Donte Jamal Mcclellon — Indictment

Summary

An indictment presented by the grand jury in the U.S. District Court for the Western District of Washington at Seattle in United States v. Donte Jamal McClellon. It opens with background on the Paycheck Protection Program under the CARES Act. The indictment alleges that McClellon obtained at least three PPP loans on behalf of the McClellon Entities totaling at least $500,948, and that a loan application to Bank One claimed that Frostlake had average monthly payroll of approximately $8,334 and was operating with employees on February 15, 2020. It closes with forfeiture and substitute asset allegations.

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Presented to the Court by the foreman of the
Grand Jury in open Court, in the presence of
the Grand Jury arid FILED in the US.
DISTRICT COURT at Seattle, Washington.

May 20 70.22
By, = puty

UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF WASHINGTON

AT SEATTLE
LK
UNITED STATES OF AMERICA, n€ R22 «=@ 3
Plaintiff INDICTMENT
Vv.
DONTE JAMAL MCCLELLON,
Defendant.

The Grand Jury charges that:
The Paycheck Protection Program

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 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 to as the Paycheck
Protection Program (“PPP”). In or around April 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 signed by an authorized representative of the business. The PPP

Indictment - 1 UNITED STATES ATTORNEY

United States v. McClellon 700 STEWART STREET, SUITE 5220
. SEATTLE, WASHINGTON 98101
USAO No. 2021R00147 (206) 553-7970
loan application required the business (through its authorized representative) to
acknowledge the program rules and make certain affirmative certifications in order to be
eligible to obtain a PPP loan. In the PPP loan application, the small business (through its
authorized representative) was required to state, among other things, its: (a) average
monthly payroll expenses; and (b) number of employees. These figures were used to
calculate the amount of money the small business was eligible to receive under the PPP.
In addition, businesses applying for a PPP loan were required to provide documentation
showing their payroll expenses.

3. PPP loan applications were processed by a participating lender. If a PPP
loan application was approved, the participating lender funded the PPP loan using its own
money, which the U.S. Small Business Administration (“SBA”) guaranteed in its
entirety. The lender transmitted to the SBA, in the course of processing the loan, data
from the application, including information about the borrower, the total amount of the
loan, and the listed number of employees.

4. The business receiving the PPP loan proceeds was required to spend the
funds on certain permissible expenses, such as 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 the loan proceeds on these allowable expense items within
a designated period of time and used a specified portion of the PPP loan proceeds on
payroll expenses.

The Defendant and Relevant Entities

5. The defendant, DONTE JAMAL MCCLELLON, resided within the
Western District of Washington through at least the end of June 2020.

6. MCCLELLON owned and controlled various corporate entities registered
in Washington State, including Frostlake, LLC (“Frostlake”), Skylake, LLC (“Skylake”),
and Cannonlake, LLC (“Cannonlake”) (collectively, the “McClellon Entities”). None of

the McClellon Entities had employees or payroll expenses of its own.

Indictment - 2 UNITED STATES ATTORNEY
United States v. McClellon 700 STEWART STREET, SUITE 5220

USAO No. 2021R00147 sean e853 7090 98101
7. Frostlake was a limited liability company that was registered with
Washington State in or around December 2016. Frostlake purportedly engaged in retail
and wholesale trade. Its principal place of business was MCCLELLON’s residential
address in Seattle, Washington. MCCLELLON was listed as its sole governor.

a. Frostlake was administratively dissolved on or around May 3, 2018.
On or about February 5, 2021, MCCLELLON filed documentation with Washington
State to reinstate Frostlake.

b. From at least on or around January 1, 2018 through at least
December 31, 2020, Frostlake had no employees for which federal payroll taxes were
paid.

8. Skylake was a limited liability company that was registered with
Washington State in or around April 2016. Skylake purportedly engaged in finance and
real estate, and its principal place of business was MCCLELLON’s residential address in
Seattle, Washington. MCCLELLON was listed as its sole managing partner and
governor.

a. Skylake was administratively dissolved on or around September 1,
2017. On or about December 27, 2017, MCCLELLON filed documentation with
Washington State to reinstate Skylake.

b. Skylake was administratively dissolved again on or around
September 3, 2019. On or around June 13, 2020, MCCLELLON filed documentation
with Washington State to reinstate Skylake.

c. From at least on or around January 1, 2018 through at least
December 31, 2020, Skylake had no employees for which federal payroll taxes were paid.

