Factual Basis for a Guilty Plea — No. 1:23-cr-00223 (Dkt. 34, M.D.N.C.)
Summary
A factual basis for a guilty plea filed March 25, 2024 as Document 34 in United States v. Chauncey Alexander Hollis, No. 1:23CR223-1, in the U.S. District Court for the Middle District of North Carolina, signed by U.S. Attorney Sandra J. Hairston and an Assistant U.S. Attorney. After describing the CARES Act, the Paycheck Protection Program and the Economic Injury Disaster Loan program, the government states that an EIDL application for Hollis House, Inc. claimed $380,000 in gross revenues and was approved for $134,900 with a $5,000 grant, although the business was never operational. It states that the SBA denied three other applications listing Hollis as owner, and that the proceeds funded the purchase of a 2017 Porsche Cayenne and two vacant pieces of land.
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“Factual Basis for a Guilty Plea — No. 1:23-cr-00223 (Dkt. 34, M.D.N.C.).”
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IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
UNITED STATES OF AMERICA :
:
v. : 1:23CR223-1
:
CHAUNCEY ALEXANDER HOLLIS :
FACTUAL BASIS FOR A GUILTY PLEA
NOW COMES the United States of America, by and through Sandra J.
Hairston, United States Attorney for the Middle District of North Carolina,
and states that the factual basis for a guilty plea is as follows:
Background on CARES Act Relief and EIDL Program
The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was
enacted in March 2020 and designed to provide emergency financial assistance
to the millions of Americans who were suffering negative economic effects
caused by the COVID-19 pandemic. One source of relief provided by the
CARES Act was the authorization of loans to small businesses for job retention
and certain other expenses, authorizing up to $349 billion in forgivable loans
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.
Another source of relief was the Economic Injury Disaster Loan (“EIDL”)
Case 1:23-cr-00223-TDS Document 34 Filed 03/25/24 Page 1 of 9
program administered by the Small Business Administration (“SBA”). EIDL
loans were designed to help small businesses meet their working capital needs
– broadly defined as short-term business expenses, such as accounts payable
and interest on fixed debts.
The CARES Act authorized the SBA to provide EIDLs of up to $2 million
to eligible small businesses experiencing substantial financial disruptions 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 was determined by the
number of employees the applicant certified having. Businesses could receive
$1,000 per employee, up to $10,000. The advances did not have to be repaid.
In order to obtain an EIDL and EIDL advance, a qualifying business was
required to 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 business entity
must have existed in an operational condition as of February 1, 2020. The
applicant was also required to certify that all of the information in the
application was true and correct to the best of the applicant’s knowledge.
EIDL applications were submitted directly to the SBA and processed by
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the agency with support from a government contractor. The amount of the loan,
if the application was approved, was based, in part, on the information
provided by the application about employment, revenue, and cost of goods, as
described above. Any funds issued under an EIDL or advance were issued
directly by the SBA.
Pursuant to the provisions governing the EIDL program, loan proceeds
had to be used on certain permissible expenses. More specifically, the EIDL
funding had to be used by the business to pay fixed debts, payroll, accounts
payable, and other bills that could have been paid had the COVID-19 disaster
not occurred.
Background Information
The defendant, Chauncey Alexander Hollis, was married to Michelle
Renee Hollis. Chauncey was incarcerated in California between around August
2016 and April 2023. During his time in prison, Chauncey was sanctioned
numerous times for having cell phones.
Records from the North Carolina Secretary of State reflect that Michelle
filed Articles of Incorporation for Hollis House, Inc. on March 2, 2020. On the
filing, Michelle is listed as the Chief Executive Officer and the principal office
address is Michelle’s home address in Winston-Salem, North Carolina. On
March 3, 2020, Michelle opened a business checking account at Wells Fargo,
account ending in 2895, with an initial deposit of $25. In opening the account,
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Michelle listed herself as the “Key Executive with Control of the Entity.”
Hollis House EIDL
On July 5, 2020, someone submitted an online application for an EIDL
from an internet protocol (IP) address in California. The application listed the
business as Hollis House and the owner of the business as Michelle.
The application further described the business as a catering business
with five employees that had been in business since October 10, 2019. The
application fraudulently claimed that Hollis House had $380,000 in gross
revenues and $100,000 in cost of goods sold for the twelve months before the
disaster—i.e., January 31, 2019 to January 31, 2020. The application included
two email addresses: mhollis414@yahoo.com was listed as the business email
address and hchauncey1971@gmail.com was listed as the “primary contact”
email. Subscriber information reflects that the hchauncey1971 account is
registered to a Chauncey Hollis.
The SBA sent the EIDL authorization and agreement to the
hchauncey1971 email account, and on July 6, 2020, the agreement was
electronically signed with the name “Michelle Hollis.” The SBA, in reliance on
the fraudulent application, approved the loan application for $134,900, with
an associated grant of $5,000. In reality, Hollis House was never an operational
business.
