Indictment — United States v. Nichelle Henson, District of Maryland (Document 1)

Summary

An indictment filed December 7, 2021 as Document 1 in United States v. Nichelle Henson, Case 1:21-cr-00470-ELH, in the U.S. District Court for the District of Maryland, charging false statements under 18 U.S.C. § 1001 and bank fraud under 18 U.S.C. § 1344. Counts 1 through 6 charge false statements in EIDL applications for Henson's businesses, including a $10,000 grant obtained on an application dated April 14, 2020 that claimed 10 employees. Counts 7 through 12 charge bank fraud against Celtic Bank and Cross River Bank through PPP applications supported by 2019 IRS Forms W-3 that the grand jury charges were never filed, including a $133,957 loan for Your Friendly Tax Preparation Services, LLC. The forfeiture allegation lists funds seized from M&T Bank accounts, including $145,044.00 in the name of Women Entrepreneurs Can Succeed, LLC.

Summary drafted by a model from the text of the original file linked on this page and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Full text

Text recognized from a scanned document; may contain errors.

Case 1:21-¢r-00470-ELH Document1 Filed 12j07/21 Page 1 of 16

IN THE UNITED STATES psritercoe, 3:99

FOR THE DISTRICT OF AND we

UNITED STATES OF AMERICA * A eS
*
NICHELLE HENSON, * (False Statements, 18 U.S.C. § 1001;
* Bank Fraud, 18 U.S.C. § 1344;
Defendant. Forfeiture)
INDICTMENT

Background

The Grand Jury for the District of Maryland charges that:

At all times material to the Indictment:

1. Defendant NICHELLE HENSON ("HENSON") was first a resident of
Baltimore, Maryland and then a resident of Baltimore County, Maryland.

2. HENSON incorporated a number of businesses with the State of Maryland,
including Crowns Construction, LLC; Nichelle Henson Campaign, LLC; One Stop for Services,
LLC; Your Friendly Tax Preparation Services, LLC; Women Entrepreneurs Can Succeed, LLC,
and Peace of Mind Services Inc. HENSON often opened bank accounts in the names of
businesses she incorporated and obtained Tax Identification Numbers (TINs) from the IRS for
the businesses.

3. Ifany of HENSON's businesses had employees, HENSON was required to withhold
taxes from their employees’ paychecks, including federal income taxes, Medicare and social
security taxes (often referred to as Federal Insurance Contribution Act or “FICA” taxes)

(collectively “employment taxes”).
Case 1:21-cr-00470-ELH Document1 Filed 12/07/21 Page 2 of 16

4. If any of HENSON's businesses had employees, HENSON was required to make
deposits of the employment taxes to the Internal Revenue Service on a quarterly basis and was
required to file, following the end of each calendar quarter, an Employer’s Quarterly Federal
Income Tax Return (Form 941), setting forth the total amount of wages and other compensation
subject to withholding, the total amount of income tax withheld, the total amount of social security
and Medicare taxes due, and the total tax deposits.

5. If any of HENSON’s businesses had employees, at the end of calendar year 2019,
HENSON was required to provide the employee with a Form W-2 Statement of Earnings or a
Form 1099 for independent contractors and to file with the IRS Forms 1099 and Form W-3 setting
forth the employees and wages paid for 2019.

6. For tax year 2019, HENSON did not file with the IRS any Forms 941, 1099, W-3,
or W-2 for any employees of Crowns Construction, LLC; Nichelle Henson Campaign, LLC; Your
Friendly Tax Preparation Services, LLC; and Peace of Mind Services, Inc. HENSON filed one
Form 941 for the First Quarter of 2019 with the IRS for Women Entrepreneurs Can Succeed LLC,
which reflected zero employees, but no other tax forms. For tax year 2019, HENSON filed with
the IRS two W-2 tax forms and one 1099 tax form for One Stop For Services LLC but no Forms
940 and 941.