9. Cannonlake was a limited liability company that was registered with
Washington State in or around December 2016. Cannonlake purportedly engaged in real
estate, retail, and wholesale trade. Its principal place of business was MCCLELLON’s
residential address in Seattle, Washington. MCCLELLON was listed as its sole governor.

Indictment - 3 UNITED STATES ATTORNEY

United States y. McClellon 700 STEWART STREET, SUITE 5220
. SEATTLE, WASHINGTON 98101
USAO No. 2021R00147 (206) 553-7970
So OND Nn FP W NYO

a. Cannonlake was administratively dissolved on or about May 3,
2018. On or about June 17, 2020, MCCLELLON filed documentation with Washington
State to reinstate Cannonlake.
b. From at least on or around January 1, 2018 through at least
December 31, 2020, Cannonlake had no employees for which federal payroll taxes were
paid.
Relevant PPP Lenders

10. Bank One was a financial institution based in the State of New Jersey
whose deposits were insured by the Federal Deposit Insurance Corporation (“FDIC”).
Bank One participated as a PPP lender to small businesses.

11. | Company One was a financial technology company headquartered in the
State of Georgia. Company One participated in the PPP by, among other things, acting as
a service provider between small businesses and certain lenders, including Bank One.
Small businesses seeking PPP loans could apply through Company One for PPP loans.
Company One would review the loan applications. If a loan application received by
Company One was approved for funding, a partner lender, such as Bank One, disbursed
the loan funds to the applicant.

12. Bank Two was a financial institution based in the State of Florida whose
deposits were insured by the FDIC. Bank Two participated as a PPP lender to small
businesses.

13. Bank Three was a financial institution based in Utah whose deposits were
insured by the FDIC. Bank Three participated as a PPP lender to small businesses.

COUNTS 1-3
(Bank Fraud)

14. The allegations in Paragraphs 1-13 are realleged and incorporated by
reference as if set forth in full herein.
15. Beginning at a time unknown but not later than in or about May 2020 and

continuing through at least June 2020, in King County, within the Western District of

Indictment - 4 UNITED STATES ATTORNEY
United States v. McClellon 700 STEWART STREET, SUITE 5220

USAO No. 2021R00147 OSS
Co mA ND HA Fe W NO =

Washington, and elsewhere, the defendant, DONTE JAMAL MCCLELLON, knowingly
devised and executed a scheme and artifice to defraud financial institutions participating
in the PPP loan program and to obtain moneys, funds, assets, and other property owned
by and under the custody and control of financial institutions participating in the PPP
loan program by means of materially false and fraudulent pretenses, representations, and
promises, as further and more particularly set forth below.

Manner and Means

16. It was part of the scheme and artifice to defraud that MCCLELLON
submitted and caused to be submitted at least seven false and misleading loan
applications to various financial institutions seeking to obtain funds related to the PPP on
behalf of corporate entities registered in Washington State that he owned and controlled,
including Frostlake, Skylake, and Cannonlake (collectively, the “McClellon Entities”).

17. It was further part of the scheme and artifice to defraud that MCCLELLON
successfully obtained at least three PPP loans on behalf of the McClellon Entities totaling
at least $500,948.

18. It was further part of the scheme and artifice to defraud that MCCLELLON
submitted a loan application to Bank One (through Company One), seeking at least
$20,833 in funds under the PPP for Frostlake.

19. It was further part of the scheme and artifice to defraud that MCCLELLON
included in the loan application to Bank One (through Company One) multiple materially
false statements, including but not limited to:

a. That Frostlake had average monthly payroll of approximately
$8,334; and

b. That Frostlake was in operation on February 15, 2020, and had
employees for whom it paid salaries and payroll taxes or paid independent contractors.

20. It was further part of the scheme and artifice to defraud that MCCLELLON
submitted a PPP loan application to Bank Two seeking at least $282,800 in funds on
behalf of Skylake.

