Indictment — United States v. Takara Hughes, District of Minnesota (Doc. 1)

Summary

An Indictment in United States of America v. Takara Hughes, Case 0:22-cr-00130-ADM-BRT, in the U.S. District Court for the District of Minnesota, filed June 30, 2022 as Doc. 1. Counts 1-5 charge wire fraud under Title 18, United States Code, Section 1343. The grand jury alleges that from at least June 2020 through July 2021 the defendant applied for at least $1.9 million in pandemic-related unemployment benefits and small business loans for herself and others, including UI claims to California, Louisiana, Minnesota and Washington and EIDL and PPP applications with fake revenue figures and tax records. It alleges California's EDD paid approximately $46,000 and a PPP loan paid approximately $20,832.00, and that the defendant filed at least 40 UI claims and at least 30 loan applications for others, at times for a fee. The Indictment includes forfeiture allegations.

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“Indictment — United States v. Takara Hughes, District of Minnesota (Doc. 1).” Original at archive.org. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/indictment-no-0-22-cr-00130-dkt-1-d-minn-d45568b22b/, SHA-256 70df93001cecd95f27a74e3ca93a5fa74c9acde563490a0a84861f3b6bc87ee5.

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CASE 0:22-cr-00130-ADM-BRT Doc. 1 Filed 06/30/22 Page 1 of 12
Je - cr- t30 Aum;gXt

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

UNITED STATES OF AMERICA, )
) INDICTMENT
Plaintiff, j 18 U.S.C. S 1343
v.
. ) 18 U.S.c. 5 e81(a)(1XC)
) 28 U.S.C. S 2461(c)
TAKARA HUGHES. )
)
Defendant. )

The UNITED STATES GRA.ND JURY charges:

General Allegations

At times material to this Indictment:

The Defendant

1. Defend.ant TAKARA HUGHES was a resident of Maplewood, Inver

Grove'Heights, and Saint Paul, in the State and District of Minnesota.

2. From at least in or about June 2020 through in or about JuIy 202I,

defendant HUGHES capitalized on the COVID-19 pandemic to exploit emergency

funding for needy, eligible unemployed. workers and small businesses by engaging in

a fraud scheme to obtain and spend benefits and loan proceeds that d.efendant

HUGHES knew that she. and others, were not entitled to receive. Defendant

HUGHES used false and fraud.ulent pretenses, representations, promises, and

concealment of material facts to apply for at least $1.9 million in pandemic-related

unemployment benefi"ts and small business loans for herself and others.

ANNED
JUN 3 0?02?.
CASE 0:22-cr-00130-ADM-BRT Doc. 1 Filed 06/30/22 Page 2 of 12

P an demic-Rel at e d Un emp loyment Benefit s

3. The Social Security Act of 1935 initiated the federal and state
unemployment ("UI") system, which provided benefits to individuals who were

unemployed for reasons beyond their control. The UI system's purpose was to lessen

the effects of unemployment through cash payments made directly to laid-off workers,

and to ensure that life necessities were met on a weeklv basis while the workers seek

employment. The UI system was administered through the states' respective

workforce agencies, such as California's Employment Development Department

("EDD"), Minnesota's Department of Employment and Economic Development

('DEED"), and similar agencies in other states.

4. Beginning in or about March 2020 and continuing through in or about

September 202I, the federal government provided signifi.cant supplemental UI

benefi.ts that flowed to and through the states to offset the historic need for

unemployment benefi.ts by the American workforce due to the COVID-l9 pandemic.

Through such legislation as the Coronavirus Aid, Relief, and Economic Security Act

("CARES Acf,') enacted in March 2020, the Consolidated Appropriations Act 202L,

and the American Rescue Plan enacted in March 2021, the federal government

extended and expanded these UI programs in a number of ways, including by:

Iengthening the eligibility period for UI benefi.ts; increasing the amount of UI benefi.ts

individuals could receive; and extending UI to workers impacted by the COVID-19

pandemic who were not ordinarily eligible for unemployment benefi.ts.
CASE 0:22-cr-00130-ADM-BRT Doc. 1 Filed 06/30/22 Page 3 of 12

5. UI funds through these pandemic-related programs were received by
state workforce agencies, such as California s EDD and Minnesota's DEED, from the

United States Department of Treasury through a program known as the Automated

Standard Application for Payments, which was an electronic system that federal

agencies used to transfer funds to recipient organizations.

