United States' Sentencing Memorandum — United States v. Rashid (N.D. Ga., Document 69)

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The United States' Sentencing Memorandum filed 11/25/22 as Document 69 in United States of America v. Aleem Rashid, Criminal Action No. 1:21-CR-259-1-JPB, in the U.S. District Court for the Northern District of Georgia, Atlanta Division, with sentencing set for December 1, 2022 at 1:30 p.m. The memorandum states that the defendant pleaded guilty to conspiracy to commit wire fraud under 18 U.S.C. § 1349 and that a Guidelines sentence of 24 months' imprisonment, at the low end of the range, is sufficient. It alleges a PPP loan for Dream Team Real Estate of $105,208, a second-draw application for $355,407 that was denied, and conduct from April 2020 to January 2021, and it responds to defense arguments on the loss table.

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   Case 1:21-cr-00259-JPB-CMS       Document 69    Filed 11/25/22   Page 1 of 14




                    IN THE UNITED STATES DISTRICT COURT
                   FOR THE NORTHERN DISTRICT OF GEORGIA
                             ATLANTA DIVISION


   U NITED S TATES OF A MERICA
                                                Criminal Action No.
           v.
                                                1:21-CR-259-1-JPB
   ALEEM RASHID


                      United States’ Sentencing Memorandum
      The United States of America, by Ryan K. Buchanan, United States Attorney,

and Tal C. Chaiken and Nathan P. Kitchens, Assistant United States Attorneys for

the Northern District of Georgia, respectfully files this Sentencing Memorandum

in advance of Defendant Aleem Rashid’s sentencing, which is set for December 1,
2022 at 1:30 p.m. Defendant pleaded guilty to conspiracy to commit wire fraud, in

violation of Title 18, United States Code, Section 1349. As set forth below, the

United States submits that a Guidelines sentence of 24 months’ imprisonment – at
the low end of the Guidelines range – is sufficient, but not greater than necessary,

to comply with the purposes set forth in Title 18, United States Code, Section

3553(a).

   A Guidelines Sentence is Appropriate Given the Section 3553(a) Factors.

      1.        The Nature and Circumstances of the Offense.

      Defendant’s offense was serious, motivated by personal greed during an
unprecedented global crisis. In early 2020, the COVID-19 pandemic sent stock

markets crashing and unemployment rates skyrocketing, while nationwide

lockdowns ground the economy to a halt. Many American businesses – and in

particular, small businesses – struggled to stay afloat as consumer demand
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plummeted, creating daunting uncertainty for the businesses, their employees,
and the families who rely on them. Against that backdrop, Congress passed the

Paycheck Protection Program (the “PPP”) as one of the mechanisms for providing

relief to small businesses and their employees. To obtain a loan, a business had to
certify that the loan would be used to pay for payroll, lease or mortgage interest,

or utilities, and the loan was forgivable if the business spent a certain percentage

of the loan on payroll costs.

      Because Congress’s intent was to “provide relief to America’s small

businesses    expeditiously,”   the     PPP     streamlined   the     Small   Business

Administration’s typical lending requirements.            Business Loan Program

Temporary Changes; Paycheck Protection Program, 85 Fed. Reg. 20811-01 (Apr.

15, 2020). For example, the PPP “allow[ed] lenders to rely on certifications of the

borrower in order to determine eligibility of the borrower and use of loan proceeds

and to rely on specified documents provided by the borrower to determine

qualifying loan amount and eligibility for loan forgiveness.” Id. These procedures

were designed to quickly get much-needed funds to small businesses so they could

keep their workers employed during an economic and public health crisis that

threatened the viability of many small businesses and their ability to keep their

employees on the payroll. Defendant, however, sought to take advantage of the

PPP’s streamlined procedures to line his own pockets.

      Several aspects of Defendant’s conduct underscore the seriousness of his

offense. First, Defendant’s fraud was not a one-time mistake. Defendant did not
just conspire with Darrell Thomas to obtain a fraudulent loan for Thomas’s

business, Bellator Phront Group, Inc. (“Bellator”). Rather, he also independently


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obtained a loan for his own business, Dream Team Real Estate (“Dream Team”),
for which he fabricated documents, made false statements, and received all of the

proceeds. (PSR, ¶¶ 39-41.) And he later submitted another fraudulent PPP loan

application for Dream Team, seeking even more money (though that loan was
denied). Defendant’s fraudulent conduct lasted at least nine months, from April

2020 to January 2021, and involved repeated, deliberate acts of fraud. (Id. ¶¶ 37-

41.)

