Statement of Facts — U.S. v. Campbell Sales Group (E.D.N.C.)
Summary
Attachment B, the Statement of Facts incorporated into the Deferred Prosecution Agreement between the United States Attorney’s Office for the Eastern District of North Carolina and Campbell Sales Group, Inc., filed April 8, 2025 as Document 7 in Case 7:25-cr-00014-FL. The company admits that after receiving $257,700 in PPP loan proceeds on or about April 27, 2020, it added individuals who did not work for it to the payroll and inflated wages of actual employees to qualify for forgiveness. It states that the company submitted a forgiveness application to First Home Bank on or about October 30, 2020 and later sent a payroll spreadsheet listing the non-employees, and that the loan was forgiven in May 2021. It also states the company obtained a second PPP loan of $213,006 from First Community Bank using the same false 2020 wage information, forgiven in March 2022.
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“Statement of Facts — U.S. v. Campbell Sales Group (E.D.N.C.).”
Original at ecf.nced.uscourts.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/court-filing-usa-v-campbell-sales-group-dkt-7-e-d-n-c-68cc81d0a5/
, SHA-256 31ea368f8e61d6b8207bb606f329608ffe1b35ddc48ae9ce09f618eb4389f1e9.Full text
FILED IN OPEN COURT
/iI ~
ATTACHMENT B ON /I~ .-.-
Peter A. Moai9, J~.. {".:iare; •
US District Cou~ •:
~astom.Olitrtr:, ,,: ; ,-::
STATEMENT OF FACTS,
The following Statement of Facts is incorporated by reference as part of the
Deferred Prosecution Agreement (the "Agreement") between the United States
Attorney's Office for the Eastern District of North Carolina (the "United States")
and the deferidant, Campbell Sales Group, Inc. cl/b/a LeatheritaliaUSA ("Campbell
Sales"). Certain of the facts herein are based on information obtained by the United
States from third parties, through its investigation, and described to Campbell
Sales. Campbell Sales admits, accepts, and acknowledges that it is responsible for
the acts of its officers, directors, employees, and agents as _set forth below. Should
the United States pursue the prosecution that is deferred by this Agreement,
Campbell Sales agrees that it neither contest the admissibility of, nor contradict,
the facts in this Statement of Facts in any such proceeding. The followlhg facts took
place in or about and between April 2020 and March 2022, unless otherwise noted,
and establish beyond a reasonable doubt the charges set forth in the Criminal
Information attached to the Agreement.
Entities
1. Campbell Sales, doing business as "LeatherltaliaUSA," was a leather
furniture supplier headquartered in Leland, North Carolina, within the Eastern
District of North Carolina. 1
As applicable, references to Campbell Sales herein includes, and is intended
to include, one or more employees and/or representatives acting within the scope of
their agency for the benefit of Campbell Sales.
Case 7:25-cr-00014-FL Document 7 Filed 04/08/25 Page 1 of 8
2. The Small Business Administration ("SBA'') was an executive branch
agency of the United States government that provided support to small businesses
. and entrepreneurs, including loans through banks, credit unions, and other lenders.
Paycheck Protect_ion Program
3. The Coronavirus Aid, Relief, and Eco_no~ic Security Act ecARES Act")
was a foderal law enacted on: March 27, 2020, designed to .p~ovide emergeri.cy,
financial assistance to the millions. of Americans who 'Yere suffering the economic
effects caused by the COVID-19 pandemic, which was declared a nationwide
disaster by the President on March -13,- 2020. One source of relief provided by the
. CARES Act was the authorization of forgivable loans to smaU businesses for job
retention and certain other expenses through· a new SBA program referred to as the
Paycheck Protection Program ("PPP").
16:. In order to obtain a PPP loan, a qualifyinK busiries·s: was required to
:submit a PPP application. The PPP application required the b~siness (through
its authorized representative) to acknowledge the progr_am rules and make
certain affirmative certifications in order to pe .eligible to obtain the PPP. In the
PPP application, the applicant (through its authorized representative) was
required to state, among other things: (a) its average monthly payroll expenses; •
and (b) its riumber of employees. These figures were used to calculate the
amount of money the small_ business: was eligible to receive under the PPP
progr~m.
2
Case 7:25-cr-00014-FL Document 7 Filed 04/08/25 Page 2 of 8
i.
, , : cif,February 15, 2020. The·app~ica:rit:was
- - . ..
also requ{re·c;I.·
..-. 'to. certify
. .th~t
. "[c]ur;erit
~ . .
• ~
economic uncertainty m,akes; th~s lqan request n:~c~~:s~ry: tci suppo;t the ongoing
operations of the Applicant," and't_hat "[t]he funds wili be used to ~etain. workers- ·.
and·maintain: payroll or make' mortgage interest f?ayment, )ease payments, and
utility payments; I. understand, that· if the funds are used for unauthorized
purposes,: the· federal governmenf ·rilay purs'ue ·criminal fraud_ charges_.,i '. :The=
applicant was also requir.ed:to certify that the inf~rinat:ioh in the· applicatipn was'.
true and correct.
