Francesco Distefano and Sargis Urumieh — Indictment, Case 1:24-cr-00424 (Document 39)
Summary
A second superseding indictment returned by the Special May 2024 Grand Jury in United States v. Francesco Distefano and Sargis Urumieh, No. 24 CR 424, Case 1:24-cr-00424, Document 39, filed 12/10/24, in the U.S. District Court for the Northern District of Illinois before Judge Jeremy C. Daniel. Counts One Through Eight charge violations of Title 18, United States Code, Sections 1014, 1343 and 1957(a). The indictment alleges that the defendants submitted not fewer than five PPP and EIDL applications for West Coast POS Inc. and National, seeking approximately $6,348,808. It alleges that approximately $312,000 of the PPP funds went toward a real property purchase backed by false mortgage applications. The forfeiture allegation lists $357,815 seized from a U.S. Bank account.
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Full text
Case: 1:24-cr-00424 Document #: 39 Filed: 12/10/24 Page 1 of 36 PageID #:149
FILED
1:24-cr-00424
Judge Jeremy C. Daniel BI
Magistrate Judge Jeffrey Cole
Cat. 4 UNITED STATES DISTRICT COURT
12/10/2024
N
S G. BRUTO T
NORTHERN DISTRICT OF ILLINOIS LERTKH,OUM.SA. DISTRICT COUR
C
EASTERN DIVISION
UNITED STATES OF AMERICA No. 24 CR 424
v. Judge Jeremy C. Daniel
FRANCESCO DISTEFANO and Violations: Title 18, United States
SARGIS URUMIEH Code, Sections 1014, 1343 and
1957(a)
SECOND SUPERSEDING
INDICTMENT
COUNTS ONE THROUGH EIGHT
The SPECIAL MAY 2024 GRAND JURY charges that:
1. At times material to this indictment:
Individuals and Entities
a. Defendant FRANCESCO DISTEFANO was a resident of
Addison, Illinois, and the owner and president of Distefano Enterprises LLC
(“Distefano Enterprises”), a limited liability company formed under the laws of
Montana in or around 2015.
b. Defendant SARGIS URUMIEH, was a resident of Glendale,
California and the Chief Executive Officer, Chief Financial Officer, and Secretary of
West Coast POS Inc. (“West Coast”), a corporation incorporated under the laws of
California on or around February 1, 2019, and the Vice President, Secretary, and
Director of National POS Inc. (“National”), a corporation incorporated in Delaware
on or about August 31, 2015.
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c. Individual A was a resident of Addison, Illinois.
The Small Business Administration
d. The U.S. Small Business Administration (“SBA”) was a United
States government agency that provided economic support to small businesses.
The Paycheck Protection Program
e. 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 who were suffering the
economic effects caused by the COVID-19 pandemic.
f. One source of relief provided by the CARES Act was the
authorization of up to $349 billion in forgivable loans to small businesses and sole
proprietors for job retention and certain other expenses, through a program called
the Paycheck Protection Program (“PPP”). Congress subsequently authorized an
additional $465 billion in funding for PPP loans, for a total of about $814 billion.
g. To obtain a PPP loan, a business, sole proprietor, or self-employed
individual submitted a PPP loan application, which was signed by the applicant or
an authorized representative of the business. The PPP loan application required the
applicants to acknowledge the program rules and make certain affirmative
certifications regarding the eligibility of the business, proprietorship, or individual.
In the application, businesses, sole proprietors, and self-employed individuals were
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required to provide, among other things, their number of employees and average
monthly payroll. This figure was used to calculate the applicant’s eligibility and the
amount of money the business could receive under the PPP. Applicants were also
required to make good faith certifications, including that that the business entity was
in operation on February 15, 2020, and that economic uncertainties had necessitated
their loan requests for continued business operations.
h. PPP loan proceeds were required to be used by the business, sole
proprietorship, or self-employed individual for certain permissible expenses—payroll
costs, interest on mortgages, rent, and utilities. The PPP allowed the interest and
principal on the PPP loan to be entirely forgiven by the SBA if the business, sole
proprietorship, or self-employed individual spent the loan proceeds on these items
within a designated period of time and used at least a certain percentage of the PPP
loan for payroll expenses.
i. To gain access to funds through the PPP, businesses, sole
proprietorships, and self-employed individuals applied to financial institutions
participating in the PPP and received the loans directly from those financial
institutions as the lender.
j. Businesses, sole proprietors, and self-employed individuals that
obtained PPP loans and used the full loan amount were allowed to obtain additional
funds through the PPP by submitting a Second Draw Borrower Application Form
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(“Second Draw Application”), which was signed by the applicant or an authorized
representative of the business. The Second Draw Application required the applicants
to again acknowledge the program rules and make certain affirmative certifications
regarding the eligibility of the business, and again provide their number of employees
and average monthly payroll. These figures were again used to calculate the
applicant’s eligibility and the amount of money the business could receive under the
PPP. Applicants were again required to make good faith certifications, including that
economic uncertainties had necessitated their loan requests for continued business
operations and that the applicants had used the full amount of the initial PPP loan
only for eligible expenses.
k. Participating lenders required applicants for PPP loans to provide
truthful information about the sole proprietorship, self-employed individual, or
business and its owner, including truthful information about the applicant’s payroll,
income, operating expenses, and how the PPP loan would be used, which information
was material to (i) lenders’ approval, terms, and funding of loans and (ii) the SBA’s
decision to guarantee and to forgive the loans.