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Denied EIDL Applications
Meanwhile, the SBA received three EIDL applications for loans where
Chauncey was listed as the business owner. Chauncey’s first application,
submitted on July 6, 2020, was for a business called “Hollis Security.” The
application described the business as a transportation company with ten
employees and gross revenues of $125,000.1 Chauncey’s second and third
applications, submitted on July 7, 2020, and July 8, 2020, respectively, were
for businesses called “Chauncey Hollis.” The second application described the
business as a “barber/hairstylist” with eight employees, and the third
application descried the business as an agriculture business with eight
employees. Each of the three applications included a financial account opened
in Chauncey’s name for deposit of the loan proceeds. None of the
aforementioned businesses existed; and the SBA ultimately denied each of the
applications.
Receipt and Use of EIDL funds
On July 8, 2020, the SBA deposited the loan of $134,900 and a grant of
$5,000 into Michelle’s Wells Fargo account ending in 2895 for the Hollis House
EIDL. The day before the EIDL funds were deposited, the ending balance of
the account was $1,090.86. In July 2020, only three other deposits were made
1 The IP address that was used to submit the Hollis Security EIDL application is the
same IP address that was used to signed the Hollis House EIDL documents.
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into the account ending in 2895 after the EIDL funds were deposited. The
other deposits were on July 17, 2020 for $230.88, July 27, 2020 for $0.01, and
July 31, 2020 for $221.64. The descriptions indicated that the deposits were
for Michelle’s payroll from a third-party. After the money was received,
Michelle and Chauncey used the fraudulently obtained EIDL proceeds on
personal purchases.
Purchase of Porsche: On July 10, two days after the EIDL proceeds
were deposited, Michelle withdrew $50,000 in cash from the account ending in
2895. The next day, Michelle purchased a 2017 Porsche Cayenne at Foreign
Cars Italia in Greensboro. Michelle placed a cash down payment of $26,200
and signed a credit application to finance the remaining balance. On the credit
application, Michelle listed her employment as a nursing assistant and “other
income” in the amount of $9,600 annual as a nursing assistant. The application
did not include any income generated from Hollis House, Inc.
Land purchases: On July 10, 2020, Chauncey and Michelle purchased
two vacant pieces of land in California. First, on July 10, Michelle initiated a
wire transfer of $9,895 from the account ending in 2895 to an account for
“Landco Investments, Inc.” Internal Revenue Service-Criminal Investigations
(IRS-CI) Special Agent Purgason obtained records from Landco which reflect
the payment was for the sale of vacant land in San Bernadino County,
California. Chauncey Hollis was listed as the buyer on the sale agreement.
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Landco also provided copies of email communications with an email address
bighit2018@gmail.com, in which the writer stated, “My wife has an
appointment with wells Fargo tomorrow at 2 PM eastern time in Which the
funds will be transferred.”
Similarly, and on the same day, Michelle initiated a wire transfer of
$3,000 from the account ending in 2895 to an account for “ATR Real Property.”
Records from ATR Real Property show that on July 8, 2020, Chauncey emailed
and inquired about a piece of land in Bridgeport, California, asking “what’s the
lowest you will take.” On July 9, 2020, Chauncey emailed ATR Real Property
in reply to the sales agreement:
Sorry for the delay. I will have this signed and returned this
morning. Please send the necessary paperwork with the
information to send the money.my wife had an appointment with
wells Fargo around 2pm eastern time so that’s 11am. Pacific time
in wich [sic] the money will be sent where ever u want.
The sale agreement lists Chauncey Hollis as the buyer and M.R., on behalf of
ATR Property Holdings, as the seller.
This the 25th day of March, 2024.
Respectfully submitted,
SANDRA J. HAIRSTON
United States Attorney
/S/ ASHLEY E. WAID
Assistant United States Attorney
NCSB #52441
United States Attorney’s Office
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Middle District of North Carolina
101 S. Edgeworth St., 4th Floor
Greensboro, NC 27401
Phone: 336/333-5351
8
Case 1:23-cr-00223-TDS Document 34 Filed 03/25/24 Page 8 of 9
CERTIFICATE OF SERVICE
I hereby certify that on March 25, 2024, the foregoing was electronically
filed with the Clerk of the Court using the CM/ECF system, which will send
notification of such filing to counsel of record:
James D. Byers, Esq.
Respectfully submitted,
SANDRA J. HAIRSTON
United States Attorney
/S/ ASHLEY E. WAID
Assistant United States Attorney
NCSB #52441
United States Attorney’s Office
Middle District of North Carolina
101 S. Edgeworth St., 4th Floor
Greensboro, NC 27401
Phone: 336/333-5351
Case 1:23-cr-00223-TDS Document 34 Filed 03/25/24 Page 9 of 9
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