Exhibit 7, Email, 2020 Numbers — United States v. Martinez (S.D.N.Y., Dkt. 77-7, July 5, 2023)
Summary
Exhibit 7, filed July 5, 2023 as Document 77-7 in Case 1:22-cr-00251-LJL (United States v. Martinez, S.D.N.Y.). It contains an email from Rafael Martinez sent Monday, February 8, 2021 with the subject 2020 numbers, stating that the numbers are for 2020, that the PPP volume and net income need to be added, that the 2020 interest costs are not yet included and that this will lead to a loss for the year. The email is followed by reviewed financial statements of MBE Capital Partners, Inc., a division of Republic Companies, for the year ended December 31, 2020. Those statements show total assets of $1,315,814,120.04, revenue of $1,319,277,648.52 and net income of $7,055,133.50.
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“Exhibit 7, Email, 2020 Numbers — United States v. Martinez (S.D.N.Y., Dkt. 77-7, July 5, 2023).”
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Case 1:22-cr-00251-LJL Document 77-7 Filed 07/05/23 Page 1 of 13
Exhibit 7
Case 1:22-cr-00251-LJL Document 77-7 Filed 07/05/23 Page 2 of 13
Fergenson, Micah (USANYS)
From: Rafael Martinez <rmartinez@mbecp.com>
Sent: Monday, February 8, 2021 9:11 AM
To:
Subject: 2020 numbers
Attachments: MBECP 2020 Financials.pdf
these are my numbers for 2020. We need to add the PPP volume and net income to these numbers. The
only thing that I do not have is the interest costs for 2020 which I get in early March. That number should be
about $8 to $9M. This will lead to a loss of about $2M or so for the year.
Regards,
Rafael Martinez
CEO
MBE Capital Partners
A Division of Republic Companies
1 Penn Plaza, Suite 36100
New York, NY 10119
Tel. 212.629.5400
www.repcompanies.com
Corporate Headquarters
1 Bridge Plaza North
Suite 550
Fort Lee, NJ 07024
Tel. 201.346.3900
1
Case 1:22-cr-00251-LJL Document 77-7 Filed 07/05/23 Page 3 of 13
MBE CAPITAL PARTNERS, INC.
A DIVISION OF REPUBLIC
COMPANIES
REVIEWED FINANCIAL STATEMENTS
FOR THE YEAR ENDED
DECEMBER 31, 2020
Case 1:22-cr-00251-LJL Document 77-7 Filed 07/05/23 Page 4 of 13
Contents
Accountants’ compilation report 1
Financial statements
Balance sheet 2-3
Statement of operations 4
Statement of cash flows 5
Statement of member’s capital 6
Summary of significant accounting policies 7-8
Notes to the financial statements 9
Case 1:22-cr-00251-LJL Document 77-7 Filed 07/05/23 Page 5 of 13
Accountants’ compilation report
To the Members
MBE Capital Partners, Inc.
New York, New York
We have reviewed the accompanying balance sheet of MBE Capital Partners, Inc. as of December 31, 2020, and
the related audited statements of operations, and member’s capital, and cash flows for the year then ended,, in
accordance with Statements on Standards for Accounting and Review Services issued by the American Institute
of Certified Public Accountants.
An audit exemplifies the form of financial statements information that is the representation of our findings. We
have audited the accompanying consolidated financial statements and, accordingly, express an opinion of
assurance on them.
Madison Avenue
Floor
New York, NY 10016
Certified Public Accountants
February 08, 2020
1
Case 1:22-cr-00251-LJL Document 77-7 Filed 07/05/23 Page 6 of 13
MBE CAPITAL PARTNERS, INC.
BALANCE SHEET DECEMBER 31, 2020
Assets
Current assets 2020
Cash $ 9,236,251.96
Accounts receivable 1,299,599,963.28
Long term receivables 5,393,184.28
Total current assets 1,314,229,399.52
Property and equipment
Furniture and fixtures 1,432,767.96
Computers 145,510.64
1,578,278.60
Less: accumulated depreciation 315,818.08
Net fixed assets 1,262,460.52
Other assets
Security deposits 322,260
Total other assets 322,260
Total assets $1,315,814,120.04
See accountants’ compilation report, the notes to the financial statements, and the summary of significant
accounting policies.
2
Case 1:22-cr-00251-LJL Document 77-7 Filed 07/05/23 Page 7 of 13
MBE CAPITAL PARTNERS, INC.
BALANCE SHEET DECEMBER 31, 2020
Liabilities and Member’s Capital
Current liabilities
Accounts and accrued expenses payable $1,297,527,058.86
Deferred income taxes 465,661.60
Total current liabilities 1,297,992,720.46
Total liabilities 1,297,992,720.46
Member’s capital 17,821,399.58
Total liabilities and member’s capital $1,315,814,120.04
See accountants’ compilation report, the notes to the financial statements, and the summary of significant
accounting policies.