The Economic Injury Disaster Loan Program
l. Another source of relief provided by the CARES Act and other
pandemic-relief legislation was the expansion of the Economic Injury Disaster Loan
(“EIDL”) Program, which provided loan assistance (including advances of up to
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$10,000) for businesses with 500 or fewer employees and other eligible entities. The
EIDL Program was designed to provide economic relief to small businesses that were
experiencing a temporary loss of revenue.
m. To gain access to funds through the EIDL Program, small
businesses applied through the SBA via an online portal and application. As part of
the EIDL application process, the SBA required applicants to submit truthful
information about the applying entity, its owner, and its financial condition prior to
the COVID-19 pandemic. This information included the entity’s number of employees
as of January 31, 2020; the entity’s gross revenues and cost of goods sold for the 12-
month period prior to January 31, 2020; and the entity’s type of business (i.e., a
business, an agricultural business, a sole proprietorship, a cooperative, among
others); the date on which the business opened; and the date on which the current
owner assumed ownership of the entity. Applicants were required to electronically
certify that the information provided in the application was true and correct and were
warned that a false statement or misrepresentation to the SBA may result in
sanctions, including criminal penalties.
n. EIDL funds were issued to small-business applicants directly
from the United States Treasury.
o. EIDL Advance was a grant program offered together with the
EIDL Program. EIDL Advance was designed to provide emergency economic relief to
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businesses that were experiencing a temporary loss of revenue as a result of the
COVID-19 pandemic. The applicant could request consideration for an EIDL advance
in an application for an EIDL. The amount of the advance issued to the small-
business applicant was determined by the number of employees indicated on the
EIDL application, at $1,000 per employee, up to $10,000. If an EIDL advance was
issued, the advance did not need to be repaid.
p. If an EIDL application was approved by the SBA, the amount of
the EIDL was determined in part based on the statements in the EIDL application
about the entity’s revenues and cost of goods sold for the 12 months prior to January
31, 2020.
q. EIDL Program funds could be used to pay for the ordinary
operating expenses and debts of the entity, including payroll, sick leave, production
costs, utilities, rent, mortgage payments, continuation of health care benefits, and
fixed debt payments.
Mortgage Loans
r. Financial institutions, including banks and mortgage lending
businesses that financed or refinanced debt secured by an interest in real estate,
required mortgage loan applicants to provide truthful information, including the
applicant’s financial condition, employment, income, assets, liabilities, and source of
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down payment funds, all of which was material to the financial institutions’ approval,
terms, and funding of mortgage loans.
Financial Institutions and Lenders
s. U.S. Bank National Association (“U.S. Bank”) was a financial
institution which funded PPP loans to approved borrowers. The deposit accounts of
U.S. Bank were insured by the Federal Deposit Insurance Corporation.
t. Encore Bank was a financial institution which funded PPP loans
to approved borrowers. The deposit accounts of Encore Bank were insured by the
Federal Deposit Insurance Corporation.
u. JPMorgan Chase Bank, N.A. (“Chase Bank”) was a financial
institution in which West Coast maintained an account. The deposit accounts of
Chase Bank were insured by the Federal Deposit Insurance Corporation.
v. Arkansas Capital Corporation (“Arkansas Capital”) was a
community development finance company located in Little Rock, Arkansas, which
originated PPP loans in partnership with financial institutions, including Encore
Bank.
w. Better Mortgage Corporation (“Better Mortgage”) was a mortgage
lending business based in New York that provided residential mortgage loans to
borrowers across the United States.
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x. Planet Home Lending LLC (“Planet Home”) was a mortgage
lending business with an office in Missouri that provided residential mortgage loans
to borrowers across the United States.
Electronic Signatures
y. Docusign was an electronic signature and document management
platform that allowed users to send and electronically sign documents using a
computer or other electronic device.
Payroll Processors
z. Payroll Processor 1 and Payroll Processor 2 were payroll
processing companies who performed payroll services on behalf of client companies,
including issuing payroll checks; calculating and withholding payroll taxes; and
preparing and filing payroll tax forms such as Forms 940 and 941 on behalf of client
companies.
The Scheme to Defraud
2. Beginning in or around March 2020 and continuing through in or around
February 2021, in the Northern District of Illinois, and elsewhere,
FRANCESCO DISTEFANO and
SARGIS URUMIEH,
defendants herein, together with others known and unknown to the Grand Jury,
knowingly devised, intended to devise, and participated in a scheme to defraud, and
to obtain money and property, in connection with applications for PPP loans, EIDLs,
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and residential mortgage loans, by means of materially false and fraudulent
pretenses, representations, and promises, as further described below.
3. It was part of the scheme that DISTEFANO and URUMIEH, for the
purpose of fraudulently obtaining approximately $6,348,808 in PPP loan and EIDL
funds, submitted and caused to be submitted not fewer than five applications for
loans and advances under the PPP and EIDL Programs, on behalf of West Coast and
National, which applications contained materially false statements and
misrepresentations concerning, among other things, the purported entities’ number
of employees, gross income, gross revenues, payroll, cost of goods sold, operating
expenses, type of business, and existence as companies with ongoing operations.