6. UI claimants were required to answer certain questions to establish
their eligibility for UI benefi.ts and to certifii that they met one of the COVID-l9

related reasons for being unemployed, partially unemployed, or unable or unavailable

to work. Although various states'UI applications had their own format and content,

they nonetheless generally required that the applicants certifir certain information,

such as, that the applicants provided true and accurate information, that the

applicants were eligible to receive UI from a certain state, and that the applicants

had not previously applied for UI from a different state. The state workforce agencies

relied upon the information provided by UI claimants in determining eligibility for

UI benefits.

7. One way in which some states provided UI benefits to claimants, such

as California's EDD, was through the use of Bank of America-issued debit cards that

were mailed through the U.S. Postal Service to claimants at the addresses provided

in the UI claims. A-fter claimants received their Bank of America debit cards, they

could activate it online or over the phone and could use the card to withdraw cash

and pay expenses. Alternatively, claimants could provide the state agency with a
CASE 0:22-cr-00130-ADM-BRT Doc. 1 Filed 06/30/22 Page 4 of 12

bank routing number and bank account, and unemployment benefits were directly

deposited to that account.

8. If a state workforce agency approved a UI claim, claimants were
required to certi$r every two weeks via telephone or Internet, under penalty of

perjury, that they remained unsmploled and eligible to receive UI benefi.ts. Upon

receipt of that periodic certifi.cation, then the state workforce agency authorized and

d.eposited payment to the claimants' debit cards, which, for California's EDD, meant

Bank of America debit cards. or to their bank account.

Pandemic-Related Loans to Small Businesses

9. The United States Small Business Administration ('SBA") was an

executive-branch agency of the United States government that provided support to

entrepreneurs and small businesses. The mission of the SBA was to maintain and

strengthen the nation's economy by enabling the establishment and viability of small

businesses and by assisting in the economic recovery of communities after disasters.

As part of this effort, the SBA enabled and provided for loans through banks, credit

unions, and other lenders. These loans had government-backed guarantees.

10. An additional source of funding authorized by the CARES Act, and
subsequently, by the American Rescue PIan Act of 202L, was the authorization of

forgivable loans to small businesses for job retention and certain other expenses,

which included a program referred to as the Paycheck Protection Program ("PPP").

To obtain a PPP loan, a qualifiiing business was required to submit a PPP loan

application, which was signed by an authorized representative of the business. The
CASE 0:22-cr-00130-ADM-BRT Doc. 1 Filed 06/30/22 Page 5 of 12

PPP loan application required the business (through its authorized representative)

to acknowledge the program rules and make certain affrrmative certifi.cations in order

to be eligible to obtain the PPP loan. In the PPP loan application, the small business

(through its authorized representative) was required to certify, among other things,

average monthly payroll expenses, which was used to calculate the amount of money

the small business was eligible to receive under the PPP. In addition, businesses

applying for a PPP loan were required to provide documentation, such as ataxreturn,

showing their payroll expenses.

11. A PPP loan application was processed by a participating lender. If a
PPP loan application was approved, the participating lender funded the PPP loan

using its own monies, which were guaranteed by the SBA. PPP loan proceeds were

required to be used on certain permissible expenses, incLuding payroll costs, mortgage

interest, rent, and utilities.

t2. In addition, the SBA provided direct loans to applicants through the
Economic Injury Disaster Loan (EIDL) program, which was also funded by such

Iegislation as the CARES Act to help small businesses facing fi.nancial difficulties

during the COVID-19 pandemic. EIDL funds were offered in low-interest rate loans,

designated for specific business expenses, such as fixed debts, payroll, and business

obligations. Eligible EIDL applicants must have suffered "substantial economic

injury'' from COVID-19 based on a company's actual economic injury determined by

the SBA.

5
CASE 0:22-cr-00130-ADM-BRT Doc. 1 Filed 06/30/22 Page 6 of 12

13. To qualify for an EIDL loan, applicants were required to submit
applications to the SBA, generally through the SBA's website, wherein the applicant

provided information including the business's: name, EIN (or social security number

for sole proprietorships), gross revenues and cost ofgoods for the prior year, address,

email, date of establishment, number of employees, and bank account information.

Applicants were required to certifi' under penalty of perjury that the information

provided in the EIDL application was true and correct.

THE SCHEME TO DEFRAUD
PANDEMIC-RELATED ASSISTANCE PROGRAMS

14. From at least June 2020 through at least in or around. JuIy 202L, in the
District of Minnesota. and elsewhere. the defendant.

TAKARA HUGHES,

did knowingly and intentionally devise and execute a scheme and artifi.ce to defraud

and to obtain money by means of materially false and fraudulent pretenses,

representations, and promises, and by concealment of material facts.