       Second, Defendant knew from the outset the fraudulent nature of Thomas’s

scheme. For example, on March 30, 2020, Thomas sent Defendant a WhatsApp

message that said: “10k per body we need ss card or social, no cpn and copy of

drivers license. Send everything to Tardean83@gmail.com.” (Ex. 1 at 1.) Over the

next several days, Defendant and Thomas discussed the PPP program, with

Thomas telling Defendant, “I have 30 corps and doing all the financials for them

to be good, bring as many bodies as possible,” and Defendant eventually telling

Thomas that he collected 70 people to list as employees. (Ex. 1 at 1-41.) By way of

further example, on April 17, 2020, Defendant forwarded to Thomas an email from

Radius Bank informing Defendant that no funds were available to process his PPP

loan application.    (Ex. 2.)   Thomas then responded, “Yeah just make sure

everything is ready to go, the actual small businesses will get this round of money but

take the app to libertysbf.com they’re a direct lender and I have all the apps there.”

(Id. (emphasis added).)

       Third, Defendant’s fraudulent conduct was increasingly brazen. In January
2021, approximately eight months after he obtained a $105,208 fraudulent PPP

loan for Dream Team (and after Thomas had been indicted in connection with


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Bellator’s fraudulent PPP loan), Defendant submitted an application for a second-
draw PPP loan. (PSR, ¶¶ 41-42.) The second application reported that Dream

Team had 21 employees (compared to only 6 employees reported in April 2020)

and requested a loan amount of $355,407. (Id. ¶ 42.) Though that loan application
was denied, Defendant’s submission of it demonstrates a concerning pattern of

fraud, undeterred by the indictment of a co-conspirator.

      Finally, when the FBI interviewed Defendant by phone on March 8, 2021, he

lied to the agent repeatedly. 1     Specifically, Defendant denied having any

involvement with Thomas regarding PPP loans, denied sending Thomas

employee names, and denied having any interactions with Thomas other than in

the real estate context.

      While Defendant’s Sentencing Memorandum places much of the blame on

Thomas, Defendant is one of the few co-defendants who, because of his

relationship and direct communications with Thomas, was uniquely situated to

understand Thomas’s fraudulent scheme.           And Defendant’s filing of two

fraudulent loans on behalf of his own business without Thomas’s involvement –
which is undisputed in the PSR (PSR, ¶¶ 39, 42) – flatly refutes any suggestion that

Thomas persuaded him to commit fraud that he would not otherwise have

committed.
      Defendant also argues that the Court should depart or vary downward

because the loss table in Section 2B1.1 “is not based on empirical data.” (DE 67 at




   1 At the Court’s request, the United States can provide a copy of the audio-

recorded interview.

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2.) 2 To support his argument, Defendant relies extensively on an article from the

Ohio State Journal of Criminal Law. (DE 67 at 6-7.) But Defendant does not

identify any Circuit precedent (or any other case) adopting his argument. Indeed,

in a lengthy decision, the Seventh Circuit rejected a similar challenge that the loss
amounts “are inherently unreasonable” because they are not based on empirical

data. United States v. Moose, 893 F.3d 951, 957 (7th Cir. 2018). The Moose court

explained that “[e]ven if the [loss amount] enhancements may lack robust
empirical support related to deterrence, they have foundations in empirical data

and national experience related to the goals of fair sentencing and retribution.” Id.

at 957-58.
      More importantly, to the extent Defendant suggests that the loss amount

attributable to him overstates his culpability, he fails to recognize that his

Guidelines range already accounts for that. Specifically, Defendant contends that

“[t]he loss amount that Mr. Rashid is responsible for is largely driven by the almost

$800,000 loan which was obtained by Darrell Thomas, from which Mr. Rashid

benefitted marginally.” (DE 67 at 7.) That is true, and for that reason, the United