4. It was further part of the scheme that, for the purpose of obtaining real
property for URUMIEH’s benefit, defendants DISTEFANO and URUMIEH used
approximately $312,000 in funds fraudulently obtained from the PPP loans to West
Coast and National towards the purchase of the real property, and prepared and
submitted not less than two fraudulent mortgage loan applications to obtain a
mortgage loan in the approximate amount of $765,600 to fund the purchase of the
real property, which applications contained materially false statements and
misrepresentations concerning, among other things, URUMIEH’s past, present, and
future income sources.
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West Coast EIDL
5. It was further part of the scheme that between March 31, 2020, and May
22, 2020, DISTEFANO and URUMIEH submitted and caused to be submitted to the
SBA an EDIL application on behalf of West Coast in the amount of $150,000 and an
EIDL advance in the amount of $10,000, knowing that the application contained false
and fraudulent representations regarding (a) West Coast’s number of employees; (b)
West Coast’s gross receipts and costs of goods sold; and (c) the truthfulness and
accuracy of the application.
6. It was further part of the scheme that in order to obtain the EIDL and
advance, DISTEFANO prepared the loan application falsely representing that for the
12 months ending January 1, 2020, West Coast had Gross Receipts of $5,000,000,
Cost of Goods of $4,500,000, and 12 employees as of that date, and URUMIEH
certified in the Loan Authorization and Agreement that all representations in the
loan application were true, correct, and complete.
7. It was further part of the scheme, that, through the submission of the
false and fraudulent EIDL application, DISTEFANO and URUMIEH caused the SBA
to disburse a loan and advance totaling $159,900 into an account that URUMIEH
maintained and controlled in the name of West Coast at Chase Bank, when, as
DISTEFANO and URUMIEH knew, neither they nor West Coast were entitled to the
EIDL funds.
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West Coast First Draw PPP Loan
8. It was further part of the scheme that between, on or about July 17,
2020, and on or about July 22, 2020, DISTEFANO and URUMIEH submitted and
caused to be submitted to Arkansas Capital a PPP loan application on behalf of West
Coast in the amount of $1,090,891, knowing that the application contained false and
fraudulent representations regarding: (a) West Coast’s number of employees; (b) West
Coast’s average monthly payroll; and (c) the truthfulness and accuracy of the
application and supporting documents.
9. It was further part of the scheme that, in order to obtain a PPP loan, on
or about July 20, 2020, URUMIEH sent an email to Arkansas Capital, containing the
PPP loan application for West Coast, with a fraudulent IRS Form 940, and fraudulent
summary payroll report, which falsely represented that West Coast had 14 employees
with an average monthly payroll of $436,356.37, and had paid its employees, wages,
tips, and compensation of $5,236,276.47 in 2019.
10. It was further a part of the scheme that, on or around July 21, 2020,
DISTEFANO applied URUMIEH’s Docusign signature to documents to open bank
accounts in the name of West Coast ending in 6266 and 6282 at Encore Bank, which
accounts were to be used to effect and conceal the scheme.
11. It was further part of the scheme that, on or about July 21, 2020,
URUMIEH submitted and caused to be submitted to Arkansas Capital, documents
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that included a fraudulent IRS Form 941 and falsely represented that West Coast
had paid $1,765,990.17 to its employees as wages, tips, and compensation in the first
quarter of 2020.
12. It was further part of the scheme that, through the submission of the
false and fraudulent PPP loan application and supporting materials, DISTEFANO
and URUMIEH caused, on or about July 22, 2020, a PPP loan of approximately
$1,090,890 to be disbursed into the West Coast account ending 6266 at Encore Bank,
when, as DISTEFANO and URUMIEH knew, neither they nor West Coast were
entitled to the PPP loan funds.
13. It was further part of the scheme that, on or about July 23, 2020,
URIMIEH, with DISTEFANO’s unannounced presence to assist him, participated in
a phone call with Payroll Processor 1, in an effort to establish an account for West
Coast in order to disguise the withdrawals of the PPP proceeds obtained from Encore
Bank as payroll, and, during such call, falsely represented that West Coast had
approximately $2,000,000 to $2,500,000 in gross sales in 2019.
14. It was further part of the scheme that, on or about July 23, 2020,
DISTEFANO applied for and established an account for West Coast with Payroll
Processor 2, in order to disguise as payroll the withdrawals of the PPP proceeds from
the accounts at Encore Bank.
15. It was further part of the scheme that on or about July 28, 2020,
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DISTEFANO created a fictitious list of approximately 66 purported employees titled
“WESTCOASTPOSINCexportPayrollRUn06.xlsx” to be used in support of the West
Coast PPP loan application, and URUMIEH thereafter transmitted the fictitious list
to Arkansas Capital.
16. It was further part of the scheme that, on or about July 28, 2020,
URUMIEH submitted and caused to be submitted on behalf of West Coast to
Arkansas Capital, what URUMIEH characterized as a “corrected” first page of the
PPP loan application with the increased number of employees from 14 to 67, knowing
that it contained false and fraudulent representations regarding the number of
employees and average monthly payroll.