18.: A:bustne,ss's .PPP-application was rec~i'ved 'and process.ed, 'iii Uie,fust'. =, ·:
instance,
: -
by .a paiticipatirig.
.. . . : leride'r.'
. . ·.::. If a. PPP application·: ~as: approv'ed;.
' . : : . .
~he. .
participating lender funded the loar;r us1ng its own monies, which was guaranteed,
by the, -SBA. '. 'Data from. ·the, application, including inf9rma(icirt about :~he .
borrower, the total amount of the loan, the listed number of empioyees, and: :the
gr'oss i~come ~mount, was tran~mitted by the )ender to tlie SBA ir:i the cour,se of :
processing the loan .•
• 19 .• ''. A PPP borrower: GOuJd:repay
...
' .the l,;mn or choose.
. :
to seek'
• . forgiveness
- .of. - . .
. the loan from the SBA by ·making· certain _representatio~s and certi:nc:;ttions/ In<· .
. orde~· to obtain forgiveness of a' PPP lo~n, the. borr~wet was 'requ'.ire'd to: ~u;bmit 'a : '..
PPP· Loan'· Forgiven~ss_ Appli~~ticm . (S~A- ·Form'. 3508). In the fi;rrgiverie:ss •.
application, the borrower was .required
: ~ - . . . to certify- 'the amount of the PP]? ;1b°a~ : =.'.' _
. ;
proceeds that the borrower, used for payroll ,and: ,other author1zed business'
Case 7:25-cr-00014-FL Document 7 Filed 04/08/25 Page 3 of 8
expenses during the covered period aft~r the loan was.made. _In·_order to obtain··
forgi~eri~ss of £he entire PPP loan, the borrower' wa~ req1tired to sp~1:1,d, and
. attest to spending, at least 60 pe~cent of the loan
.
p~oceeds on eligible. paymll
. : .
costs during the covered period.. -• The forgiveness application required. th.e •'•:
borrower -to certify, a~ong· other th_ings, that all information provided in- the
applicatipn and supporting documents. a11-d forms was· true and correct. 'I_'he- . •
•· borrower was also required tb .confirm .that they u:ricierst~od
. .. - .
that provid1:ng.
.
a fals~
. : : . - ..
statement
.
to obtain forgiveness of an SBA-guaranteed' loan was
: . . . . ~- federal _crime,'.
punishable by fine, i~prisonment, or both.
Scheme to Defraud in Connection with First PPP L~an Applicatichi:::
•20. ·• a
On or about April 3, 202:0, Campbell Sal~s: • subiriitt~d- • PPP: foa:n. .·•
application· to First Home Bank, an,
-
SBA-approved
. -
1¢rid~f
.
·, •~ep~e~~i:itafrves
. :·: . .
from ·
• . .
Campbell Sales sign~d the application and, in so doing, certifie'.d ai~d •acknowledge~
the following, among other things:
• "The [PPP] funds will be used to retain workers and maintain payroll.
or make mortgage payments, lease payments, and utility payments; I
•. understand that if the funds are used for unauthorized purposes, the
federal government may·pursue criminal fr:aud charges."·
• . "Documentation verifying the number of full-time emp:l~yees bn payroll •
• ak well as dollar amounts of payroll costs,: covered mortgage interest •
payments, covered rent payments,• and: covered utilities for the eight-
week period foilowirig' th~~ loan will be provided t~ the lender." •
• "Loan forgiveness wilibe •provided for the, s1:1~ of documented payroll'.:··
. costs, covered mcirtgage interest payments, -~overed rent payments, • •
and covered utilities ... _"
4
Case 7:25-cr-00014-FL Document 7 Filed 04/08/25 Page 4 of 8
21. On or about April 27, 2020, PPP loan proceeds totaling $257,700 were
disbursed and deposited into Campbell Sales's operating account. . Immediately
thereafter, Campbell Sales tocik steps to fraudulently increase 1ts payroll • in
anticipation of attempting to meet the SBA's eligibility requirements to qualify for
PPP loan forgiveness. Specifically, beginning with the May 8, 2020 pay period,· a:nd .
continuing through the June 19, 2020 pay period, Campbell Sales added multiple
individuals to the payroll and made purported wage payments to them. None of
these individuals worked for Ca~pbell Sales during this time period, however, and
the individuals did not retain the "ghost wages" paid to them.
wef i iwtilin@d CcF Campl5eH gales. The "ghost wages" represented a significant ••
portion of the company's net payroll for the pay periods at issue.
22. In addition to . the payment of "ghost wages," Campbell Sales
artificially inflated its payroll during the covered period by increasing the biweekly
wages of multiple actual employees. For example, one employee's biweekly wages
were increased by $1,600. To offset the additional wages for this employee,
Campbell Sales incorporated a bogus deduction, characterized as a loan repayment,
into the employee's wage computation. Another employee's biweekly wages were
increased by $1,730. After the wages were paid to the employee, the additional
wage amounts were returned to Campbell Sales.
