Affidavit in Support of Warrant - Julio Enrique Lugo and Rosenide Venant (March 26, 2021)

Summary

An Affidavit in Support of Warrant, Case 8:21-mj-01294-AAS, Document 1, filed March 26, 2021, in the United States District Court for the Middle District of Florida. An FBI Special Agent states that the affidavit supports an application for a criminal complaint and arrest warrant for Julio Enrique Lugo and Rosenide Venant. The affiant states that approximately 70 fraudulent loan applications seeking at least approximately $5.8 million in SBA coronavirus relief funds were traced to IP addresses assigned to their home, and that Lugo was listed as applicant on at least four loans seeking approximately $321,485. It concludes there is probable cause of violations of 18 U.S.C. §§ 371 and 1014, and, as to Lugo, § 1957. Appendix 1 lists family companies' loans.

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Case 8:21-mj-01294-AAS Document1 Filed 03/26/21 Page 2 of 32 PagelD 2

AFFIDAVIT IN SUPPORT OF WARRANT

I, John E. Herman, being duly sworn, hereby depose and state as follows:

1. Iam a Special Agent with the Federal Bureau of Investigation (“FBI”),
and have been since 2007. Prior to joining the FBI, I was Captain in the United States
Army. My duties include investigating federal crimes, including conspiracy, bank
fraud, and wire fraud.

2. As an FBI agent, I am charged with enforcing the laws of the United
States of America, and possess the authority to request, to obtain, and to execute
orders of the United States Courts, including search warrants issued under federal
authority. I have extensive training in investigations, particularly for fraud.

3, This Affidavit supports an application for a criminal complaint and
arrest warrant for JULIO ENRIQUE LUGO, a/k/a “Rick Williams,” and
ROSENIDE VENANT, a/k/a “Rose Lugo.” As detailed below, LUGO and
VENANT conspired to defraud the Small Business Administration (“SBA”) and to
commit other offenses by submitting false and fraudulent information to steal and
attempt to steal coronavirus relief funds from the SBA’s Paycheck Protection Program
(“PPP”) and Economic Injury Disaster Loan (“EIDL”) program. In total,
approximately 70 fraudulent loan applications seeking at least approximately $5.8
million in SBA coronavirus relief funds were traced back to Internet Protocol
addresses (“IP-Addresses”) assigned to LUGO and VENANT’s home in the Middle
District of Florida. LUGO, himself, was listed as the applicant on at least four of the

fraudulent EIDL/PPP loans, which sought a total of approximately $321,485. As for
Case 8:21-mj-01294-AAS Document1 Filed 03/26/21 Page 3 of 32 PagelD 3

VENANT, she was listed as the applicant on at least 13 fraudulent EIDL/PPP loans,
which sought a total of approximately $1.2 million. Additionally, as detailed later,
LUGO and VENANT had access to and misused EIDL/PPP funds, including to pay
off a note on a luxury vehicle in violation of 18 U.S.C. § 1957.

4, Based on these acts, as set forth more fully below, probable cause exists
to believe that LUGO and VENANT violated 18 U.S.C. §§ 371 (conspiracy to
defraud the SBA) and 1014 (false statements to a lending institution). Further,
probable cause exists to believe that LUGO violated 18 U.S.C. § 1957 (illegal
monetary transactions). This Affidavit is intended to show merely that there is
sufficient probable cause for the requested warrant and does not set forth all of my
knowledge about this matter.

PROBABLE CAUSE
Overview

5. In 2015, JULIO ENRIQUE LUGO, a/k/a “Rick Williams,” was
convicted of conspiracy to defraud the federal government (18 U.S.C. § 286) and
aggravated identity theft (18 U.S.C. § 1028A). United States v Julio Lugo, Case No.
0:14-cr-60105 (S.D. Fla.), Doc. 59. Then, LUGO had filed 48 fraudulent federal
income tax returns using tax-preparation businesses—including, pertinently, The
Number One Tax Specialist, LLC (“NOTS”)}—to steal at least $279,000 from the
United States Treasury using the stolen identities of unknowing victims. See id. at

Docs. 33-34. For that conviction, LUGO remains on supervised release. See id. at
Case 8:21-mj-01294-AAS Document1 Filed 03/26/21 Page 4 of 32 PagelD 4

Doc. 59. Now, LUGO is working with new conspirators to steal federal funds—this
time, coronavirus relief funds offered by the SBA—using small businesses and shell
companies like NOTS, which LUGO had used in his previous crimes.

6. The ongoing investigation has revealed that LUGO and VENANT are
conspiring to defraud the SBA with several other close family members. Other
associates and relatives also appear to be involved. The conspirators publicly hold
Florida-registered corporations (the “Lugo Family Companies”) that have
fraudulently secured coronavirus relief funds. As detailed herein, fraudulent loan and
grant applications for the Lugo Family Companies were electronically filed from IP-
Addresses! associated with the home where LUGO and VENANT live. The Lugo
Family Companies’ fraudulent loan applications sought approximately $2.5 million in
EIDL/PPP funds, resulting in at least $1.6 million of theft as set forth on the below
table. In addition, the same IP-Addresses were the origin for at least 48 other
suspicious EIDL applications for third-party companies. Altogether, the fraudulent
EIDL applications electronically submitted from LUGO and VENANT’s house

sought at least approximately $5.8 million from the SBA.