National First Draw PPP Loan
17. It was further part of the scheme that, on or about July 26, 2020,
DISTEFANO and URUMIEH submitted and caused to be submitted to Arkansas
Capital a PPP loan application and supporting documents on behalf of National in
the amount of $1,722,646, knowing that the application materials contained false and
fraudulent representations regarding: (a) National’s number of employees; (b)
National’s average monthly payroll; and (c) the truthfulness and accuracy of the
application and supporting documents.
18. It was further part of the scheme that, on or about July 26, 2020,
DISTEFANO and URUMIEH caused an email to be sent to Arkansas Capital
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transmitting a fraudulent PPP loan application that contained false representations,
including that National had 19 employees and an average monthly payroll
$689,058.20, and accompanied the fraudulent PPP loan application with a fraudulent
payroll summary report and fraudulent IRS Form 941 for the first quarter of 2020
that falsely reported the payment of wages of approximately $2,157,170 to employees.
19. It was further a part of the scheme that, on or about July 27, 2020,
DISTEFANO and URUMIEH caused to be submitted to Arkansas Capital a
fraudulent IRS Form 940 that falsely reported that National paid wages, tips, and
compensation of approximately $8,269,698 to its employees.
20. It was further a part of the scheme that, on or around July 27, 2020,
URUMIEH, for the purpose of effecting and concealing the scheme, applied his
Docusign signature to a Signature Card form to open a bank account for National
ending in 6449 at Encore Bank.
21. It was further part of the scheme that, on or about July 28, 2020,
DISTEFANO created a fictitious list of approximately 122 purported employees titled
“NATIONALPOSINCexportPayrollRun06.xlsx” to be used in support of the National
PPP loan application, and URUMIEH thereafter transmitted the fictitious list to
Arkansas Capital.
22. It was further part of the scheme that, on or about July 28, 2020,
URUMIEH submitted and caused to be submitted to Arkansas Capital, what he
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characterized as a “corrected” PPP loan application for National, knowing that it
falsely and fraudulently represented that National had 123 employees.
23. It was further a part of the scheme that, on or around July 28, 2020,
DISTEFANO, for the purpose of effecting and concealing the scheme, applied a
Docusign signature for URUMIEH to a Signature Card form to open a bank account
for National ending in 6472 at Encore Bank.
24. It was further part of the scheme that, through the submission of the
false and fraudulent PPP loan application and supporting materials, on or about July
29, 2020, DISTEFANO and URUMIEH caused a PPP loan of approximately
$1,722,645 to be deposited into a National account ending in 6449 at Encore Bank,
when, as DISTEFANO and URUMIEH knew, neither they nor National were entitled
to the PPP loan funds.
West Coast Second Draw PPP Application
25. It was further part of the scheme that between approximately January
29, 2021, and February 5, 2021, DISTEFANO and URUMIEH submitted and caused
to be submitted to Arkansas Capital, a fraudulent second draw PPP loan application
on behalf of West Coast in the approximate amount of $1,380,655, knowing that it
contained false and fraudulent representations regarding: (a) West Coast’s number
of employees; (b) West Coast’s average monthly payroll; (c) gross receipts; and (d) the
truthfulness and accuracy of the application and supporting documents.
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26. It was further part of the scheme that, on or about February 5, 2021,
DISTEFANO submitted and caused to be submitted a fraudulent second draw loan
application, and fraudulent IRS Forms 941 for 2019, to Arkansas Capital, which, as
DISTEFANO and URUMIEH knew, falsely represented that West Coast had 14
employees, its monthly payroll was approximately $552,262, and total payments to
all employees were approximately $6,627,145 for year 2019.
National Second Draw PPP Application
27. It was further part of the scheme that, between approximately January
29, 2021 and February 5, 2021, DISTEFANO and URUMIEH submitted and caused
to be submitted to Arkansas Capital an application for a PPP loan for National in the
amount of approximately $1,994,717, knowing that it contained false and fraudulent
representations regarding: (a) the number of employees; (b) average monthly payroll;
(c) gross receipts; and (d) the truthfulness and accuracy of the application and
supporting documents.
28. It was further part of the scheme that, on or around February 5, 2021,
DISTEFANO submitted and caused to be submitted to Arkansas Capital fraudulent
tax forms, namely IRS Forms 941 for tax year 2019, which as DISTEFANO and
URUMIEH knew, contained false representations regarding National’s number of
employees, total payments to all employees, and average monthly payroll.
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Purchase of Property in Glendale, California
29. It was further part of the scheme that, on or about August 17, 2020,
URUMIEH caused $450,000 in funds obtained from the PPP loan to National to be
transferred from the account ending in 6449 that he controlled at Encore Bank to the
account ending in 6472 that he controlled at Encore Bank.
30. It was further part of the scheme that, on or about August 18, 2020,
URUMIEH caused $450,000 in funds obtained from the PPP loan to National to be
transferred from the account ending in 6472 that he controlled at Encore Bank to the
account ending in 6250 that he controlled at Chase Bank.
31. It was further part of the scheme that, on or about September 3, 2020,
URUMIEH caused $32,000 in funds obtained from the PPP loan to National to be
transferred from the account ending in 6250 that he controlled at Chase Bank to an
escrow account for the purchase of real property located at 29XX E. Chevy Chase Dr.
in Glendale, California (the “Glendale Property”).