7. The United States Small Business Administration (“SBA”) was an executive-
branch agency of the United States government that provides support to entrepreneurs and small
businesses. The mission of the SBA was to maintain and strengthen the nation’s economy by
supporting the establishment and viability of small businesses and by assisting in the economic

recovery of communities after disasters.
Case 1:21-cr-00470-ELH Document1 Filed 12/07/21 Page 3 of 16

8. The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was a federal
law enacted in and around March 2020, which was designed to provide emergency financial
assistance to American suffering from the economic effects caused by the COVID-19 pandemic.
Two sources of relief provided by the CARES Act were the authorization of forgivable loans to
small businesses for job retention and certain other expenses, through programs referred to as the
Paycheck Protection Program (“PPP”) and the expansion of the Disaster Loan Program to include
pandemic related economic injury through COVID-19 Economic Injury Disaster Loans (“EIDL”).

EIDL Loans

9. In order to obtain an EIDL, a small business submitted an electronic EIDL
application (SBA Form 5) directly to SBA via its website, covid19relief.sba.gov. The EIDL
application was certified by an authorized representative of the business. The EIDL application
required the business, through its authorized representative, to acknowledge the program rules and
to make certain certifications in order to be eligible for the EIDL loan.

10. The authorized representative of the small business certified eligibility information.
Further, the authorized representative submitted Combined Annual Operating Expenses for the 12
months prior to January 31, 2020 as well as Gross Revenues and Costs of Goods Sold for that
same period. Loans were calculated based on 6 months of Gross Revenues minus Cost of Goods
Sold. Applicants could also receive a Disaster Loan Emergency Advance Grant up to $10,000
calculated as a $1,000 grant per employee up to a maximum of $10,000.

11. An EIDL application was processed by the SBA. If an EIDL application was
approved, the SBA directly funded the loan through a deposit to a bank account of the business

borrower.
Case 1:21-cr-00470-ELH Document1 Filed 12/07/21 Page 4 of 16

12.

EIDL proceeds were required to be used by the business on certain permissible

expenses—fixed debts including rent and utilities, payroll, accounts payable and other bills

resulting from the pandemic. The EIDL program lent the money at a fixed annual percentage rate.

13.

THE CHARGES

On or about the dates set for the below, in the District of Maryland, the Defendant

NICHELLE HENSON

in a matter within the jurisdiction of the Small Business Administration made materially false,

fictitious, and fraudulent statements and representations in connection with EIDL electronic loan

applications made through the SBA’s covid19relief.sba.gov website as detailed below:

Nichelle Henson Campaign LLC, that falsely
claimed 5 employees, 2019 Gross Revenue of
$480,000, Cost of Goods Sold of $70,080.

COUNT | DATE of EIDL | DESCRIPTION OF FALSITY FUNDS
APPLICATION OBTAINED
1 April 14, 2020 HENSON submitted the application for Your | $10,000
Friendly Tax Preparation Services, LLC, Grant
that falsely claimed 10 employees, 2019 Gross | Deposited to
Revenue of $36,000, Cost of Goods Sold of Acc't 1646 at
$13,000. SunTrust
Bank
2 June 19, 2020 HENSON submitted the application for One $8,000 Grant
Stop for Services LLC, that falsely claimed 8 | Deposited to
employees, 2019 Gross Revenue of $762,540, Acct 5611] in
Cost of Goods Sold of $204,981. the name of
Nichelle
Henson
Campaign
LLC at
People’s
Bank
3 June 19, 2020 HENSON submitted the application for Advance and

Loan
Declined
Case 1:21-cr-00470-ELH Document1 Filed 12/07/21 Page 5 of 16

Cost of Goods Sold of $475,962.

COUNT | DATE of EIDL_ | DESCRIPTION OF FALSITY FUNDS
APPLICATION OBTAINED
4 June 19, 2020 HENSON submitted the application for Peace | Advance and
of Mind Services Inc, that falsely claimed 12 Loan
employees, 2019 Gross Revenue of $1,375,409, | Declined

Revenue of $700,000, Cost of Goods Sold of
$400,000

5 April 7, 2021 HENSON submitted an Application for Advance and
Nichelle Henson Campaign LLC, that falsely | Loan
claimed 1! employees, 2020 Gross Revenue of | Declined
$800,000, Cost of Goods Sold of $500,000

6 April 7, 2021 HENSON submitted an Application for Your | Advance and
Friendly Tax Preparation Services LLC, that | Loan
falsely claimed 14 employees, 2020 Gross Declined

18 U.S.C. § 1001(a)
Case 1:21-cr-00470-ELH Document1 Filed 12/07/21 Page 6 of 16

COUNTS 7 — 12

The Grand Jury for the District of Maryland further charges:

PPP LOANS
1. Paragraphs 1 — 8 of Counts 1-6 are incorporated here.
2. In order to obtain a PPP loan, a small business submitted a PPP loan application,

which was signed by an authorized representative of the business. The PPP loan application
required the business (through its authorized representative) to acknowledge the program rules and
to make certain certifications in order to be eligible for the PPP loan.