' Specifically, the IP-Addresses 47.200.4.123 and 47.200.25.251 were assigned to the home
on Preston Avenue in Davenport, Florida, where LUGO and VENANT live. The associated
account for internet service was in VENANT’s name,

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Case 8:21-mj-01294-AAS Document 1

Filed 03/26/21

Lugo Family SBA EIDL/PPP Loan Applications

Julio
Enrique
Total Applications
Applied for 4 SBA loans

(3 EIDL, 1 PPP) using
2 Florida LLCs

Lugo’s Claimed LLCs
Universal Property Vision;
Facerick Entertainment

EIDL/PPP funding attempted
$321,485

EIDL/PPP funding secured

Rosenide
Venant

ta Be
Total Applications
Applied for 13 SBA loans
(8 EIDL, 5 PPP) using
5 Florida LLCs

Venant’s Claimed LLCs
Rosenide Tax Consulting;
Rose Garden Recovery Living;
Sisters Compassionate Care;
tysal-Central, Inc.;
Diamond Taxes and Multi Services

EIDL/PPP funding attempted
$1,209,553

EIDL/PPP funding secured

$256,485
y,

Page 5 of 32 PagelD 5

(— Relative #1 )

Total Applications
Applied for 3 SBA EIDL loans

using 2 Florida LLCs

Claimed LLCs
Diamond Taxes and Multi Services;
Consumer Dispute Services

EIDL/PPP funding attempted

$413,742

Relative #2

Total Applications
Applied for 2 SBA EIDL loans
using 2 Florida LLCs

Claimed LLCs
The Number One Tox Specialist;
Rose Compassionate Care

$400,700 EIDL/PPP funding attempted
and secured:
EIDL/PPP funding secured $294,700
Relative #3 > Relative #4 »)

Applicant for SBA EIDL loan
for H & C Mortgage
Investments Realty Inc.

EIDL funds secured:

$121,500.

Applicant for SBA EIDL loan
for H & C Community
Development, Inc. and Western
Shores Mortgage Investment, Inc.

EIDL funds secured:
$249,900

See also, infra, Appendix 1 (Table of Lugo Family PPP/EIDL Loans).

i Once the EIDL or PPP funds were disbursed, the conspirators

exchanged checks with one another that were falsely labeled as “payroll” and other

qualified expenses. These transactions were designed, at least in part, to conceal the

nature, ownership, and control of the fraud proceeds. The “payroll” checks were

merely pretextual because the conspirators ultimately misused the stolen EIDL and

PPP funds, including approximately $47,000 to pay off a note on a 2017 BMW 7-

Series sedan, over $49,000 in charges at casinos, at least $13,500 spent at weight loss

centers, questionable Zelle transfers exceeding $200,000, and ATM and counter

withdrawals exceeding $320,000. LUGO even publicized his misuse of the SBA funds

in a nearly eight-minute-long video that he posted to his Facebook account’ on July 1,

2 The stills on the following page were from a video posted to the Facebook profile named
“Rick Williams.” The profile includes numerous depictions of LUGO, VENANT, and his
+t
Case 8:21-mj-01294-AAS Document1 Filed 03/26/21 Page 6 of 32 PagelD 6

2020. The video featured LUGO and VENANT at a hotel room littered with $100
bills and several items from Louis Vuitton, including, as LUGO stated in the video, a

$5,000 watch. Sample stills from the video are depicted below:

8. This conduct establishes probable cause that LUGO and VENANT
conspired to defraud the SBA in violation of 18 U.S.C. § 371 and violated multiple
federal criminal statutes, including 18 U.S.C. §§ 1014 and 1957.

Background Regarding the PPP

9. In March 2020, the Coronavirus Aid, Relief, and Economic Security

Act, or the “CARES Act,” was enacted to provide immediate assistance to

individuals, families, and organizations affected by the COVID-19 emergency.

conspirators/relatives. “Rick Williams” is believed to be an alias that pairs his middle name
“Enrique” (for “Rick”) with a family surname “Williams.”

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Among its various provisions, the CARES Act authorized the SBA to guarantee PPP
loans, the full principal amount of which could qualify for forgiveness.

10. Borrowers were required to use PPP loan proceeds for enumerated
purposes, including payroll costs,’ rent and utilities, and mortgage interest payments.
Knowing misuse of PPP funds subjected the borrower to additional liability, such as
charges for fraud.

11. Under the PPP, the maximum loan amount is the lesser of $10 million
or an amount calculated using a payroll-based formula specified in the CARES Act.
The payroll-based formula principally considers the borrower's aggregate payroll costs
from the preceding twelve months for all domestic employees.* Once an average
monthly payroll cost is established, the borrower multiplies that amount by 2.5 to
arrive at the total maximum PPP loan amount.

12. To apply for a PPP loan, potential borrowers could electronically submit
the SBA Form 2483 with supporting payroll documentation to a financial institution

that administers the loan and serves as custodian of the funds. On the SBA Form

3 Payroll costs consist of compensation to employees (whose principal place of residence is
the United States) in the form of salary, wages, commissions, or similar compensation; cash tips or
the equivalent (based on employer records of past tips or, in the absence of such records, a
reasonable, good-faith employer estimate of such tips); payment for vacation, parental, family,
medical, or sick leave; allowance for separation or dismissal, payment for the provision of employee
benefits consisting of group health care coverage, including insurance premiums, and retirement,
payment of state and local taxes assessed on compensation of employees; and for an independent
contractor or sole proprietor, wages, commissions, income, or net earnings from self-employment, or
similar compensation.

4 The payroll-based formula expressly excluded (i) any compensation of an employee whose
principal place of residence is outside of the United States; and (ii) the compensation of an
individual employee in excess of an annual salary of $100,000, prorated as necessary.

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2483, an authorized representative must make several certifications about his business
‘operations and related information. Those certifications include that: (i) the applicant
was in operation on February 15, 2020 and had employees for whom it paid salaries
and payroll taxes or paid independent contractors, as reported on a Form 1099-MISC;
(ii) current economic uncertainty made the loan request necessary to support the
applicant’s ongoing operations; and (iii) the PPP funds would be used to retain
workers and to maintain payroll or pay other qualifying expenses. Upon submitting
the SBA Form 2483, the authorized representative certifies that, should he knowingly
use the PPP funds for unauthorized purposes, the United States could hold him
legally liable, including for charges of fraud.