States agreed to recommend a two-level downward adjustment for Defendant’s

role in the offense. (PSR, ¶ 51.) That is, the United States took into the account

that Defendant’s loss amount included significant losses for which Defendant was


   2 While Defendant seeks a departure, he does not identify any provision of the

Sentencing Guidelines supporting such a departure. The only authorized basis for
a downward departure in the Sentencing Guidelines is where “the offense level
determined under [Section 2B1.1] substantially overstates the seriousness of the
offense.” U.S.S.G. § 2B1.1, cmt. (n.21(C)). Defendant’s loss amount does not
overstate the seriousness of the offense because it is based on the actual loan
proceeds that Defendant participated in obtaining.

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not fully responsible. Defendant’s request for a two-level downward departure
seeks a double benefit: he asks the Court to grant a two-level adjustment for the

same reason the United States already agreed to recommend a two-level

downward adjustment.
      Finally, Defendant incorrectly suggests that the Court has departed from the

advisory range on this basis for other defendants sentenced as part of Thomas’s

scheme. (DE 67 at 5.) While the Court has varied downward for some defendants

– including those defendants identified in footnote 8 of Defendant’s Memorandum

– it has not identified the loss table as a basis for any variance it has imposed. In

connection with Thomas’s scheme, the Court has calculated each Defendant’s

guidelines range based on the loss table set forth in Section 2B1.1. It should do the

same here.

      2.     Defendant’s History and Characteristics.

      The Circuit has cautioned that a defendant’s history and characteristics

“cannot be considered in isolation and without regard to the criminal conduct for

which the defendant has been convicted and the characteristics it reveals.”

Howard, 28 F.4th at 218–20 (reversing sentence of probation where the district court

considered the history and characteristics of the defendant as a “single-minded

focus to the detriment of all other factors”). Defendant’s remorse and acceptance

of responsibility likewise do not require a downward variance, as the Eleventh

Circuit has recognized genuine remorse and low likelihood of reoffending as

factors that “are usually present in most white-collar cases resulting in a guilty
plea.” United States v. Hayes, 762 F.3d 1300, 1308 (11th Cir. 2014). When considered

in conjunction with the other Section 3553(a) factors – in particular, the nature and


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circumstances of the offense and the need to provide just punishment and afford
adequate deterrence – Defendant’s history and characteristics do not support a

non-Guidelines sentence.

      Defendant seeks a downward departure on the basis that his criminal
history category – Category II – “substantially over-represents the seriousness of

his criminal history and the likelihood that he will commit other crimes.” (DE 67

at 8). While the Court has authority to depart, it should not. The fact that

Defendant has two prior convictions for the same offense reflects his prior

recidivism after criminal convictions and is an important indicator of the

likelihood that he will commit other crimes. Moreover, Defendant’s criminal

history category based on his prior convictions appropriately distinguishes him

from the co-defendants who have been before this Court with no prior convictions

and who are appropriately in Criminal History Category I.

      In addition, Defendant asks for a downward variance based on family

caretaking obligations in that he contends that his parents depend on his support

financially and emotionally.    (DE 67 at 11-12.)    While the United States is

sympathetic to Defendant’s family, the circumstances here do not warrant a

variance. While the Court has granted downward variances to two co-defendants

– Derek Parker and David Belgrave – in part based on family caretaking

obligations, those obligations were far more significant than those described here

and were shown to be essentially irreplaceable. In any event, the variances in

those other cases (which were also based on other factors) resulted in custodial
sentences of 18 months’ imprisonment (for Parker) and 9 months’ imprisonment

followed by 18 months’ of home confinement (for Belgrave).


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      Defendant has not submitted any evidence reflecting his caretaking
responsibilities for his parents, other than brief letters from his parents. However,

the record in this case undermines Defendant’s current claim. After he was

detained following his arrest, 3 Defendant filed a motion for reconsideration of his

bond. (See DE 18.) In that motion, Defendant stated that his parents moved to

Texas in late 2020 “and they are willing to stay in the Northern District of Georgia,

where they have many ties, if the Court would consider releasing Mr. Rashid to
reside with them.” (Id. at 2 n.1.) Defendant’s motion also identified many family

members in the Atlanta area. (Id. at 2.)