3. The small business, through its authorized representative, made the PPP loan
application on SBA Form 2483 to an authorized lender, such as an FDIC-insured bank. Some PPP
loan applications were received by on-line processors such as Kabbage, Inc., and Blue Vine, and
were then sent to the FDIC insured bank.

4. The authorized representative of the small business on SBA Form 2483 provided
information as to the purpose of the loan, average monthly payroll, number of employees and
background of the business and its owner. The average monthly payroll expenses and the number
of employees were 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 confirming their payroll expenses including copies of forms they had filed for tax
year 2019 with the IRS.

5. Ifa PPP loan application was approved, the lending financial institution funded the
PPP loan using its own monies through a deposit to the bank account of the borrower. Although

the participating lender made the PPP loan, the loan was 100% guaranteed by the SBA. Data from
6
Case 1:21-cr-00470-ELH Document1 Filed 12/07/21 Page 7 of 16

the loan application, including information about the borrower, the total amount of the loan and
the listed number of employees, was transmitted by the lender to the SBA in the course of
processing the loan.

6. The applying small business was required by the PPP to be in operation prior to
February 15, 2020, and the applicant was required to certify this fact to the lender and SBA. The
authorized representative of the small business was also required to disclose what, if any, other
businesses they owned or controlled.

7. PPP loan proceeds were required to be used by the business on certain permissible
expenses—payroll costs, rent for the business premises, or interest on mortgages on the business
premises, utilities for the business, and worker protection costs related to COVID-19. The PPP
loan program allowed the interest and principal on the PPP loan to be forgiven if the business
spent the loan proceeds on these expense items within a designated period of time and used a
defined portion of the PPP loan proceeds on payroll expenses.

The Scheme to Defraud

8. Beginning in and around April 2020 and continuing through in and around July
2021, in the District of Maryland and elsewhere, the defendant,
NICHELLE HENSON,
did knowingly and willfully execute and attempt to execute a scheme and artifice to defraud
financial institutions, namely Celtic Bank and Cross River Bank, and to obtain moneys, funds and
property owned by and under the custody and control of the financial institutions by means of

materially false and fraudulent pretenses, representations, and promises.
Case 1:21-cr-00470-ELH Document1 Filed 12/07/21 Page 8 of 16

The Object of the Scheme to Defraud

9. It was the object of the scheme to defraud for HENSON to personally enrich
herself by fraudulently obtaining PPP loans and spending the funds for purposes not permitted
under the PPP loan program including payments for HENSON’s personal plastic surgery,
renovations to a relative's home, renovations to HENSON’s personal living spaces, car
payments, and other unauthorized expenditures.

Manner and Means of the Scheme to Defraud

10. —_‘ It was part of the scheme to defraud that HENSON submitted applications for loans
under the PPP program that contained false statements, misrepresentations and omissions related
to her purported businesses including their existence, address, payroll expense, and number of .
employees.

11. —_‘_It was further a part of the scheme to defraud that HENSON falsely attested on the
PPP loan applications that the information presented was true and accurate.

12. It was further a part of the scheme to defraud that HENSON provided bank account
numbers into which PPP loan proceeds were deposited; some of the bank accounts were personal,
opened in the names of other businesses which did not apply for PPP loans, or were opened
expressly in time to receive the PPP loan proceeds.

13. It was a further part of the scheme to defraud that HENSON failed to disclose on
her application other businesses which she had incorporated and/or other businesses for which she
had submitted PPP loan applications.

14, ‘It was a further part of the scheme to defraud that HENSON falsely promised to

spend PPP funds on allowable expenses such as payroll, business rent and business utilities when

8
Case 1:21-cr-00470-ELH Document1 Filed 12/07/21 Page 9 of 16

she intended to spend the funds on personal expenses such as personal plastic surgery, home
renovations for herself and relatives, rent and utilities for personal residences, and family expenses.