Better Mortgage
32. It was further part of the scheme that, between approximately
September 9, 2020 and October 19, 2020, DISTEFANO and URUMIEH submitted
and caused to be submitted to Better Mortgage an application for a residential real
estate loan in the amount of approximately $746,555 to purchase the Glendale
Property, knowing that such application contained false and fraudulent
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representations regarding: (a) monthly income; and (b) the truthfulness and accuracy
of the application and supporting documents.
33. It was further part of the scheme that, on or about September 9, 2020,
DISTEFANO and URUMIEH submitted and caused to be submitted a fraudulent
Uniform Residential Loan Application to Better Mortgage falsely representing that
URUMIEH had monthly income of $233,333.
34. It was further part of the scheme that between approximately
September 9, 2020 and October 19, 2020, DISTEFANO and URUMIEH submitted
and caused to be submitted to Better Mortgage two fraudulent individual income tax
returns (IRS Forms 1040-X) falsely representing that URUMIEH had adjusted gross
income of $8,908,233.43 in 2019 and adjusted gross income of $7,659,188.50 in 2018,
and a fraudulent letter from “ER TAX SERVICES” explaining the IRS Forms 1040-
X.
35. It was further part of the scheme that between approximately
September 9, 2020, and October 19, 2020, DISTEFANO and URUMIEH submitted
and caused to be submitted to Better Mortgage a fraudulent “Large Deposit
Explanation” that falsely attributed a $450,000 deposit of proceeds from the National
first draw PPP loan into an account that URUMIEH controlled at Chase Bank ending
in 6250, as proceeds of a liquidation of URUMIEH’s “stock options on TastyTrade.”
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36. It was further a part of the scheme that, on or about October 19, 2020,
URIMIAH, after he was informed by Better Mortgage that his loan application had
been rejected by underwriting because of “discrepancies in income in the amount of
millions of dollars from what was reported to the IRS when your taxes were filed as
opposed to the tax returns that [Better Mortgage] received,” sent an email to
DISTEFANO and Individual A stating “[t]hats what I was concerned about” and
asking “[w]hat now?” to which DISTEFANO responded with a false narrative for
URUMIEH to provide to Better Mortgage.
Planet Home
37. It was further part of the scheme that, between approximately October
30, 2020 and December 4, 2020, DISTEFANO, URUMIEH, and Individual A
submitted and caused to be submitted to Planet Home an application on behalf of
URUMIEH for a residential real estate loan in the amount of approximately $765,600
to purchase the Glendale Property, knowing that such application contained false and
fraudulent representations regarding: (a) monthly income; and (b) the truthfulness
and accuracy of the application and supporting documents.
38. It was further part of the scheme that, on or about October 30, 2020,
DISTEFANO and URIMIAH submitted and caused to be submitted a fraudulent
Uniform Residential Loan Application to Planet Home falsely representing that
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URUMIEH was employed by National and West Coast, both of Addison, Illinois, with
a total monthly income of $30,833.
39. It was further a part of the scheme that, on or about November 17, 2020,
URUMIEH caused $105,000 in proceeds of the West Coast PPP loan to be transferred
from an account at Encore Bank ending in 6282 to an account that URUMIEH
controlled at Chase Bank ending in 6250.
40. It was further part of the scheme that, between approximately October
30, 2020 and December 4, 2020, DISTEFANO, URUMIEH, and Individual A, created
and caused to be created and submitted to Planet Home, a fraudulent Sales Purchase
Agreement dated August 1, 2020 (the “Sales Purchase Agreement”), that falsely
recounted that West Coast was sold by URUMIEH to Distefano Enterprises for
$2,000,000 payable in installments, and that URUMIEH was to enter into a 10-year
employment agreement with Distefano Enterprises at an annual salary of $365,000.
41. It was further a part of the scheme that, on or around December 4, 2020,
URIMIAH executed and caused to be submitted a fraudulent Uniform Residential
Loan Application to Planet Home falsely representing that he was then employed by
West Coast of Addison, Illinois as a “Consultant” with a total monthly income of
$30,416.
42. It was further a part of the scheme that, on or around December 4, 2020,
URUMIEH caused a wire transfer of approximately $280,421 in funds from the
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account he controlled at Chase Bank ending in 6250, to Escrow Company 1 for the
purchase of the Glendale Property.
43. It was further part of the scheme that, through the submission of the
false and fraudulent Uniform Residential Loan Application and supporting
materials, on or about December 4, 2020, URUMIEH, DISTEFANO, and Individual
A caused Planet Home to disburse approximately $765,600 to Escrow Company 1 to
enable URUMIEH to purchase the Glendale Property, when, as URUMIEH,
DISTEFANO, and Individual A knew, URUMIEH was not entitled to the funds.
44. It was further part of the scheme that DISTEFANO and URUMIEH
misrepresented, concealed, and hid, and caused to be misrepresented, concealed, and
hidden, the existence and purpose of the scheme and the acts done in furtherance of
the scheme.