      Thus, according to Defendant, as recently as 16 months ago, Defendant’s
parents were living in another state, moved back to Atlanta only because of

Defendant’s indictment, and have many family members in the Atlanta area.

Defendant has made no showing that any care or assistance that he provides to his
parents is meaningfully different than the support that many defendants facing

sentencing by this Court provide to parents, children, and other family members.

      3.     The Need for Punishment and Adequate Deterrence.

      A sentence within the Guidelines range is necessary to afford adequate

deterrence and to reflect the seriousness of the offense, promote respect for the

law, and provide just punishment for the offense. 18 U.S.C. § 3553(a)(2).




   3 Contrary to Defendant’s assertion, he was not the only defendant detained

pretrial in connection with Thomas’s scheme. Charles Petty likewise was detained
pending trial and, unlike Defendant, was not later granted a bond. Petty received
a Guidelines sentence of 46 months’ imprisonment after spending more than six
months in pretrial detention before his sentencing hearing.

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      Defendant contends that his background and personal characteristics show
that he is not likely to reoffend. (DE 67 at 2.) But the facts of this case show that

specific deterrence is an important consideration for sentencing in this case.

Specifically, Defendant submitted a fraudulent PPP loan application for Dream
Team months after Thomas was indicted for various fraud and money laundering

offenses in connection with various PPP loans, including Bellator’s fraudulent PPP

loan, which Defendant conspired with Thomas to obtain. Thus, even after criminal

charges were brought against his co-conspirator, Defendant remained undeterred,

committing another criminal offense for personal gain.           And when he was

confronted by the FBI, he lied rather than coming clean. Defendant’s conduct

warrants a meaningful custodial sentence to afford specific deterrence.

      Moreover, the Eleventh Circuit has identified general deterrence as “an

important goal of sentencing in a white-collar crime prosecution.” United States v.

Kuhlman, 711 F.3d 1321, 1328 (11th Cir. 2013); see also Howard, 28 F.4th at 209

(“General deterrence is more apt, not less apt, in white collar crime cases.”); United

States v. Livesay, 587 F.3d 1274, 1279 (11th Cir. 2009) (“[T]he threat of spending time

on probation simply does not, and cannot, provide the same level of deterrence as

can the threat of incarceration in a federal penitentiary for a meaningful period of

time.”); United States v. McQueen, 727 F.3d 1144, 1158 (11th Cir. 2013) (recognizing

that general deterrence is one of the “‘key purposes of sentencing’”) (citation

omitted).

      A non-custodial (or a below-Guidelines) sentence would do little to
dissuade Defendant or others from committing a similar crime in the future. To

the contrary, it would encourage would-be white-collar offenders to view


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probation or a short prison sentence as part of the cost of doing business. Nor
would a lenient sentence reflect the seriousness of fraudulently obtaining for

personal gain funds intended for struggling small businesses and their employees

in the midst of a global crisis. Hayes, 762 F.3d at 1308 (collecting cases where the
Eleventh Circuit has “set aside sentences of little to no imprisonment” in white

collar cases “because they do not constitute just punishment for the offense, do not

promote respect for the law, and will not do much to deter similar activity by

others”); see also United States v. Shah, 476 F. Supp. 3d 619, 623 (E.D. Mich. Aug. 4,

2020) (noting the seriousness of an offense that involved “bilk[ing] the government

out of . . . funds that were earmarked to pay for the medical expenses of vulnerable

and needy individuals”).

       As the Eleventh Circuit has recognized, deterrence is especially important

in the context of crimes, like Defendant’s crime in this case, that “may easily go

undetected and unpunished.” See McQueen, 727 F.3d at 1158–59 (reversing the

district court’s lenient sentence because it “sap[ped] the goal of general

deterrence”); see also United States v. Engle, 592 F.3d 495, 502 (4th Cir. 2010)

(explaining that because tax evasion offenses are infrequently prosecuted,

“[w]ithout a real possibility of imprisonment, there would be little incentive for a

wavering would-be evader to choose the straight-and-narrow over the wayward

path); United States v. Heffernan, 43 F.3d 1144, 1149 (7th Cir. 1994) (“Considerations

of (general) deterrence argue for punishing more heavily those offenses that either

are lucrative or are difficult to detect and punish, since both attributes go to
increase the expected benefits of a crime and hence the punishment required to

deter it.”).