13. Additionally, the applicant must respond to questions regarding his
personal history, including whether he was convicted of a felony and/or placed on
probation within the previous five years. The PPP loan application expressly states
that, should the applicant respond “yes,” the PPP loan would “not be approved.” The
applicant must also certify the truth and accuracy of any information provided on the
SBA Form 2483 and in all supporting documents.' Such supporting documents could
include tax filings with the Internal Revenue Service (“IRS”), such as the IRS Form

W-3 (Transmittal of Wage and Tax Statements), IRS Form 940 (Employer’s Annual

5 Borrowers must submit supporting documents to establish loan eligibility for PPP. Such
support could include payroll tax filings (e.g., IRS Forms 940 and 941), payroll processor records,
bank records, or other records sufficient to demonstrate the qualifying payroll amount.

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Federal Unemployment Tax Return), or the IRS Form 941 (Employer’s Quarterly

Federal Tax Return).

14. Finally, the applicant must certify the following warning regarding false

statements and other criminal penalties:

Filed 03/26/21

Page 9 of 32 PagelD 9

I understand that knowingly making a false statement to obtain a
guaranteed loan from SBA is punishable under the law, including under
18 U.S.C. §§ 1001 and 3571 by imprisonment of not more than five
years and/or a fine of up to $250,000; under 15 U.S.C. § 645 by
imprisonment of not more than two years and/or a fine of not more
than $5,000; and, if submitted to a federally insured institution, under
18 U.S.C. § 1014 by imprisonment of not more than thirty years and/or
a fine of not more than $1,000,000.

15. The ongoing investigation has established that, since March 2020, the
conspirators have fraudulently applied for at least approximately 25 EIDL and PPP

loans using the Lugo Family Companies. These fraudulent loan applications sought

The Conspirators’ Fraudulent PPP Loans

at least $2.5 million in coronavirus relief funds, resulting in over $1.6 million of

disbursed program funds. Of this, at least approximately $378,000 derived from

fraudulent PPP loan applications from LUGO or VENANT as set forth below:

Onor Approx
: _ About : Associated
# Applicant Company Name _ Application pamount Email Account{s)
ate
Universal Property
] Julio Lugo Vision LLC 4/20/2020 $59,485 | julioenriquelugo@gmail.com
(“UPV”)
Rosenide Rose Garden $60,000
2 Venant Recovery Living 4/8/2020 (loan roselugo3 180@gmail.com
Inc. (“RGR”) denied)
. Rose Garden
3 Rosenide Recovery Living | 4/24/2020 | $40,000 | roselugo3180@gmail.com
enant “ "
Inc. (“RGR”)
Case 8:21-mj-01294-AAS Document1 Filed 03/26/21 Page 10 of 32 PagelD 10

Sisters
Compassionate 5/6/2020 $101,242 roselugo3 180@gmail.com
Care LLC (“SCC”)

4 Rosenide
Venant

Rosenide Diamond Taxes .
5 Venant and Multi Services | 4/20/2020 $40,208 roselugo3 180@gmail.com
Inc. (“DTMS"”)
Rosenide Diamond Taxes $77,303
6 Venant and Multi Services | 4/28/2020 (loan roselugo3180@gmail.com
Inc. (“DTMS”) denied)

UPV’s False and Fraudulent PPP Loan Application

16. Onor about April 20, 2020, LUGO electronically submitted a fraudulent
SBA Form 2483 to Bank-1, a federally insured financial institution, for a construction
company named UPV. In turn, Bank-1 awarded LUGO approximately $59,485 in
PPP funding. On the PPP loan application, LUGO was identified as UPV’s
“authorized representative” and sole owner. He cited “Payroll,” “Lease/ Mortgage
Interest,” and “Utilities” as the purposes for the PPP loan.

17.. According to the PPP loan application and Florida corporate records,
UPV was purportedly located at a commercial address on Ambersweet Way in
Davenport, Florida, which is within the Middle District of Florida. That address,
however, is merely a drop-box site at a United Parcel Service (“UPS”) store.® While
the UPS store served as UPV’s purported business address, LUGO claimed to reside
at a home on Pinecrest Loop in Davenport, Florida (the “Pinecrest Loop Address”).

The Pinecrest Loop Address, it bears noting, would later also serve as the purported

6 In prior years, UPV was registered at a residential property on Calabria Avenue, in
Davenport, Florida, which is a residential property. According to open source research, LUGO
resided at the address in the past, but the property is now occupied by another individual.

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business address on at least six other fraudulent PPP/EIDL applications submitted by
his family members—including Relative #2’s EIDL application for NOTS, the tax
preparation company central to LUGO’s 2015 fraud conviction.

18. Onthe fraudulent PPP loan application, LUGO claimed that UPV had
16 employees with an Average Monthly Payroll demand of $47,588—or, annualized,
$571,056. As the investigation has revealed, that was false. UPV had reported no
wages for any employees to the State of Florida in 2019. In Florida, employers must
report quarterly wage and hour returns to state agencies. Records from the Florida
Department of Economic Opportunity (“FDOE”) showed a complete lack of
reporting for UPV in 2019.

19. Further, a preliminary review of available financial records for UPV
showed no payroll activity prior to the coronavirus pandemic. UPV held accounts at
two different banks: Bank-2 (-6251) and Bank-1 (-0385). According to the available
bank records, prior to March 2020, UPV made no payments to the IRS for payroll
taxes or otherwise to payroll processors. Nor did UPV consistently pay wages directly
to steady employees. UPV only began issuing checks to purported “employees” after
LUGO secured PPP funds from Bank-1. After securing the PPP funds, UPV issued
checks labeled as “payroll” to his immediate family members, including conspirator
VENANT, and others. And, in turn, their respective companies—which likewise had
no payroll activity prior to the pandemic—issued similarly labeled “payroll” checks to

conspirators LUGO, VENANT, and many of the same family members.

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20. Onthe SBA Form 2483, LUGO also lied about his status as a convicted
felon on supervised release, which would have automatically disqualified him as a
PPP borrower. As noted previously, the SBA Form 2483 asked borrowers, “Within
the last 5 years, [have you] been placed on any form of parole or probation?” The
application expressly warned that, by answering “YES,” the PPP loan would be
denied. LUGO checked “NO,” even though he was actively serving a term of
supervised release from his 2015 tax conviction. He remains on supervision today.
LUGO affirmed his false answer by entering his electronic initials “J.E.L.”