15. It was a further part of the scheme to defraud that HENSON submitted fictitious
tax forms to financial institutions which HENSON had never filed with the IRS.

THE CHARGES

16. On or about the dates set forth below, in the District of Maryland, the Defendant
NICHELLE HENSON
executed the scheme and artifice to defraud financial institutions and made false and fraudulent

misrepresentations and promises to the financial institutions as detailed below:

COUNT | DATE of LOAN | DESCRIPTION OF BANK FRAUD LOAN FUNDS
APPLICATION OBTAINED
7 April 30, 2020 HENSON submitted an SBA PPP Borrower
Application to Celtic Bank for Your $133,957

Friendly Tax Preparation Services, LLC,
that falsely claimed 14 employees, an
average monthly payroll of $53,583.33 and
was supported by a fraudulent 2019 IRS
Form W-3 (never filed with the IRS) which
falsely showed 14 employees and total
wages paid in 2019 of $643,000

8 May 10, 2020 HENSON submitted an SBA PPP Borrower | $125,000
Application to Cross River Bank for
Nichelle Henson Campaign LLC, that
falsely claimed 10 employees, an average
monthly payroll of $50,000 and was
supported by a fraudulent 2019 IRS Form
W-3 (never filed with the IRS) which falsely
showed 10 employees and total wages paid
in 2019 of $600,000
Case 1:21-cr-00470-ELH Document1 Filed 12/07/21 Page 10 of 16

COUNT

DATE of LOAN
APPLICATION

DESCRIPTION OF BANK FRAUD

LOAN FUNDS
OBTAINED

May 14, 2020

HENSON submitted an SBA PPP Borrower
Application to Cross River Bank for One
Stop for Services LLC, that falsely claimed
5 employees, an average monthly payroll of
$48,000, and was supported by a fraudulent
2019 IRS Form W-3 (never filed with the
IRS) which falsely showed 5 employees and
total wages paid in 2019 of $480,000

$120,000

10

June 20, 2020

HENSON submitted an SBA PPP Borrower
Application to Cross River Bank for Peace
of Mind Services Inc. that falsely claimed
12 employees, an average monthly payroll of
$73,084, and was supported by a fraudulent
2019 IRS Form W-3 (never filed with the
IRS) which falsely showed 12 employees
and total wages paid in 2019 of $864,970

$182,709

11

June 23, 2020

HENSON submitted an SBA PPP Borrower
Application Form to Cross River Bank for
Women Entrepreneurs Can Succeed,
LLC, that falsely claimed 11 employees and
an average monthly payroll of $90,411 and
was supported by a fraudulent 2019 IRS
FormW-3 (never filed with the IRS) which
falsely showed 11 employees and $997,265
paid in total wages for 2019

$226,027

12

June 29, 2020

HENSON submitted an SBA PPP Borrower
Application to Cross River Bank for Crowns
Construction, LLC, that falsely claimed 12
employees and an average monthly payroll
of $84,359 and was supported by a
fraudulent 2019 IRS Form W-3 (never filed
with the IRS) which falsely showed 12
employees and $992,461 paid in wages for
2019

$210,897

18 U.S.C. § 1344

10
Case 1:21-cr-00470-ELH Document1 Filed 12/07/21 Page 11 of 16

COUNTS 13 - 18

The Grand Jury for the District of Maryland further charges:

1, Paragraph 1 — 15 of Counts 7-12 are incorporated here.

Second Draw PPPs

2. The Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act
(Economic Aid Act), which was part of the Consolidated Appropriations Act, 2021 package,
extended the Paycheck Protection Program (PPP) to include a second round of funding to certain
businesses that received funding under the original PPP. These are referred to as “Second Draw
PPP Loans.”

3, In order to obtain a Second Draw PPP loan, a small business was required to have
previously received a First Draw PPP loan, used the full loan amount for authorized uses before
the Second Draw PPP loan was disbursed, demonstrated at least a 25% reduction in gross receipts
between comparable quarters in 2019 and 2020, and submitted a PPP Second Draw loan
application, which was signed by an authorized representative of the business. The PPP loan
application required the business (through its authorized representative) to acknowledge the
program rules and to make certain certifications in order to be eligible for the PPP loan.