45. On or about the dates set forth below, in the Northern District of Illinois,
Eastern Division, and elsewhere, defendants FRANCESCO DISTEFANO and
SARGIS URUMIEH, as set forth below, for the purpose of executing the above-
described scheme, knowingly caused to be transmitted by means of wire
communication in interstate commerce certain writings, signs, and signals, listed
below, each such writing, sign, and signal constituting a separate count:
Count Date Description of Act
1 March 31, 2020 An internet transmission of an EIDL application on
behalf of “WEST COAST POS INC.” to the SBA
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Count Date Description of Act
2 July 20, 2020 An internet transmission of a PPP loan application on
behalf of “WEST COAST POS INC.” to Arkansas
Capital
3 July 21, 2020 An internet transmission of a Docusign signature upon
a Corporate Authorization Resolution form to Encore
Bank
4 February 5, 2021 An internet transmission of a PPP loan application on
behalf of “WEST COAST POS INC.” to Arkansas
Capital
5 July 26, 2020 An internet transmission of a PPP loan application on
behalf of “NATIONAL POS INC.” to Arkansas Capital
6 July 28, 2020 An internet transmission of a Docusign signature upon
a Signature Card form to Encore Bank
7 February 5, 2021 An internet transmission of a PPP loan application on
behalf of “NATIONAL POS INC.” accompanied by
falsified IRS Forms 941 to Arkansas Capital
8 November 27, An internet transmission of a Docusign envelope
2020 containing the Sales Purchase Agreement from
DISTEFANO to URUMIEH
In violation of Title 18, United States Code, Section 1343.
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COUNTS NINE THROUGH ELEVEN
The SPECIAL MAY 2024 GRAND JURY further charges:
1. Paragraphs 1(a), 1(d) through 1(q), 1(s), 1(t), 1(v), and 1(z) of Counts One
through Eight are incorporated here.
2. Beginning in or around March 2020, and continuing until in or around
February 2021, in the Northern District of Illinois, Eastern Division, and elsewhere,
FRANCESCO DISTEFANO,
defendant herein, knowingly devised, intended to devise, and participated in a
scheme to defraud and to obtain money and property from government relief
programs, by means of materially false and fraudulent pretenses, representations,
and promises, as further described below.
3. It was part of the scheme that DISTEFANO, for the purpose of
fraudulently obtaining approximately $440,835 in PPP and EIDL funds, submitted
and caused to be submitted not fewer than three fraudulent applications for loans
and advances under the PPP and EIDL programs on behalf of Distefano Enterprises,
which applications and supporting documents contained materially false
representations concerning, among other things, Distefano Enterprises’ purported
number of employees, payroll, gross revenues and operating expenses.
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EIDL Application and Loan
4. It was further part of the scheme, that on or about March 31, 2020,
DISTEFANO submitted and caused to be submitted to the SBA an online EIDL
application for Distefano Enterprises seeking a loan in the amount of $150,000 and
an EIDL advance in the amount of $10,000, knowing that the application contained
false and fraudulent representations.
5. It was further part of the scheme that on or about March 31, 2020, in
order to obtain the EIDL and advance, DISTEFANO prepared and submitted a
fraudulent loan application in which he falsely represented that Distefano
Enterprises had gross revenues of $2,500,000 and cost of goods sold of $2,120,000 for
the 12 months ending January 31, 2020, and 12 employees as of that date, when, as
DISTEFANO knew, Distefano Enterprises did not have 12 employees and did not
have the revenues or cost of goods stated in the application.
6. It was further part of the scheme that, through the submission of the
false and fraudulent EIDL application, DISTEFANO caused the SBA, on or about
June 10, 2020, to disburse approximately $149,900 in EIDL proceeds into a bank
account ending in 9624 at U.S. Bank that was controlled by DISTEFANO.
7. It was further part of the scheme that, through the submission of the
false and fraudulent EIDL application, DISTEFANO caused the SBA, on or about
June 18, 2020, to disburse approximately $10,000 in EIDL advance funds into a bank
24
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account ending in 9624 at U.S. Bank that was controlled by DISTEFANO.
PPP Loan from U.S. Bank
8. It was further part of the scheme that between approximately April 20,
2020, and May 13, 2020, DISTEFANO submitted and caused to be submitted to U.S.
Bank a PPP loan application on behalf of Distefano Enterprises in the amount of
$237,500, knowing that the application contained false and fraudulent
representations regarding: (a) Distefano Enterprises’ number of employees; (b)
Distefano Enterprises’ average monthly payroll; and (c) the truthfulness and
accuracy of the application and supporting documents.
9. It was further part of the scheme that, in order to obtain a PPP loan, on
or about April 27, 2020, DISTEFANO sent an email to U.S. Bank, containing the
fraudulent PPP loan application for Distefano Enterprises, which falsely represented
that Distefano Enterprises had 14 employees with an average monthly payroll of
$95,000.
10. It was further part of the scheme that, on or about April 27, 2020,
DISTEFANO sent an email to U.S. Bank, containing a fraudulent Payroll Run Report
that falsely purported to be issued by Payroll Processor 2 and falsely represented that
Distefano Enterprises had total payroll of approximately $1,011,889 during calendar
year 2019.
11. It was further part of the scheme that, on or about May 13, 2020,
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DISTEFANO submitted a revised fraudulent PPP loan application to U.S. Bank,
which falsely represented that Distefano Enterprises had 14 employees with an
average monthly payroll of $79,166.