21. The SBA Form 2483 also reflected LUGO’s initials (“J.E.L.”) beside all
required certifications for the PPP loan, including those set forth verbatim below:

a. “The funds will be used to retain workers and maintain payroll or make
mortgage interest payments, lease payments, and utility payments, as
specified under the Paycheck Protection Program Rule; I understand that
if the funds are knowingly used for unauthorized purposes, the federal
government may hold me legally liable, such as for charges of fraud.”

b. “I further certify that the information provided in this application and the
information provided in all supporting documents and forms is true and
accurate in all material respects. I understand that knowingly making a
false statement to obtain a guaranteed loan from SBA is punishable under
the law, including under 18 USC 1001 and 3571 by imprisonment of not
more than five years and/or a fine of up to $250,000; under 15 USC 645
by imprisonment of not more than two years and/or a fine of not more
than $5,000; and, if submitted to a federally insured institution, under 18
USC 1014 by imprisonment of not more than thirty years and/or a fine
of not more than $1,000,000.”

22. Along with the SBA Form 2483, LUGO executed an electronic PPP
Loan Promissory Note (“Note”) with Bank-1 on or about May 7, 2020. The email

address “julioenriquelugo@gmail.com” was also identified on the note. In the section

1]
Case 8:21-mj-01294-AAS Document1 Filed 03/26/21 Page 13 of 32 PagelD 13

titled “Use of Proceeds,” the Note advised that the “Borrower”—meaning LUGO—
“shall use the proceeds of this loan only for eligible expenses under the terms of the
PPP.” It further warned that “[t]he Borrower shall use the funds received under this
Note for business purposes only and not for personal, family or household purposes.”
(Emphasis added.) LUGO, however, ignored these warnings.

23. Additionally, in the Note, LUGO certified the truth and accuracy of the
information he had provided. Section 12, sub-section 17 of the certification stated:

I further certify that the information provided in this application and the information
provided in all supporting documents and forms is true and accurate in all material
respects. I understand that knowingly making a false statement to obtain a guaranteed
loan from SBA is punishable under the law, including under 18 USC 1001 and 3571
by imprisonment of not more than five years and/or a fine of up to $250,000; under
15 USC 645 by imprisonment of not more than two years and/or a fine of not more
than $5,000; and, if submitted to a federally insured institution, under 18 USC 1014
by imprisonment of not more than thirty years and/or a fine of not more than
$1,000,000.

24. This conduct establishes probable cause that LUGO violated multiple

federal criminal statutes, including 18 U.S.C. § 1014.
VENANT’s Fraudulent PPP Loan Applications

25. The ongoing investigation has also revealed that LUGO’s wife,
ROSENIDE VENANT, lied on applications seeking SBA-guaranteed funds. Using
one of her known email addresses (i.e., “roselugo3180@gmail.com”), VENANT
electronically submitted at least five fraudulent PPP loan applications for companies
held in her name to federally insured financial institutions as detailed in the following

table. VENANT’s loan applications are discussed next.

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. : On or About Approx. :
Financial en Associated
# : Company Name Application Amount :
Institution Date Disbursed Email Account(s)
Sisters Compassionate ‘
1 Bank-2 Care tLe (SCC) 5/6/2020 $101,242 roselugo3 180@gmail.com
Rose Garden Recovery $60,000 :
2 Bank-3 Living Inc. (RGR) 4/8/2020 (denied) roselugo3180@gmail.com
3| Bank-3 | RoseGarden Recovery | 4/74/2920 | $40,000 | roselugo3180@gmail.com
Living Inc. (RGR) 6
Diamond Taxes and Multi .
4 Bank-1! Services Inc. (DTMS) 4/20/2020 $40,208 roselugo3 1 80@gmail.com
Diamond Taxes and Multi $77,303 .
3 Bank-1 Services Inc. (DTMS) 4/28/2020 (denied) roselugo3 1 80@gmail.com

Sisters Compassionate Care LLC

26. Onorabout May 6, 2020, VENANT electronically submitted a
fraudulent PPP loan application for Sisters Compassionate Care LLC (“SCC”) to
Bank-2, a federally insured financial institution. According to open source research,
SCC is a home health care service with only one Google review. The review, posted
by the user “JULIO LUGO,” stated: “the place is a home for any elderly that needs
love an (sic) care.” SCC also maintained a website describing residential facilities for
the elderly and disabled.

27. VENANT listed the Pinecrest Loop Address as SCC’s business address
on documents supporting the application. This address, as noted previously, appeared
on several of the conspirators’ fraudulent EIDL/PPP loan applications.

28. VENANT served as SCC’s “authorized representative” on the PPP loan
application. As such, she certified that SCC “had employees for whom it paid salaries

and payroll taxes.” VENANT further advised that, for 2019, SCC’s Average Monthly

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Payroll was approximately $40,497.13—or, annualized, $485,965.56. By entering this
substantial figure into the payroll calculator, SCC requested approximately $101,242
in SBA-guaranteed PPP funds. Bank-2 funded the loan on or about May 8, 2020.

29. SCC’s purported payroll amount, however, required supporting .
documentation. Accordingly, VENANT sent Bank-2 a bogus IRS Form 940 for 2019.
The IRS confirmed, however, that SCC had made no filings at all for Tax Year 2019.
Further, SCC had reported no wages to the State of Florida for the same period.
Additionally, the IRS Form 940 that VENANT uploaded had plain badges of fraud,

including a backdated signature. See Excerpt Below.

Part 7: Il ‘Sign here. You MUST complete both pages of thisformandSIGNit,

Under penatties of perjury. | declare that | have examined this return, including accompanying schedules and statements, and to the
best of my knowledge and bellef, it is tue, correct, and complete, and that no part of any payment made to a state unemployment
fund claimed as a credit was, or is to be, deducted from the payments made to employeas. Declaration of preparer (other than
taxpayer) is based on all information of which preparer has any knowledge.