4, The small business, through its authorized representative, made the PPP Second
Draw foan application on SBA Form 2483-SD to an authorized lender, such as an FDIC-insured
bank, or to a loan processor, which in turn provided the application to the financial institution.

5. The authorized representative of the small business on SBA Form 2483-SD
provided information as to the purpose of the loan, average monthly payroll, number of employees

and background of the business and its owner. The average monthly payroll expenses and the
Case 1:21-cr-00470-ELH Document1 Filed 12/07/21 Page 12 of 16

number of employees were used to calculate the amount of money the small business was eligible
to receive under the PPP. In addition, businesses applying for a PPP Second Draw loan were
required to provide documentation confirming their payroll expenses including copies of forms
they had filed for tax year 2020 with the IRS.

6. A PPP Second Draw loan application was processed by a participating lender. Ifa
PPP loan application was approved, the lender funded the PPP Second Draw loan using its own
monies through a deposit to a bank account of the borrower. While it was the participating lender
that issued the PPP Second Draw loan, the loan was 100% guaranteed by the SBA. Data from the
loan application, including information about the borrower, the total amount of the loan and the
listed number of employees, the reduction in gross receipts, was transmitted by the lender to the
SBA in the course of processing the loan.

7. The applying small business was required by the PPP to be in operation prior to
February 15, 2020, and the applicant was required to certify this fact to the lender and SBA. The
authorized representative of the small business was also required to disclose what, if any, other
businesses they owned or controlled.

8. PPP loan proceeds were required to be used by the business on certain permissible
expenses—payroll costs, rent for the business premises, or interest on mortgages on the business
premises, utilities for the business, and worker protection costs related to COVID-19. The PPP
Second Draw loan program allowed the interest and principal on the PPP loan to be forgiven if
the business spent the loan proceeds on these expense items within a designated period of time

and used a defined portion of the PPP loan proceeds on payroll expenses.

12
Case 1:21-cr-00470-ELH Document1 Filed 12/07/21 Page 13 of 16

THE CHARGES

9. On or about the dates set forth below, in the District of Maryland, the Defendant
NICHELLE HENSON
executed the scheme and artifice to defraud financial institutions and made false and fraudulent

misrepresentations and promises to the financial institutions as detailed below:

COUNT | DATE of LOAN | DESCRIPTION OF BANK FRAUD LOAN FUNDS
, APPLICATION OBTAINED
13 January 19,2021 | HENSON submitted an SBA PPP Second | $133,750

Draw Borrower Application to M&T Bank
for Your Friendly Tax Preparation
Services, LLC, that falsely claimed 14
employees and an average monthly payroll
of $53,500, a reduction in Gross Receipts of
$40,749 and was supported by a fraudulent
2020 IRS Form 940 (never filed with the
IRS) that falsely showed total wages paid in
2020 of $642,000.

14 January 19, 2021 | HENSON submitted an SBA PPP Second $125,000
Draw Borrower Application Form to M&T
Bank to M&T Bank for Nichelle Henson
Campaign LLC, that falsely claimed 10
employees and an average monthly payroll
of $50,000 and was supported by fraudulent
2020 IRS Forms 940 and 941 (never filed
with the IRS) which falsely showed 10
employees and total wages paid in 2020 of
$600,000.

15 January 19, 2021 | HENSON submitted an SBA PPP Second | $120,000
Draw Borrower Application Form for One
Stop for Services LLC to M&T Bank that
falsely claimed 10 employees, an average
monthly payroll of $48,000, a reduction in
Gross Receipts of $42,750 and was
supported by fraudulent 2020 IRS Forms
940 and 941 (never filed with the IRS)
which falsely showed 10 employees and
total wages paid in 2020 of $576,000.

13
Case 1:21-cr-00470-ELH Document1 Filed 12/07/21 Page 14 of 16

COUNT

DATE of LOAN
APPLICATION

DESCRIPTION OF BANK FRAUD

LOAN FUNDS
OBTAINED

16

January 19, 2021

HENSON submitted an SBA PPP Second
Draw Borrower Application Form to M&T
Bank for Peace of Mind Services Ince. that
falsely claimed 12 employees, an average
monthly payroll of $59,000, & was
supported by fraudulent 2020 IRS Forms
940 and 941 (never filed with the IRS)
which falsely showed 12 employees and
total wages paid in 2020 of $696,000.