15. The purpose of the scheme and artifi.ce to defraud was to obtain money
and property from states, such as California's EDD and Minnesota's DEED, among

others, as well as from the United States, in the form of UI benefits and small

business loans by submitting fraudulent claims and applications.

16. As part of her scheme to defraud, defendant HUGHES frled fraudulent
claims seeking UI benefits from states where she had no lawful basis to receive UI

benefits because, in fact, she neither resided, nor worked. in those states. For example,

while defendant HUGHES resided in Minnesota throughout 2020 and 202t, she
CASE 0:22-cr-00130-ADM-BRT Doc. 1 Filed 06/30/22 Page 7 of 12

caused the fraudulent submission of claims to California's EDD, in which she falsely

claimed, among other things, that she resided at an address in San Diego, California,

and that she previously earned income as a "self employed hairstylist" in California,

all of which defendant HUGHES knew was false. As a result of defendant HUGHES's

false and fraudulent claims, California's EDD paid defendant HUGHES
approximately $46,000 in periodic UI payments between approximately July 2020

and JuIy 202I, during which time HUGHES actually resided in Minnesota.

L7. It was further part of defendant HUGHES's scheme that she unlawfully
"double-dipped" by trying to obtain UI benefi.ts from multiple states simultaneously.

For instance, in or about Septembe r 2020, defendant HUGHES caused the
submission of a fraudulent claim for UI to Louisiana's Workforce Commission at

which time she was actually residing in Minnesota and was already fraudulently

receiving UI benefits from California's EDD, all of which d,efendant HUGHES

concealed. In her fraudulent claim to Louisiana, defendant HUGHES claimed she

was entitled to UI because she had purportedly been employed while living at a

residence in New Orleans, which she knew was false. Approximately one month later

in October 2020, defendant HUGHES fraudulently applied for UI from Minnesota's

DEED, and concealed her fraudulent receipt of UI benefits from California and her

claim to Louisiana. As a result of defendant HUGHES's false and fraud"ulent claims,

Minnesota's DEED paid defendant HUGHES approximately $5,500 in periodic UI

payments between approximately May 2021and July 2021. Approximately two days

after she submitted her claim for UI benefits to Minnesota's DEED, on or about
CASE 0:22-cr-00130-ADM-BRT Doc. 1 Filed 06/30/22 Page 8 of 12

October 7I, 2020, defendant HUGHES fraudulently applied for UI benefits from the

State of Washington's Employment Security Department. Despite her previous UI

claims to California, Louisiana, and Minnesota to the contrary, defendant HUGHES

claimed to Washington that she purportedly had not applied for or received. UI

benefi.ts in another state within the last twelve months and that she had purportedly

not worked in another state besides Washington within the prior 18 months.

18. It was further part of defendant HUGHES's scheme that she also caused
the submission of fraudulent applications for EIDL small business loans to the SBA

that were based, among other falsehoods, upon fake revenue figures. For instance,

defendant HUGHES caused the submission of fraudulent EIDL loan applications in

or about June 2020, July 2020, and December 2020, which falsely claimed, among

other things, that defendant HUGHES's cleaning service had gross revenues of

approximately $52,000, $96,000, and $167,1-44, respectively, which she knew was

fa1se. All three of these fraudulent EIDL loan applications were denied.

19. As an additional part of her scheme, defendant HUGHES fraud.ulently
applied for PPP small business loans in March 202t and May 202I that were based,

among other falsehoods, upon fake payroll information and bogus tax records to

deceive lenders. More specifi.cally, defendant HUGHES falsely claimed in her March

2O2LPPP loan application that she was the sole proprietor of a business purportedly

established in January 2018 in the "commercial and institution building

construction," all of which defendant HUGHES knew was false. Defendant HUGHES

supported her fraudulent PPP application with a bogus tax record, namely, an IRS

8
CASE 0:22-cr-00130-ADM-BRT Doc. 1 Filed 06/30/22 Page 9 of 12

Schedule C tax form for tax year 2019, in which she falsely purported, to be in

"wholesale" with gross receipts or sales of $134,000. As a result of defendant

HUGHES's false and fraudulent claims for a small business loan, the PPP paid her

approximately $20,832.00 in loan proceed.s in April 2021. Defendant HUGHES

submitted another fraudulent PPP loan application in May 2021seeking funds for

"All Star." Defendant HUGHES submitted with her second PPP application what

purported to be a 2020 Schedule C tax form, which claimed that she had gross receipts

or sales of $91,198, all of which defendant HUGHES knew was false.