Verifies by POF Titer Print your

\X Sign your Siok sereaszace _ name here [ ROSENIDE: VENANT _. |
name here | Print your (7

title here [saNaceR — I

Redacted __|

12) 2%) 2019 Best daytime phone |

Dato

30. As reflected above, VENANT manually dated the form “12/27/2019”
while the automated date stamp beside her electronic signature read “05/04/2020,”
only two days before she submitted the PPP loan application to Bank-2.

31. VENANT also supplied a purported IRS Form 941 and related payroll
processing records for the first quarter of 2020. A preliminary review of available bank
records for SCC, however, showed no corresponding payroll activity prior to the
coronavirus pandemic. And, again, once the PPP funds were disbursed, SCC issued a

flurry of checks labeled as “payroll” to other conspirators, including LUGO.
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32. Finally, VENANT certified that the PPP funds awarded to SCC would
“be used to retain workers and maintain payroll or make mortgage payments, lease
payments, and utility payments.” VENANT also acknowledged her understanding
that she could be charged with fraud for the knowing use of PPP funds for
unauthorized purposes. The conspirators, however, disregarded these mandates,
including with extensive spending at casinos, large cash withdrawals, and the use of
the EIDL/PPP funds at weight loss centers.

33. This conduct establishes probable cause that VENANT violated multiple
federal criminal statutes, including 18 U.S.C. § 1014.

Rose Garden Recovery Living Inc.

34. VENANT also applied for two PPP loans for Rose Garden Recovery
Living Inc. (“RGR”) from Bank-3, a federally insured financial institution. She again
used one of her known email addresses (i.¢., “roselugo3180 @gmail.com”). According
to its website, RGR offers sober-living housing to recovering addicts. On RGR’s PPP
loan applications, VENANT listed the Pinecrest Loop Address as its purported
business location, which, as noted before, appeared on many of the subject fraudulent
PPP and EIDL applications.

35, VENANT attempted to secure PPP loan funds for RGR twice. The first
PPP loan application for RGR was submitted on or about April 8, 2020. Notably, that

day, the Lugo Family Companies had collectively applied for at least seven different

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Filed 03/26/21

Page 17 of 32 PagelD 17

SBA loans using their family members as applicants to request over $600,000 in funds

using IP-Addresses associated with LUGO and VENANT’s house:

On or
: Associated Email About EIDL/ | Amount
Applicant Company Name Account(s) Application | PPP Requested
Date
Diamond Taxes
: and Multi :
Relative #1 Services Inc. d******#*2797@gmail.com 4/8/2020 EIDL | $127,500
(DTMS)
Julio Lugo UPV rickrose8376@gmail.com 4/8/2020 EIDL $65,000
. Lysal-Central, ; : : .
Rosenide Inc. rosetaxconsultingllc@gmail.com; 4/8/2020 FIDL $92,500
Venant roselugo3180@gmail.com
(Lysal)
Rosenide .
Venant RGR roselugo3180@gmail.com 4/8/2020 EIDL $110,000
Rosenide .
Venant RGR roselugo3 180@gmail.com 4/8/2020 PPP $60,000
Rosenide Rosenide Tax
V Consulting LLC roselugo3 180@gmail.com 4/8/2020 EIDL $76,800
enant
(RTC)
Rosenide SCC roselugo3180@gmail.com 4/8/2020 | EIDL | $79,000
enant
Total: $610,800
36. | When Bank-3 denied VENANT’s first request for RGR, she tried again

on April 24, 2020. The second loan attempt was successful. On or about May 1, 2020,

Bank-3 disbursed $40,000 in PPP funds to RGR’s bank account (-0956). Again,

VENANT had agreed this money would only be used for qualified PPP expenses. A

review of RGR’s account (-0956) at Bank-3, however, revealed that the funds were

instead used for other purposes, including large transfers to other Lugo Family

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Companies. For example, on or about May 4, 2020, UPV received approximately
$12,500 from the RGR Account (-0956). Similarly, on or about June 3, 2020, RGR
wired approximately $17,000 to SCC’s account (-3292) at Bank-2.

37. Later, the RGR account (-0956) reflected other suspicious activity, such
as large wire transfers from some third-party companies that had submitted EJDL .
applications from LUGO’s confirmed IP-addresses. For example, on or about July 9,
2020, the RGR account (-0956) received an incoming wire of $48,500 from Company-
1 in Indiana. That same week, Company-1 had received approximately $150,000
from the SBA based on an EIDL application electronically filed from LUGO and
VENANT’s home. Similarly, in July 2020, the RGR account (-0956) received two
incoming wires totaling $43,500 from Company-2. Again, that same month,
Company-2 had received approximately $150,000 from the SBA based on an EIDL
application also sent from LUGO and VENANT’s home. Neither EIDL application
disclosed a “preparer” as required by the SBA.

38. Finally, in under one month, RGR sought EIDL/PPP funding at least
four times—and each application reported different information for RGR. According
to the fraudulent applications, RGR had anywhere from 5 to 10 employees and at
least 2 different business addresses as set forth on the table below. Notwithstanding,
while the RGR applications asserted upwards of 10 different employees with as much
as $20,000 in payroll per month, it had reported no wages to the State of Florida for

2019.

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Case 8:21-mj-01294-AAS Document1 Filed 03/26/21 Page 19 of 32 PagelD 19

On or About Reported
ae RGR’s Purported | EIDL / Requested
Application Business Address PPP Loan Amount Number of RGR
Date Employees
Ambersweet Way,
3/30/2020 Davenport, FL EIDL $150,000 10
Ambersweet Way,
4/8/2020 Davenport, FL EIDL $110,000 5
4/8/2020 Pinecrest Loop | ppp $60,000 7
Davenport, FL ,
4/24/2020 Pinecrest Loop PPP $40,000 6
Davenport, FL ,

39, This conduct establishes probable cause that VENANT violated multiple

federal criminal statutes, including 18 U.S.C. § 1014.
Diamond Taxes and Multi Services Inc.