$147,500

17

January 19, 2021

HENSON submitted an SBA PPP Second
Draw Borrower Application Form to M&T
Bank for Women Entrepreneurs Can
Succeed, LLC, that falsely claimed 11
employees, an average monthly payroll of
$60,000, a reduction in Gross Receipts of
$50,000, & was supported by fraudulent
2020 IRS Forms 940 and 941 (never filed
with the IRS) which falsely showed 11
employees and total wages paid in 2020 of
$720,000.

$150,000

18

January 19, 2021

HENSON submitted an SBA PPP Second
Draw Borrower Application Form to M&T

Bank for Crowns Construction LLC, that

falsely claimed 12 employees, an average
monthly payroll of $57,000, a reduction in
Gross Receipts of $78,077 & was supported
by fraudulent 2020 IRS Forms 940 and 941
(never filed with the IRS) which falsely
showed 12 employees and total wages paid
in 2020 of $684,000.

$142,500

18 U.S.C. § 1344

14
Case 1:21-cr-00470-ELH Document1 Filed 12/07/21 Page 15 of 16

FORFEITURE ALLEGATION

The Grand Jury for the District of Maryland further finds that:

1. Pursuant to Federal Rule of Criminal Procedure 32.2, notice is hereby given to the

defendant that the United States will seek forfeiture as part of any sentence in accordance with 18

U.S.C. § 982, 21 U.S.C. § 853(p), and 28 U.S.C. § 2461 (c), as a result of the defendant’s conviction

under any of the offenses in Counts Seven through Eighteen of this Indictment.

2. Pursuant to 18 U.S.C. § 982(a)(2)(A), upon conviction of any of the offenses set

forth in Counts Seven through Eighteen of this Indictment, the defendant,

NICHELLE HENSON

shall forfeit to the United States any property constituting, or derived from, proceeds obtained

directly or indirectly, as the result of the scheme to defraud.

3. The property to be forfeited includes, but is not limited to, the following:

a.

$145,044.00 in funds seized from M&T Bank Account x0657 in the name of
Women Entrepreneurs Can Succeed, LLC;

$142,544.00 in funds seized from M&T Bank Account x0665 in the name of
Peace of Mind Services, LLC;

$127,114.71 in funds seized from M&T Bank Account x0749 in the name of
Your Friendly Tax Preparations, LLC

$114,534.01 in funds seized from M&T Bank Account x0756 in the name of
One Stop for Services LLC

$120,044.00 in funds from M&T Bank Account x0780 in the name of
Nichelle Henson Campaign, LLC

$28,793.10 in funds seized from M&T Bank Account x1424 in the name of
Incredible Solutions Group Inc. d/b/a Incredible Solutions

a money judgment in the total amount of proceeds the defendant obtained as
the result of the scheme to defraud.

15
Case 1:21-cr-00470-ELH Document1 Filed 12/07/21 Page 16 of 16

Substitute Assets’
4, If any of the property described above, as a result of any act or omission of the
defendant:
a. cannot be located upon the exercise of due diligence;
b. has been transferred or sold to, or deposited with, a third party;
c. has been placed beyond the jurisdiction of the court;
d. has been substantially diminished in value; or
e. has been commingled with other property which cannot be divided
without difficulty,

the United States shall be entitled to forfeiture of substitute property pursuant to 21 U.S.C.
§ 853(p), as incorporated by 18 U.S.C. § 982(b) and 28 U.S.C. § 2461(c).

18 U.S.C. § 982(a)(2)(A) & (b)

21 U.S.C. § 853(p)

Fed. R. Crim. P. 32.2(a)

Erek L. Barron
United States Attorney
A TRUE BILL
SIGNATURE REDACTED

Date: 1277-202]

16


File and source

File

1-indictment.pdf

Size

424,724 bytes

SHA-256

df331547e250aa8a3d3103b61c40814eab8df48452ba63fb7dc7b755187f5248

Our copy

1-indictment.pdf

Original

archive.org