20. In addition to fraudulently obtaining pandemic-related benefits for
herself, it was further part of defendant HUGHES's scheme that on behalf of others

she fraudulently obtained pandemic-related funds in exchange for a fee that she

charged, which varied but that was at times approximately $3,000. More specifi.cally,

defend.ant HUGHES submitted on behalf of others at least 40 false and fraudulent

claims for UI benefits and at least 30 false and fraudulent applications for small

business loans.

21. The various fraudulent UI applications and loan applications that
defendant HUGHES submitted in the names of other claimants contained false and

fraud.ulent representations, including but not limited to, that the claimants had

worked for particular employers, had specific annual incomes, worked during

particular time periods, worked in particular states, were self-employed in various

occupations, or were laid off and had no work due to the COVID-l9 pandemic but

were otherwise available to work. Defendant HUGHES was aware that these claims

9
CASE 0:22-cr-00130-ADM-BRT Doc. 1 Filed 06/30/22 Page 10 of 12

were false. Among other things, the claimants were either not previously working,

employed, self-employed, or otherwise seeking new employment, in the manner she

represented in the applications. Defendant HUGHES also knew that these

applications regarding the claimants' employment and availability to work were false

at the time they were made, or she otherwise lacked the knowledge and authority to

make such representations regarding each claimant. For example, in at least one

instance, defend.ant HUGHES caused the submission of a fraudulent EIDL loan to

the SBA on or about June 30. 2020. in the name of an inmate incarcerated at a

Minnesota prison.

22. Between June 2020 and JuIy 2021, d.efendant HUGHES applied
fraudulently for at least $1.9 milIion in pandemic-related funds. In all, defendant

HUGHES caused the United States and multiple state agencies to pay out at least

$1.2 to defendant HUGHES and. others in the form of fraudulent UI benefits and

small business loan proceeds.

COUNTS 1-5
@ire Fraud)
23. Paragraphs 1 through 22 are incorporated by reference as if fully set
forth herein.

24. On or about the dates set forth below. in the State and District of
Minnesota and elsewhere. the defendant.

TAKARA HUGHES

for the purpose of executing and attempting to execute the above-described scheme

and artifice to defraud, knowingly transmitted and caused to be transmitted by

10
CASE 0:22-cr-00130-ADM-BRT Doc. 1 Filed 06/30/22 Page 11 of 12

means of wire communications in interstate and foreign commerce, certain writings,

signs, signals, and sounds, as described below:

Date ofWire
Count (on or about) Wire
1 June 24,2020 Electronic submission from Minnesota of an
application for an EIDL loan for defendant
HUGHES, which was routed through servers
located outside of Minnesota.
2 June 28.2020 Electronic submission from Minnesota of an
application for an EIDL loan by defendant
HUGHES, for Individual A, an incarcerated
inmate at a Minnesota prison facility, which was
routed through servers located outside of
Minnesota.
3 JuIy 5, 2020 Electronic submission from Minnesota of a claim
for UI benefits to California's EDD for defendant
HUGHES, which was routed through servers
located outside of Minnesota.
4 August 7,2020 Electronic submission from Minnesota of a claim
for UI benefi.ts to California's EDD for Individual
B, which was routed through servers located
outside of Minnesota.
5 December 7,2020 Electronic submission from Minnesota of an
application for an EIDL loan for defendant
HUGHES, which was routed through servers
Iocated outside of Minnesota.

All in violation of fitle 18, United States Code, Section 1343.

FORFEITURE ALLEGATIONS

25. Counts 1 through 5 of this Indictment are incorporated by reference for
the purpose of alleging forfeiture pursuant to Title 18, United States Code, Section

981(a)(1)(C), in conjunction with Title 28, United States Cod,e, Section 246I(c).

26. Upon conviction of any of the offenses alleged in Counts 1through 5, as
set forth in this Indictment, defendant shall forfeit to the United States of America

any property, real or personal, which constitutes or is derived from proceeds traceable

11
CASE 0:22-cr-00130-ADM-BRT Doc. 1 Filed 06/30/22 Page 12 of 12

to the violation, as provided in Title 18, United States Code, Section 981(a)(1)(C) and
\

Title 28, United States Code, Section 246I(c).

27. If any of the above-described forfeitable property is unavailable for
forfeiture, the United States intends to seek the forfeiture of substitute property as

provided for in Title 21, United States Code, Section 853(p), as incorporated by Title

28, United States Code, Section 246I(c).

A TRUE BILL

UNITED STATES ATTORNEY FOREPERSON

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