40. Finally, VENANT also sought PPP funding from Bank-1, a federally
insured financial institution, for Diamond Taxes and Multi Services Inc. (“DTMS”).
In April 2020, she submitted two PPP loan applications for DTMS to Bank-1 using
the email account “roselugo3180@gmail.com.” Metadata provided by Bank-1
revealed that the fraudulent PPP loan applications were electronically filed from an
IP-Address associated with LUGO and VENANT’s home. Ultimately, Bank-1
approved one of the PPP loans, disbursing approximately $40,208 in funds to DTMS
for authorized PPP expenses.

41. Like the other Lugo. Family companies that sought PPP funds, DTMS

also appeared to be ineligible. For 2019, DTMS had reported no wages for any

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Case 8:21-mj-01294-AAS Document1 Filed 03/26/21 Page 20 of 32 PagelD 20

employees to the State of Florida. Nor had DTMS filed any business or payroll tax
returns for 2019, which were required filings. Given that DTMS is a purported tax-
preparation company, it should be on notice of its IRS filing requirements.

42. Further, the dearth of federal and state wage reporting undermines the
legitimacy of supporting documentation that DTMS sent Bank-1 as part of its PPP
loan applications. Specifically, VENANT sent a copy of a purported IRS Form W-3
(Transmittal of Wage and Tax Statements) for DTMS with each application. The
IRS, however, has no record of having received a Form W-3 from DTMS. Worse yet,
the Forms W-3 for the DTMS applications did not match. The Forms W-3 reflected
VENANT’s electronic signature dated “12/27/2019” with the unique EIN (Le.,
employer identification number) assigned to DTMS. Notwithstanding, the forms
reflected different purported business addresses as well as different numbers in Box Cc
(Total Number of Forms W-2) and Box 16 (State wages, tips, etc.). Critically, because
DTMS did not report wages to the IRS or the State of Florida, the figures reported on
either version of the Form W-3 appear to be specious.

43. This conduct establishes probable cause that VENANT violated multiple
federal criminal statutes, including 18 U.S.C. § 1014.

Background regarding EIDL

44. The CARES Act also allowed the SBA to offer EIDL funding to

businesses affected by the coronavirus pandemic. The businesses, importantly, must

have been in operation as of February 1, 2020.

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Case 8:21-mj-01294-AAS Document1 Filed 03/26/21 Page 21 of 32 PagelD 21

45. EIDL funds came directly from the United States Treasury. The money
was only for certain expenses, such as fixed debts, payroll, accounts payable, and
other bills that could have been paid had the pandemic not occurred. EIDL funds
were not for business expansion or to replace lost sales or profits.

46. To have sought EIDL funding, applicants were required to send the SBA
information about their businesses through an online portal. The required information
included, pertinently, (a) the number of employees as of January 31, 2020 (i.e., the
declared date for the COVID-19 disaster); (b) the gross revenues and the cost of goods
for the business for the twelve months prior to January 31, 2020; (c) the names and
other identifying information regarding all owners (including email address); and (d)
contact information, banking information, and other identifying details for the
business. Applicants were also required to disclose whether, in the last five years, they
had been convicted of a crime (other than a minor vehicle violation) or placed on any
form of probation.

47, Once the SBA received the EIDL application, an automated evaluation
system would perform various checks, including for duplicate loan requests. Also,
using the operational data provided, the system calculated the amount of EIDL
funding available to the borrower. Should the application not clear the SBA’s
automated evaluation, the application’s progress would be halted and the applicant

would be notified. The applicant could then work with the SBA for reconsideration.

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48. Finally, applicants had to certify that the information provided to the
SBA was true and correct under penalty of perjury. They also had to acknowledge the
below warning regarding civil liability and criminal offenses:

WARNING: Whoever wrongfully misapplies the proceeds of an SBA disaster

loan shall be civilly liable to the Administrator in an amount equal to one-and-

one half times the original principal amount of the loan under 15 U.S.C. §636(b),

In addition, any false statement or misrepresentation to SBA may result in

criminal, civil or administrative sanctions including, but not limited to: 1) fines

and imprisonment, or both, under 15 U.S.C 645, 18 U.S.C. 1001, 18 U.S.C.

1014, 18 U.S.C 1040, 18 U.S.C. 3571, and any other applicable laws; 2) treble

damages and civil penalties under the False Claims Act, 31 U.S.C. 3729; 3)

double damages and civil penalties under the Program Fraud Civil Remedies

Act, 31 U.S.C. 3802; and 4) suspension and/or debarment from all Federal

procurement and non-procurement transactions. Statutory fines may increase if

amended by the Federal Civil Penalties Inflation Adjustment Act Improvements

Act of 2015.

The Conspirators’ Fraudulent EIDL Loans

49. From March 2020 through August 2020, the SBA traced approximately
70 fraudulent EIDL applications back to LUGO and VENANT’s confirmed IP-
addresses. The EIDL applications sought at least $5.8 million from the SBA.

50. The Lugo Family’s Companies accounted for at least 19 of these EIDL
applications, as identified below. The conspirators’ EIDL applications—which had
been filed from IP-Addresses assigned to LUGO and VENANT’s home—sought over
$2.2 million from the SBA, resulting in at least $1.3 million of theft. As detailed in the
following sections, the Lugo Family Companies and their EIDL applications reflected
numerous badges of fraud, including that none had reported wages to the State of
Florida for 2019. Based on these acts, as described below, probable cause exists to

believe that LUGO, VENANT, and their conspirators committed additional overt

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16 | Relative #4 Fes err ores nee 6/22/2020 $129,600
17| Relative #2 | The Nom NOT 7/13/2020 $144,700
18 | Relative #1 Consumer "eDs) Services LLC 7/24/2020 $145,700
19} Relative #2 | Rose Compa) Care LLC 7/21/2020 $150,000

Operational Status of the Lugo Family Companies

51. To qualify for EIDL funds, as detailed earlier, the business must have
been in operation as of February 1, 2020. Further, applicants were required to
disclose, among other information, the number of employees it had as of January 31,
2020, along with the gross revenues and costs of goods for the twelve months prior to
that date. Here, as to number of employees per company, the conspirators claimed
that the Lugo Family Companies had anywhere between 5 and 28 employees, with a
median of 10 employees. These assertions appear specious, however, as the
companies had reported no payroll to the State of Florida for 2019.