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      A recent analysis found that approximately 12.3% of the PPP loans granted
to small businesses, totaling $64.2 billion, have at least one indicator of potential

fraud. See John M. Griffin et al., Did FinTech Lenders Facilitate PPP Fraud? (Aug. 5,

2022), available online at https://ssrn.com/abstract=3906395 (last visited Aug. 15,
2022). And because of the sheer number of PPP loans as well as the streamlined

documentation necessary to obtain them, the United States is unlikely to detect

and/or to prosecute most individuals who obtained fraudulent PPP loans. The
need for general deterrence is therefore significant in this case. Simply put, a

below-Guidelines sentence would signal to others considering engaging in white-

collar crime that there is a significant benefit to be gained and little to be lost by

committing the offense. A below-Guidelines sentence would undermine, rather

than promote, Section 3553(a)’s purposes.

      4.     The Sentencing Commission’s Policy Statement.

      “In deciding a sentence, district courts should consider the policies behind

the applicable guidelines provision.” United States v. Crisp, 454 F.3d 1285, 1291

(11th Cir. 2006); see also 18 U.S.C. § 3553(a)(5) (directing district courts to consider
the Sentencing Commission’s policy statements). For fraud-related offenses, the

Sentencing Commission has explained that “along with other relevant factors

under the guidelines, loss serves as a measure of the seriousness of the offense and
the defendant’s relative culpability and is a principal factor in determining the

offense level under [U.S.S.G. § 2B1.1].” U.S.S.G. § 2B.1.1, cmt. backg’d.

      The Sentencing Commission’s policy statement supports imposing a
Guidelines sentence in this case given the seriousness of Defendant’s offense.




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      5.       Unwarranted Sentencing Disparities.
      As explained above, because Defendant both conspired with Thomas and

committed his own, independent PPP fraud, he is uniquely situated among co-

defendants in this case.     However, while the Court has granted downward
variances to some co-defendants involved in Thomas’s scheme, Defendant has not

identified any similar reasons for a variance here – e.g. payment of extraordinary

restitution;    extraordinary,   irreplaceable    family   care-taking   obligations;

extraordinary medical conditions; or military or community service.

      6.       The Need to Provide Restitution.

      The Eleventh Circuit has rejected the argument that a large restitution

award warrants a shorter custodial sentence.          See Crisp, 454 F.3d at 1291

(explaining that shortening a defendant’s sentence “in order to increase the time

for the defendant to earn money to pay restitution” would turn the Sentencing

Commission’s policy on its head because it would mean that the more loss a

defendant inflicts, the shorter their sentence).     While Defendant’s restitution

obligation is significant, the need to provide restitution does not outweigh Section

3553(a)’s other considerations and does not warrant a downward variance.



                                    Conclusion
      For these reasons, the United States respectfully requests that the Court

impose a sentence at the low-end of the applicable Guidelines range.

Dated: November 25, 2022.                  Respectfully submitted,

                                           R YAN K. B UCHANAN
                                           United States Attorney


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Case 1:21-cr-00259-JPB-CMS   Document 69   Filed 11/25/22   Page 13 of 14




                                   T AL C. C HAIKEN
                                    Assistant United States Attorney
                                   Georgia Bar No. 273949

                                   N ATHAN P. K ITCHENS
                                    Assistant United States Attorney
                                   Georgia Bar No. 263930

                                   600 U.S. Courthouse
                                   75 Ted Turner Drive SW
                                   Atlanta, GA 30303
                                   404-581-6000; Fax: 404-581-6181

                                   SIJI MOORE
                                    Trial Attorney, Fraud Section
                                    U.S. Department of Justice




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                            Certificate of Service

     The United States Attorney’s Office served this document today by filing it

  using the Court’s CM / ECF system, which automatically notifies the parties
  and counsel of record.




November 25, 2022




                                        N ATHAN P. K ITCHENS

                                        Assistant United States Attorney


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