12. It was further part of the scheme that, through the submission of the
false and fraudulent PPP loan application and supporting materials, DISTEFANO
caused U.S. Bank, on or about May 13, 2020, to disburse a PPP loan of approximately
$197,915 into an account DISTEFANO controlled at U.S. Bank ending 9624, when,
as DISTEFANO knew, neither he nor Distefano Enterprises was entitled to the PPP
loan funds.
Forgiveness Application Submitted to SBA
13. It was further part of the scheme that, on or around October 29, 2020,
in order to fraudulently obtain forgiveness of the Distefano Enterprises PPP loan
obtained through U.S. Bank, DISTEFANO submitted and caused to be submitted to
the SBA, a PPP Loan Forgiveness Application Form 3508EZ, knowing that the
forgiveness application contained false and fraudulent representations regarding: (a)
Distefano Enterprises’ number of employees; (b) Distefano Enterprises’ average
monthly payroll; and (c) the truthfulness and accuracy of the application and
supporting documents.
14. It was further part of the scheme that, on or around October 29, 2020
DISTEFANO prepared and submitted a fraudulent forgiveness application to SBA
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falsely representing that, between May 13, 2020 and October 27, 2020, Distefano
Enterprises had payroll costs of $255,478.54, and that, as of the date of the
forgiveness application, Distefano Enterprises had seven employees, when, as
DISTEFANO knew, DISTEFANO enterprises did not have seven employees and had
not paid the payroll amounts represented.
15. It was further part of the scheme that on or around October 29, 2020,
DISTEFANO submitted to the U.S. Bank in support of the forgiveness application, a
fraudulent IRS Form 941 for the third quarter of 2020, falsely representing that
Distefano Enterprises had seven employees who received wages, tips, or other
compensation totaling $217,149.38 during that period, and that the original of the
IRS Form 941 had been filed electronically, when, as DISTEFANO knew, Distefano
Enterprises had not filed or caused to be filed an IRS Form 941 and had neither the
employees nor the payroll represented in the document.
Distefano Enterprises Second Draw PPP Application
16. It was further part of the scheme that, between approximately January
29, 2021 and February 5, 2021, DISTEFANO submitted and caused to be submitted
to Arkansas Capital an application for a second draw PPP loan for Distefano
Enterprises in the amount of approximately $83,920, knowing that it contained false
and fraudulent representations regarding: (a) the number of employees; (b) average
monthly payroll; and (c) the truthfulness and accuracy of the application and
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supporting documents.
17. It was further part of the scheme that, in order to obtain a PPP loan, on
or about February 5, 2021, DISTEFANO sent an email to Arkansas Capital,
containing a fraudulent PPP loan application for Distefano Enterprises, falsely
representing that Distefano Enterprises had 14 employees and average monthly
payroll of $33,568.13, when, as DISTEFANO knew, Distefano Enterprises had
neither the represented number of employees nor the represented amount of payroll.
18. It was further part of the scheme that on or about February 5, 2021,
DISTEFANO submitted to Arkansas Capital, in support of the Distefano Enterprises
second draw PPP loan application, fraudulent IRS Forms 941 for the first, second,
third, and fourth quarters of 2019, and the second quarter of 2020, that had not been
filed with the IRS, and falsely represented the number of individuals employed and
wages paid by Distefano Enterprises.
19. It was further part of the scheme that DISTEFANO misrepresented,
concealed, and hid, and caused to be misrepresented, concealed, and hidden, the
existence and purpose of the scheme and the acts done in furtherance of the scheme.
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20. On or about the dates set forth below, in the Northern District of Illinois,
Eastern Division, and elsewhere, defendant FRANCESCO DISTEFANO, as set forth
below, for the purpose of executing the above-described scheme, knowingly caused to
be transmitted by means of wire communication in interstate commerce certain
writings, signs, and signals, listed below, each such writing, sign, and signal
constituting a separate count:
Count Date Description of Act
9 March 31, 2020 An internet transmission of an EIDL application on
behalf of “DISTEFANO ENTERPRISES LLC” to the
SBA
10 April 27, 2020 An internet transmission of a PPP loan application on
behalf of “DISTEFANO ENTERPRISES LLC” to U.S.
Bank
11 February 5, 2021 An internet transmission of a PPP loan application on
behalf of “DISTEFANO ENTERPRISES LLC”
accompanied by falsified IRS Forms 941 to Arkansas
Capital
In violation of Title 18, United States Code, Section 1343.
29
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COUNT TWELVE
The SPECIAL MAY 2024 GRAND JURY further charges:
1. Paragraphs 1(a), 1(d) through 1(i), 1(k), and 1(s) of Counts One through
Eight are incorporated here.
2. On or about April 27, 2020, in the Northern District of Illinois, Eastern
Division, and elsewhere,
FRANCESCO DISTEFANO,
defendant herein, knowingly made a false statement to U.S. Bank for the purpose of
influencing the actions of U.S. Bank concerning a PPP loan application, in that
defendant falsely stated:
a. That Distefano Enterprises had 14 employees; and
b. That Distefano Enterprises had an Average Monthly Payroll of $95,000;
when defendant knew that such statements were false;
In violation of Title 18, United States Code, Section 1014.