52. Additionally, the IRS has provided research regarding the 2019 tax
filings for a subset of the Lugo Family Companies, namely, SCC, Rosenide Tax

Consulting (“RTC”), and Diamond Taxes and Multi Services Inc. (“DTMS”). The

7 Only one EIDL application on the above table traced back to an alternate IP Address.
Specifically, the EIDL application for Consumer Dispute Services LLC (“CDS”) was filed from the
IP Address 98.21.160.188, which resolved back to a hotel in Indiana where LUGO held a confirmed
reservation on or about the date of application, i.e., July 24, 2020. As detailed herein, CDS was only
established as a registered Florida corporation in Relative #1’s name on or about July 12, 2020—
meaning approximately 12 days before seeking EIDL funds.

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research revealed that, for 2019, these companies had not filed payroll tax returns—or
any tax returns for that matter. The failure to file was particularly egregious here as
VENANT has training in tax preparation. And, further, DTMS and RTC were
purported to be companies specialized in tax preparation.

53. In addition to the dearth of state and federal payroll reporting, the
conspirators’ EIDL applications were even facially fraudulent as to their purported
personnel. As the above table reflects, the conspirators submitted multiple EIDL
applications for nearly half of the Lugo Family Companies, including UPV, SCC,
RGR, DTMS, and Lysal-Central, Inc. (“Lysal”). Each respective company’s EIDL
applications reflected inconsistent responses to Question 33, which asks for the
“Number of Employees (As of January 31, 2020).” The applications also reported
varying figures for gross revenues (Question 14) and the cost of goods (Question 15).
Each company’s responses should have been uniform as the EIDL application seeks
information relative to a fixed date (4.e., January 31, 2020). Not once were the

responses consistent across multiple EIDL applications, as reflected below:

$75,000

Services Inc. (DTMS) 4/8/2020 15 $285,000 $114,000
Lysal-Central, Inc. 3/29/2020 26 $750,000 $125,000
(Lysal) 4/8/2020 28 $350,000 $145,000

Rose Garden Recovery Living 3/30/2020 10 $695,000 $205,200
LLC (RGR) 4/8/2020 5 $350,000 $120,000
Rosenide Tax Consulting LLC 3/29/2020 6 $450,000 $150,000
(RTC) 4/8/2020 10 $275,000 $102,000

Sisters Compassionate Care 3/29/2020 6 $265,000 $100,000
LLC (SCC) 4/8/2020 8 $279,000 $105,000
3/29/2020 8 $275,000 $75,000

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Case 8:21-mj-01294-AAS Document1. Filed 03/26/21 Page 26 of 32 PagelD 26

| Universal Property Vision | 4/8/2020 __| 5 | $250,000 | $110,000 |

54. Furthermore, as detailed earlier, EIDL eligibility required that the
business was in operation as of February 1, 2020. The bank account and corporate
registration histories for some of the Lugo Family Companies support that the

companies were not operating then:

Onor
About Corporate Registration and/or
Company Name Application Bank Account History

Date

CDS registered on or about 7/12/2020, i.e, 12 days before its

Consumer Dispute EIDL application. On 7/24/2020, i.e., the date of application,

Services LLC 7/24/2020 | Relative #1 opened CDS Account -4812 at Bank-1, where she

(CDS) received EIDL funds.

Facerick Facerick registered in 2010; remained in “inactive” status since
Entertainment 6/16/2020 2012. Facerick’s EIDL application listed LUGO’s UPV Account
LLC (Facerick) -6251 at Bank-2 for receipt of SBA funds.

H&c Relative #4 amended HCC’s corporate registration on or about
Community 6/22/2020 (i.e., the application date) to remove other officers.

Development, Inc. 6/22/2020 | That same day, Relative #4 opened an HCC Account -0447 at
(HCC) Bank-1, where he received EIDL funds.

VENANT voluntarily dissolved RCC in 2018. RCC’s corporate

C ionat 7/27/2020 | tegistration reinstated in Relative #2’s name on or about
Care LLC (RCC) 7/13/2020, ie., two weeks before EIDL application.
NOTS registration went inactive in 2015. On or about
The Number One 7/12/2020 (i.e., the day before the application), NOTS was
Tax Specialist 7/13/2020 | reinstated in Relative #2’s name. The next day, Bank-1 account
LLC (NOTS) (-5287) was opened for NOTS using Relative #2 as signor.

WSM'’s corporate registration went inactive in 2013. On or about

Western Shores 6/22/2020 (i.e., the application date), Relative #4 reinstated

aan 6/22/2020 | WSM. He also opened WSM's bank account (-6110) at Bank-1,
(W SM) , where he received EIDL funds.

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Case 8:21-mj-01294-AAS Document1 Filed 03/26/21 Page 27 of 32 PagelD 27

55. | For example, as described above, the corporate registration for NOTS
expired in 2015. Back then, LUGO had used NOTS, a purported tax-preparation
business, to commit tax fraud related to his 2015 federal conviction. Despite having
used the entity to pursue criminal activity, the conspirators reinstated NOTS as a
Florida corporation on July 12, 2020—meaning one day before they submitted its
EIDL application. The Sunbiz registration for NOTS identified only one individual as
an owner or manager (z.¢., Relative #2). The next day (i.e, the EIDL application
date), Relative #2 opened a bank account for NOTS (-5287) at Bank-1. The timing of
certain corporate registrations and account openings in relation to the EIDL
applications supports that the conspirators used and established these entities to
defraud the SBA’s EIDL program. This pattern establishes probable cause for, among
other violations, 18 U.S.C. § 371.