23. On or about, October 30, 2020, Campbell Sales submitted a PPP Loan
Forgiveness Application (SBA ·Form 3508) to First Home Bank. To support its
request for complete forgiveness of the PPP loan, Camp bell Sales provided a total
5
Case 7:25-cr-00014-FL Document 7 Filed 04/08/25 Page 5 of 8
payroll cost figure that included the false "ghost wages" paid to non-employees
and the fraudulently inflated wages paid to employees, as described above. As
part of the application, Campbell Sales certified, among other things, that the
information in the application and all supporting documents: ~~s true and ~or:re~t
in all material respects, Campbell Sales also certified its understanding: that
"making a false stat~ment to obtain forgiv~ness of an SBA-guaranteed loan" is
. .
punish_able under fe:d.eral law by impriso~mep.t, fines, or
both.
•z4: On or about December 29, 2020, a First Home Bank representative
emailed. Campbell Sales with a request for· additional records and information
related to - the . company's forgiven.es&· application, including . payroll
documentation. • On or about January 5, · _2021,. Campbell Sales emailed its
response to F1rst Hoine Bank. Among other, things, .Campbell Sales st:;tte.d, that.
'-'the covered period for the PPP loa~ w~~'May 3, 2020 to June 27, 2020" and, in
:.turn, recited the· saine false and fraudulent, payroll total that appeared in the
forgiveness application. C~mpbell Sales. ~.lso attached an' Excel' spr_eadsheet •
titled "PPP Payroll Analysis". The ana:lysis;included a list of Campbell Sales's
. .
purported employees during the covered period, which included individuals who
did not, in fact, work for the company. The analysis also reported the total wages
. .
allegedly paid to each listed person during the covered period, which included the
"ghost wagesll for the non-employees and the manipulated wage$ . for actual
employees, as described above.
6
Case 7:25-cr-00014-FL Document 7 Filed 04/08/25 Page 6 of 8
..
25. Ort or about April 26, 2021, a First· Hom~; ':s~nk: 'r~pr~s~~tati~e; •'. ' --=. •
', • emailed. Campbell Sales and asked for "clarification of. the # of employee~ ~t the •
time,of (he PPP application." Campbell Sales falsely ,replied that "during the.
PPP meas'4rement period of May 3, 2020 to 'June 27, 2020, .we had 15 employees.
•• The· ,Conipariy did -furlough some employ~es during the State mandated Covid,. •.
. -shutdown in MarchiApril 2020 but brought all but 2 back, and
.
the ·. i that
.-
did nof .
return' \Vere beca\ise the employee decided not to return, not the- C~riipany's
= '- - decision:". ·rn truth; according to the investigation; Campbell Sales had 11 actual
: ' 'employe~s during the covered (after excluding the non-employees paid "ghost -
wages"), and the company terminated eight employees in March/April 2020 and·
brought back only one.
26. The full balance of Campbell Sales's PPP loan was ultimately -
forgiven by the SBA in May 2021. •
Scheme to Defraud in Connection with Secorid PPP Loan Application -
27. On or 'about March 19; 2021; '.' Campbell Sales· applied to First
-Community Bank '.for: an:additional PPP lo~n,~n the amount of $213,006~ Campbell
Sales certified, among other things, :that th~ infor~a:tion =:11i the applicati~n and
• ,all supporting
. . - .
documents
• :
was tr~e
.
and
. cdrr~ct
:
in.- all material respects. Campbell
.
'. Sales
-.
alsocertified its ·tindersta~ding·th~i''mq.king
-
. . : . .
~ false
.
statem~nt to obtain '
•
. forgiveness . of an SBA-guaranteed loan" -i'~. punishable under federal law by
imprisonment, pnes? or both. On or abo1:1t •March 22, 2021, PPP loan proceeds
totalH1g $213,006 were disbursed to the company.·
Case 7:25-cr-00014-FL Document 7 Filed 04/08/25 Page 7 of 8
28, To· support the loan. amount requested in the second PPP application,;.: ', •• =, '.
Campbell Sales
. . -
.
repo~ted average
. . monthly payrol(for
.
the 2020: calendar. year.
. .: -
:
The. : , ·: •
payroll fig~re. provided to the lerider incorporated
. the ·same~' false.. -2020
. " •wage':
-
, '. :': : •: . :
. . . .
information that Campbell Sales used to obtain f9rgiveness of the first P]:>P. 103:n,: as
described above.
29. . On 01': '~bout March, 14,_ 2022, Campbell S~les. submitted a PPP '.Lo:an ·•
Forgi~eness.Application (SBA ·F~;in _3508) .. The full b·alan,ce of Campbell Sales's
secon·d: P:PP loan was. subseque'ntiy: forgiven by the. SBA in· March 202·2.
- : : .
8
Case 7:25-cr-00014-FL Document 7 Filed 04/08/25 Page 8 of 8
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