30
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COUNTS THIRTEEN THROUGH SEVENTEEN
The SPECIAL MAY 2024 GRAND JURY further charges:
On or about the dates set forth below, in the Northern District of Illinois and
elsewhere,
FRANCESCO DISTEFANO,
defendant herein, did knowingly engage and attempt to engage in a monetary
transaction affecting interstate or foreign commerce and involving criminally derived
property of a value greater than $10,000, in the manner described by count below,
such property having been derived from specified unlawful activity, namely, wire
fraud, in violation of Title 18, United States Code, Section 1343:
Count Date Financial Transaction
13 July 31, 2020 Transfer and deposit of $388,821 into U.S. Bank
account ending in 9624 of proceeds traceable to the
National PPP loan
14 July 31, 2020 The purchase of Cashier’s Check #4264509237 in
the amount of $95,445 with funds from the U.S.
Bank Account ending in 9624 that was used to
purchase a 2016 Lamborghini Huracan,
VIN # ending in 4413
15 July 31, 2020 The purchase of Cashier’s Check #4264509235 in
the amount of $41,250.94 with funds from the U.S.
Bank Account ending in 9624 that was used to
purchase a 2017 Maserati Ghibli, VIN # ending in
0190
16 July 31, 2020 The purchase of Cashier’s Check #4264509234 in
the amount of $46,509.39 with funds from the U.S.
Bank Account ending in 9624 that was used to
purchase to payoff loan balance for a 2020 Land
Rover Evoque, VIN # ending in 6525
31
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17 August 6, 2020 Use of Check #1212 in the amount of $89,345 drawn
on U.S. Bank account ending in 9624 for purchase
of 2017 Porsche 911 Carrera S Coupe, VIN # ending
in 3487
All in violation of Title 18, United States Code, Section 1957(a).
32
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FORFEITURE ALLEGATION ONE
(Proceeds of the Distefano and Urumieh Scheme)
The SPECIAL MAY 2024 GRAND JURY further alleges:
1. Upon conviction of an offense in violation of Title 18, United States Code,
Section 1343, as set forth in Counts One through Eight of this Superseding
Indictment, defendants shall forfeit to the United States of America any property
which constitutes and is derived from proceeds traceable to the offense, as provided
in Title 18, United States Code, Section 981(a)(1)(C), and any property traceable to
such property, as provided in Title 18, United States Code, Section 982(a)(1).
2. The property to be forfeited includes, but is not limited to:
a. A personal money judgment in an amount equal to the proceeds derived
from the offenses in violation of Title 18, United States Code, Section 1343, estimated
to be approximately $2,973,436.
b. The following specific property:
i. a 2016 Lamborghini Huracan, VIN # ZHWUC2ZF1GLA04413;
ii. 2017 Maserati Ghibli, VIN # ZAM57RTA1H1230190;
iii. 2020 Land Rover Evoque, VIN # SALZP2FX7LH006525;
iv. 2017 Porsche 911 Carrera S Coupe, VIN #
WP0AB2A9XHS123487;
v. 2020 Tesla Model 3, VIN # 5YJ3E1EA5LF808078;
vi. 29XX E. Chevy Chase Dr. in Glendale, California; and
33
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vii. $320,117.25 seized from U.S. Bank account ending in 9624.
3. If any of the property described above, as a result of any act or omission
by a defendant: cannot be located upon the exercise of due diligence, has been
transferred or sold to, or deposited with, a third party, has been placed beyond the
jurisdiction of the Court; has been substantially diminished in value; or has been
commingled with other property which cannot be divided without difficulty, the
United States of America shall be entitled to forfeiture of substitute property, as
provided in Title 21, United States Code, Section 853(p).
34
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FORFEITURE ALLEGATION TWO
(Proceeds of the Distefano PPP and EIDL Scheme)
The SPECIAL MAY 2024 GRAND JURY further alleges:
1. Upon conviction of offenses in violation of Title 18, United States Code,
Sections 1014 and 1343, as set forth in Counts Nine through Twelve of this
Superseding Indictment, defendant shall forfeit to the United States of America any
property which constitutes and is derived from proceeds traceable to the offense, as
provided in Title 18, United States Code, Section 981(a)(1)(C), and any property
traceable to such property, as provided in Title 18, United States Code, Section
982(a)(1).
2. The property to be forfeited includes, but is not limited to:
a. A personal money judgment in an amount equal to the proceeds
derived from the offenses in violation of Title 18, United States Code, Sections 1014
and 1343, estimated to be approximately $357,815.
b. The following specific property:
i. $357,815 seized from U.S. Bank account ending in 9624.
3. If any of the property described above, as a result of any act or omission
by a defendant: cannot be located upon the exercise of due diligence, has been
transferred or sold to, or deposited with, a third party, has been placed beyond the
jurisdiction of the Court; has been substantially diminished in value; or has been
commingled with other property which cannot be divided without difficulty, the
35
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United States of America shall be entitled to forfeiture of substitute property, as
provided in Title 21, United States Code, Section 853(p).
A TRUE BILL:
FOREPERSON
______________________________________
ACTING UNITED STATES ATTORNEY
36
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