56. Finally, as noted previously, applicants were required to disclose
whether, in the last five years, they had been convicted of a crime or placed on any
form of probation. As he did on the PPP loan applications, LUGO again concealed
his supervised release status when he sought EIDL funds from the SBA for Facerick
and UPV.

57. The acts described above establishes probable cause to believe that

LUGO and VENANT violated 18 U.S.C. §§ 371 (conspiracy to defraud the SBA).

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Case 8:21-mj-01294-AAS Document1 Filed 03/26/21 Page 28 of 32 PagelD 28

Use of Fraudulent EIDL Funds to Purchase BAW

58. According to purchase documents, on or about May 19, 2020,
VENANT and Relative #1, purchased a 2017 BMW from a dealership in Hollywood,
Florida. The purchase price for the vehicle was $51,055. At the time of the purchase,
VENANT and Relative #1 financed a total of approximately $54,595 with a lender.
As will be detailed below, a majority of this loan was later paid off with fraudulently
obtained EIDL funds.

59. According to records obtained from the lender, VENANT and Relative
#1 were co-applicants on loan account number 62062722847831001 (Loan 1001),
which was used to purchase the BMW in May 2020. While there were a few smaller
payments made towards Loan 1001, the largest payment was a $47,000 wire on June
26, 2020, from LUGO’s UPV bank account (-6251) at Bank-2. This wire was funded
just days before with fraudulently obtained EIDL proceeds.

60. As detailed above, on or about June 16, 2020, LUGO had submitted an
EIDL application on behalf of Facerick Entertainment, LLC, seeking approximately
$105,000 (the “Facerick SBA EIDL”). Facerick was formed and registered in 2010;
however, according to corporate filings, it has remained in “inactive” status since
2012. Facerick’s SBA EIDL application listed UPV Account -6251 for receipt of the

SBA funds.

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Case 8:21-mj-01294-AAS Document1 Filed 03/26/21 Page 29 of 32 PagelD 29

61. According to account records, UPV Account -6251 was opened on or
about December 21, 2018, by LUGO, and is held in the name of UPV. LUGO is the
sole signatory on the account.

62. On/June 22, 2020, UPV Account -6251 had a balance of approximately
$1,324.44. On or about June 23, 2020, $104,900 from the Facerick SBA EIDL was
deposited into UPV Account -6251, leaving a balance of $106,224.44.

63. Immediately following the Facerick SBA EIDL deposit, on June 23,
2020, there were two outgoing Zelle transfers totaling $6,000. On June 24, 2020, there
was an unexplained counter credit of $15,000 to the account, leaving a balance of
$115,224.44. On June 26, 2020, $47,000* was transferred from UPV Account -6251 to
Loan 1001 to pay down the balance owed. According to the loan documents, Loan
1001 was ultimately paid off in or around August 2020.

64. Because the June 24, 2020 wire that substantially satisfied Loan 1001
involved more than $10,000 in criminally derived funds, LUGO made this

transaction in violation of 18 U.S.C. § 1957.

8 Even assuming, arguendo, that the unexplained June 23, 2020 counter credit of $15,000 to
UPV Account 6251 came from untainted sources, those funds would not have been sufficient, on
their own, to fund the $47,000 wire to Loan 1001 on June 24, 2020. Therefore, at least $32,000 of
this wire is traceable to the proceeds of the fraudulently obtained Facerick SBA EIDL.
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Case 8:21-mj-01294-AAS Document1_ Filed 03/26/21 Page 30 of 32 PagelD 30

CONCLUSION

Based on the foregoing facts, probable cause exists to believe that, from at
least in or around March 2020, through and including August 2020, JULIO
ENRIQUE LUGO (a/k/a “Rick Williams”) and ROSENIDE VENANT (a/k/a
“Rose Lugo”) violated 18 U.S.C. §§ 371 (conspiracy to defraud the SBA) and 1014
(false statements to a lending institution). Further, probable cause exists to believe
that, on or about June 24, 2020, LUGO violated 18 U.S.C. § 1957 (illegal monetary
transactions).

FURTHER AFFIANT SAYETH NAUGHT.

Jolin E. Herman, Special Agent, FBI

Sworn to by the applicant in accordance with
the requirements of Fed. R. Crim. P. 4.1 and “il a)

eS) via telephone this Ze day of
March 2021.

AMANDA A.SANSONE
United States Magistrate Judge

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Case 8:21-mj-01294-AAS Document 1

Filed 03/26/21

Appendix 1: Lugo Family Companies’ SBA Loans

Page 31 of 32 PagelD 31

: On or About EIDL / Amount
# Applicant Company Name Application Date PPP Requested Approved?
H & C Mortgage
1 Relative #3 Investments Realty Inc. 6/16/2020 EIDL $121,500 Yes
(HCM) .
. Consumer Dispute Services
2 Relative #1 LLC (CDS) 7/24/2020 EIDL $145,700 Yes
. Diamond Taxes and Multi
3 Relative #1 Services Inc. (DTMS) 3/29/2020 EIDL $127,500 Yes
. Diamond Taxes and Multi
4 Relative #1 Services Inc. (DTMS) 4/8/2020 EIDL $127,500 No
. H & C Community
5 Relative #4 Development, Inc. (HCC) 6/22/2020 EIDL $120,300 Yes
6 | Relative#4 | Western Shores Mortgage 6/22/2020 EIDL $129,600 Yes
Investment, Inc.
7 | Relative #2 | Rose Compassionate Care 7/27/2020 EIDL $150,000 Yes
LLC (RCC) ’
. The Number One Tax
8 Relative #2 Specialist LLC (NOTS) 7/13/2020 EIDL $144,700 Yes
Facerick Entertainment
9 Julio Lugo LLC 6/16/2020 EIDL $105,000 Yes
(Facerick)
10 | JulioLugo | Universal Property Vision 3/29/2020 EIDL $92,000 Yes
LLC (UPV) ,
. Universal Property Vision
11 Julio Lugo LLC (UPV) 4/8/2020 EIDL $65,000 No
. Universal Property Vision
12 Julio Lugo LLC (UPV) 4/20/2020 PPP $59,485 Yes

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