Indictment - 5 UNITED STATES ATTORNEY
United States v. McClellon 700 STEWART STREET, SUITE 5220

. SEATTLE, WASHINGTON 98101
USAO No. 2021R00147

(206) 553-7970
NR NR KR KL DN DD eee pee

21. It was further part of the scheme and artifice to defraud that MCCLELLON
included in the loan application to Bank Two multiple materially false statements,
including but not limited to:

a. That Skylake had 13 employees; and
b. That Skylake was in operation on February 15, 2020, and had
employees for whom it paid salaries and payroll taxes or paid independent contractors.

_ 22. It was further part of the scheme and artifice to defraud that MCCLELLON
submitted a PPP loan application to Bank Three seeking at least $197,315 in funds on
behalf of Cannonlake.

23. It was further part of the scheme and artifice to defraud that MCCLELLON
included in the loan application to Bank Three multiple materially false statements,
including but not limited to:

a. That Cannonlake had 13 employees; and

b. That Cannonlake was in operation on February 15, 2020, and had
employees for whom it paid salaries and payroll taxes or paid independent contractors.
Execution

24. On or about the dates identified below, in King County, within the Western
District of Washington, and elsewhere, for the purpose of executing and attempting to
execute this scheme and artifice to defraud financial institutions, and to obtain moneys,
funds, assets, and other property owned by and under the custody and control of financial
institutions by means of materially false and fraudulent pretenses, representations and
promises, MCCLELLON knowingly caused to be conducted the following acts, with

each act constituting a separate Count of this Indictment:

//

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Indictment - 6 UNITED STATES ATTORNEY
United States v. McClellon 700 STEWART STREET, SUITE 5220

SEATTLE, WASHINGTON 98101

USAO No. 2021R00147 (206) 553-7970
SCS OH ND NH FP W YO Fe

Count | Approximate Description
Date
1 May 12, 2020 MCCLELLON submitted a fraudulent application with

false supporting documentation to Bank One (through
Company One) for a PPP loan in the name of Frostlake.
2 June 11, 2020 MCCLELLON submitted a fraudulent application with
false supporting documentation to Bank Two for a PPP
loan in the name of Skylake.

3 June 23, 2020 MCCLELLON submitted a fraudulent application with
false supporting documentation to Bank Three for a PPP
loan in the name of Cannonlake.

All in violation of Title 18, United States Code, Sections 1344 and 2.
FORFEITURE ALLEGATION

The allegations contained in Counts 1-3 of this Indictment are hereby realleged

and incorporated by reference for the purpose of alleging forfeiture. Upon conviction of
any of the offenses alleged in Counts 1-3, the defendant, DONTE JAMAL
MCCLELLON, shall forfeit to the United States, pursuant to Title 18, United States
Code, Section 982(a)(2), any property that constitutes or is traceable to proceeds of the
offense, including but not limited to a sum of money reflecting the proceeds the
defendant obtained as a result of the offense.
Substitute Assets. If any of the above-described forfeitable property, as a result of

any act or omission of the defendant,

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 which cannot be divided
without difficulty,
//
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Indictment - 7 UNITED STATES ATTORNEY
United States v. McClellon 700 STEWART STREET, SUITE 5220

SEATTLE, WASHINGTON 98101

USAO No. 2021R00147 (206) 553-7970
SCS ON Dn FP W WHO &

it is the intent of the United States to seek the forfeiture of any other property of the
defendant, up to the value of the above-described forfeitable property, pursuant to
Title 21, United States Code, Section 853(p).

A TRUE BILL:

Signature of Foreperson redacted pursuant
to the policy of the Judicial Conference of
the United States.

| a __ FOREPERSON
NICHOEAS W. BROWN
United States Attorney

THOMAS M. WOODS
Assistant United States Attorney

Fon

SOK\TEA JIANG

Assistant United States Attorney

Indictment - 8 UNITED STATES ATTORNEY
United States v. McClellon 700 STEWART STREET, SUITE 5220

USAO No. 2021R00147 sea B00 Seda 98101


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