, it is suspected that LLOYD assisted
SCHORT in fraudulently obtaining the PPP loan in exchange for roughly half the proceeds.

22. Asearch of Oregon Secretary of State Corporate Records revealed that Albany
Home Care services was established in Oregon on April 21, 2016, by LLOYD. The business
activity was listed as “Assist individuals with daily needs at home.” On October 23, 2019, a
change in ownership form was filed naming Wendy Richardson as the Owner and the
withdrawing Owner was listed as LLOYD. Based on this information, LLOYD was not the
Owner of Albany Home Care Services at the time he applied for and received the PPP loan.

23. | Asearch of Oregon Secretary of State Corporate Records revealed that Keystone
Pacific Management, Inc., was incorporated in Oregon on June 26, 2018. The name of the
Registered Agent and Incorporator was LLOYD, address 40394 Hilltop Drive, Lebanon, Oregon
97355. On August 20, 2019, an Amended Annual Report was filed naming LLOYD as the
President and the corporate address listed as 3714 Long Street, Sweet Home OR 97386. The
business activity was listed as “Investing in and managing real estate and property.” On January
7, 2020, an Information Change form was filed listing Christopher Lloyd as the “new president.”
Based on this information, LLOYD was not the President of Keystone Pacific Management, Inc.,

at the time he submitted the loan application and listed himself as President and when he

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received the PPP loan proceeds.

24. — A-search of Oregon Secretary of State Corporate Records revealed that Schort Lee
Construction was established on January 22, 2020, by SCHORT, 835 Cook Street, Myrtle Creek,
Oregon 97457. Based on the date that the company was established, Schort Lee Construction
could not have paid $3,084,046 in wages in 2019 as represented in the loan application.

25. Asearch of databases containing information relating to property ownership,
utilities, and individual addresses reported to credit agencies revealed that only eleven of the
names listed as employees of Albany Home Care Services, Keystone Pacific Management, Inc.,
and Schort Lee Construction had someone with that same name in Oregon, and none resided in
Albany or Lebanon, Oregon. Based on the fact the exact same names were listed as employees of
all three companies, and database checks failed to identify a majority of the employees as
residing in Oregon, I believe that the names listed as employees in all three of the above
described PPP loan applications are fictitious.

26. | Both LLOYD and SCHORT applied for the above-referenced PPP loans
electronically, meaning they used a computer or otherwise internet connected device to transmit
their applications and supporting documentation. A review of the applications shows both
LLOYD and SCHORT electronically signed their applications.

27. The investigations also found that LLOYD applied for and obtained an EIDL loan
in the name of Albany Home Care Services for approximately $150,000, which was funded on
June 16, 2020.

28. Areview of E*TRADE Securities LLC records reveals that account number

ending in 1550 was opened by LLOYD, 40394 Hilltop Drive, Lebanon, Oregon 97355, on April

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9, 2018. In 2020, LLOYD transferred the majority of the above-described PPP loan funds from
his JP Morgan Chase and USAA Bank account to his E*TRADE Securities brokerage account
ending in 1550. LLOYD also transferred the $307,000 wired into his Pentagon Federal Credit
Union account to his E*TRADE account ending in 1550. The majority of the funds were used to
purchase securities totaling $1,800,568.64.

29. The securities LLOYD purchased substantially increased in value. In November
2020, LLOYD transferred the funds and securities in his E*TRADE account to a Charles
Schwab account ending in 2705 in the name of LLOYD. At the time of the transfer, the balance
in the E*TRADE brokerage account was over $5 million.

30. In November 2020, LLOYD transferred the funds and securities from Charles
Schwab account ending in 2705 into Charles Schwab account ending in 4724 in the name of
LLOYD and NANCY ELLEN LLOYD.

31. As of November 30, 2020, records indicate that LLOYD had purchased, with
proceeds of the fraud as well as a loan from Charles Schwab secured by equities purchased with
proceeds of the fraud, 15,740 shares of Tesla, Inc. As of January 4, 2021, those shares have a
value of $11,486,597.

32. Furthermore, I submit that an order under 21 U.S.C. § 853(e) may not be
sufficient to assure the availability of the property for forfeiture. The fraud proceeds have
already been transferred between numerous accounts. In my experience, these transfers can take
place even when an administrative hold is on the accounts. This can make it difficult to track and

ultimately leave the property unavailable for forfeiture.

///

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CONCLUSION

33. Based on the foregoing, I have probable cause to believe, and I do believe, that
ANDREW AARON LLOYD and RUSSELL A. SCHORT committed a violation of 18 U.S.C. §
1343, Wire Fraud, 18 U.S.C. § 1344, Bank Fraud, and 18 U.S.C. § 1957, Money Laundering. I
therefore request that the Court issue a criminal complaint and arrest warrant for ANDREW
AARON LLOYD and RUSSELL A. SCHORT.

34. Based on foregoing, I also have probable cause to believe, and I do believe, that
the Charles Schwab account ending in 4724 contains property constituting or derived from
proceeds obtained directly or indirectly as a result of violations of Title 18, U.S.C. §§ 1343, Wire
Fraud and Title 18, U.S.C. §§ 1344, Bank Fraud, and is property involved in a violation of 18
U.S.C. § 1957 or traceable to such property and as such are subject to seizure pursuant to 18
U.S.C. § 981(b) and 21 U.S.C. § 853(f) and subject to forfeiture pursuant to 18 U.S.C.

§§ 981(a)(1)(A) & (C), 982(a)(1), 984, and 28 U.S.C. § 2461(c).

35. Prior to being submitted to the Court, this affidavit, the accompanying
application, and the requested arrest and seizure warrants were reviewed by Assistant United
States Attorney (AUSA) Gavin Bruce, and AUSA Bruce advised me that in his opinion the
affidavit and application are legally and factually sufficient to establish probable cause to support
the issuance of the requested warrants.

Request for Sealing

36. It is respectfully requested that the Court issue an order sealing, until further order
of the Court, all papers submitted in support of the requested criminal complaint, arrest warrant,

and seizure warrant. I believe that sealing these documents is necessary because any disclosure

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of the information at this time may cause flight from prosecution, cause destruction of or
tampering with evidence, cause intimidation of potential witnesses, or otherwise seriously
jeopardize the ongoing investigation. Premature disclosure of the affidavit, the criminal
complaint, arrest warrant, and seizure warrant may adversely affect the integrity of the

investigation.

/s/ Timothy Suttles, Per Rule 4.1

Timothy W. Suttles
Special Agent, FBI

Sworn in accordance with the requirements of Fed. R. Crim. P. 4.1 by telephone at 12:14pm

a.m/p.m. on January 5, 2021 |

MUSTA#A T. KASUBHAI
United States Magistrate Judge

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