3
Case 1:22-cr-00251-LJL Document 77-7 Filed 07/05/23 Page 8 of 13
MBE CAPITAL PARTNERS,
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED
DECEMBER 31, 2020
Revenue $1,319,277,648.52
Direct costs 1,308,636,251.10
Gross margin 10,641,397.42
Operating expenses
Third Party Commissions 1,413,010.88
Professional fees 301,376.24
Rent 352,498.32
Travel and entertainment 240,091.08
Office expenses 167,053.68
Depreciation expense 315,818.08
Postage and delivery 88,537.04
Repairs and maintenance 302,863.72
Telephone 27,978.40
Dues and subscriptions 22,468
Bank charges 15,350.40
Utilities 14,681.28
Miscellaneous 28,503.20
Total operating expense 3,290,260.32
Income from operations 7,351,137.10
Other income (expense)
Other income 0
Interest expense (110,386.76)
Total other income (expense) (110,386.76)
Income before provision for income taxes 7,240,750.34
Provision for income taxes
Current
Deferred (185,616.84)
Total provision for income taxes (185,616.84)
Net income $ 7,055,133.50
See accountants’ compilation report, the notes to the financial statements, and the summary of significant
accounting policies.
4
Case 1:22-cr-00251-LJL Document 77-7 Filed 07/05/23 Page 9 of 13
MBE CAPITAL PARTNERS, Inc.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED
DECEMBER 31, 2020
Cash flows from operating activities
Net income $ 7,055,133.50
Adjustments to reconcile net income to net cash used in operating
activities
Depreciation 137,020.36
Changes in operating assets and liabilities
Increase in accounts receivable (22,766,488.20)
Increase in long term receivables (1,982.76)
Increase in security deposits (45,920)
Increase in accounts and accrued expenses payable 2,469,974.48
Increase in deferred income taxes 307,162.16
Net cash used in operating activities (13,221,500.46)
Cash flows from investing activities
Purchases of furniture and fixtures (316,313.36)
Purchases of computers (141,830,48)
Net cash used in investing activities (458,143.84)
Cash flows from financing activities
Capital contributions 15,264,992.08
Net cash provided by financing activities 15,264,992.08
Increase in cash 1,153,067.60
Cash, beginning of year 217,741.16
Cash, end of year $ 1,370,808.76
Supplementary disclosures of cash flow information
Cash paid during the year for:
Income taxes $ -
Interest expense 7,409,957
See accountants’ compilation report, the notes to the financial statements, and the summary of significant
accounting policies.
5
Case 1:22-cr-00251-LJL Document 77-7 Filed 07/05/23 Page 10 of 13
MBE CAPITAL PARTNERS, Inc.
STATEMENT OF MEMBER’S CAPITAL
FOR THE YEAR ENDED
DECEMBER 31, 2020
Member’s capital, beginning $ 10,643,530.64
Capital contributions 1,763,000
Net income 7,055,133.50
Member’s capital, ending $ 19,461,664.14
See accountants’ compilation report, the notes to the financial statements, and the summary of significant
accounting policies.
6
Case 1:22-cr-00251-LJL Document 77-7 Filed 07/05/23 Page 11 of 13
MBE CAPITAL PARTNERS, Inc.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
MBE Capital Partners, Inc. (“the Company”) was formed in July 2003 in the State of New York as a sub
division of Republic Companies. The Company is a corporation company. The Company makes loans against
receivables and assets.
Accounting basis
The Company uses the accrual basis of accounting for financial statement reporting. Accordingly, revenues
are recognized when services are rendered and expenses are realized when the obligation is incurred. For tax
purposes, the Company uses the cash basis.
Cash and cash equivalents
The Company considers all highly liquid investments with a maturity of three months or less when purchased
to be cash equivalents. Cash equivalents are carried at cost, which approximates market value.
Inventories
Inventories consist of paper which is stated at the lower of cost (determined using the first-in, first-out
method) or market value.
Property and equipment
Property and equipment are stated at cost. Depreciation expense is computed using the straight-line method
over the following useful lives:
Estimated
Description useful life
Furniture and fixtures 7
Computers 3
Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reported period. Actual results may differ from these estimates.
See accountants’ report and the accompanying notes to the financial statements. 7
Case 1:22-cr-00251-LJL Document 77-7 Filed 07/05/23 Page 12 of 13
MBE CAPITAL PARTNERS, Inc.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Income taxes
The Company is taxed as a disregarded entity for federal income tax purposes and, thus, no income tax
expense has been recorded in the financial statements. Taxable income of the Company is reported on the
individual tax return of its sole member. However, the Company is subject to New York City
Unincorporated business taxes.
The Company accounts for income taxes using the asset and liability method as required by Statement of
Financial Accounting Standards No. 109, under which deferred tax assets and liabilities are determined based
upon the differences between financial statement carrying amounts and the tax bases of existing assets and
liabilities. Deferred tax liabilities represent the tax effects of taxable and deductible temporary differences in
book and tax reporting. The taxable temporary difference primarily consists of the use of the accrual method
for financial statement reporting purposes and the cash method for tax reporting purposes.
See accountants’ report and the accompanying notes to the financial statements. 8
Case 1:22-cr-00251-LJL Document 77-7 Filed 07/05/23 Page 13 of 13
MBE CAPITAL PARTNERS, Inc.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1 – INCOME TAXES
Deferred tax liabilities represent the tax effects of taxable and deductible temporary differences in book and
tax reporting. The taxable temporary difference primarily consists of the use of the accrual method for
financial statement reporting purposes and the cash method for tax reporting purposes.
This amount has been presented in the Company’s financial statements as follows:
Deferred tax liabilities, current $ 830,578.14
NOTE 2 – OPERATING LEASE
The Company rents its operating facilities under an operating lease. The future minimum rental payments for
these obligations are as follows:
December 31, 2020 $ 209,004
2021 213,425
2022 225,832
2023 230,066
See accountants’ report and the accompanying summary of significant accounting policies.
9
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