Indictment — United States v. William Frederick Reed, Northern District of Illinois (Document 1)

Summary

An indictment returned by the Special November 2023 Grand Jury in United States of America v. William Frederick Reed, Case 1:25-cr-00213, in the U.S. District Court for the Northern District of Illinois, filed April 21, 2025 as Document 1. The caption cites Title 15, United States Code, Section 645(a), Title 18 Sections 152(3) and 152(8), and Title 26 Sections 7203 and 7206(1). Counts One through Three allege false statements in PPP loan applications to Kabbage, Inc., ReadyCap Lending LLC and Cross River Bank for $5,862, $5,800 and $5,862, each supported by a 2019 Schedule C reporting gross receipts of $29,456. The indictment states that the 2019 Schedule C Reed filed with the IRS reported gross receipts of $1,304. Count Four alleges a false 2021 tax return, Count Five a bankruptcy fraud scheme, and Count Nine a failure to file a 2023 return.

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“Indictment — United States v. William Frederick Reed, Northern District of Illinois (Document 1).” Original at www.justice.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/indictment-no-1-25-cr-00213-dkt-1-n-d-ill-2525fc10a4/, SHA-256 09b29a913bee7427ef58ebee18e26c04a224dc7d5bc0a17e3fcdf2226c2d3f30.

Full text

Case: 1:25-cr-00213 Document #: 1 Filed: 04/21/25 Page 1 of 18 PageID #:1

FIL1E/2D
025
MEN
UNITED STATES DISTRICT COURT 4/2
. BRUTO N
NORTHERN DISTRICT OF ILLINOIS THOMA.SDG
IS T R IC T COURT
EASTERN DIVISION CLERK, U.S

UNITED STATES OF AMERICA ) No.
)
v. ) Violation: Title 15, United
) States Code, Section 645(a),
WILLIAM FREDERICK REED ) Title 18, United States Code,
1:25-cr-00213 ) Sections 152(3) and 152(8), and
Judge Manish S. Shah ) Title 26, United States Code,
Magistrate Judge Keri L. Holleb Hotaling ) Sections 7203 and 7206(1)
RANDOM / CAT.3
COUNT ONE

The SPECIAL NOVEMBER 2023 GRAND JURY charges:

1. At times material to this indictment:

a. Defendant WILLIAM FREDERICK REED resided in Hazel

Crest, Illinois, was employed as a police officer by the Village of Robbins and the

Village of Dolton, was self-employed as an independent contractor/sole proprietor

providing security services, and had control and signature authority over multiple

bank accounts, including US Bank account #9934 (the “US Bank Account”); National

Police Credit Union account #81298 (the “National Police Credit Union Account”);

National Bank of Kansas City account #2343 (the “National Bank of Kansas City

Account”) and Chime account #0710 which was administered by The Bancorp Bank

(the Chime Account).

Paycheck Protection Program Loans

b. The United States Small Business Administration (“SBA”) was

an agency of the United States government that provided economic support to small
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businesses, including by guaranteeing loans provided to small businesses by private

lenders.

c. The Coronavirus Aid, Relief, and Economic Security (“CARES”)

Act was a federal law enacted in or around March 2020 and designed to provide

emergency financial assistance to the millions of Americans who were suffering the

economic effects caused by the COVID-19 pandemic.

d. One source of relief provided by the CARES Act was the

authorization of forgivable loans to small businesses and sole proprietors for job

retention and certain other expenses, through a program called the Paycheck

Protection Program (“PPP”).

e. To obtain a PPP loan, a business, sole proprietor, or self-employed

individual submitted a PPP loan application, which was signed by the applicant or

an authorized representative of the business. The PPP loan application required the

applicants to acknowledge the program rules and make certain affirmative

certifications regarding the eligibility of the business, proprietorship, or individual

for a PPP loan. In the application, businesses, sole proprietors, and self-employed

individuals were required to provide, among other things, the number of employees

employed by the business and the average monthly payroll or gross income. These

figures were used to calculate the applicant’s eligibility and the amount of money that

the business could receive as part of a PPP loan. Applicants were also required to

make good faith certifications, including that the business entity was in operation on

February 15, 2020, and economic uncertainties had necessitated their loan requests

for continued business operations.

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f. The PPP allowed the interest and principal on the PPP loan to be

entirely forgiven by the SBA.

g. To gain access to funds through the PPP, businesses, sole

proprietorships, and self-employed individuals applied to lenders participating in the

PPP, and received the loans directly from those lenders. The SBA used information

provided by the applicant to the lender to determine whether to guarantee and forgive

the loan.

h. Kabbage, Inc., ReadyCap Lending, LLC, and Cross River Bank

were lenders that participated directly in the PPP to whom applicants for PPP loans

could submit information for the purpose of receiving a loan that could be guaranteed

or forgiven by the SBA.

2. On or about March 27, 2020, REED filed with the Internal Revenue

Service a Form 1040, Individual Income Tax Return for 2019, along with a Schedule

C, Profit or Loss from Business, which reported that REED received gross receipts of

$1,304 and had a net loss of $16,656 from the operation of his “Off Duty Security”

business in 2019. Based upon the information in the 2019 Schedule C filed by REED

with the IRS on March 27, 2020, REED would not have qualified for a PPP Loan.

3. On or about June 22, 2020, REED submitted an application to Kabbage,

Inc., in which REED falsely represented that he was qualified to receive a PPP loan

in the requested amount of $5,862 based on inflated and falsified average monthly

payroll and which application included a Schedule C, Profit or Loss From Business,

for 2019 (the “Fraudulent 2019 Schedule C”), which falsely represented gross receipts

of $29,456 and a net profit of $28,142 from the operation of his “Off Duty Security”

3
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business in 2019, when REED knew that the Fraudulent 2019 Schedule C inflated

both gross receipts and net profit.

4. On or about June 22, 2020, in the Northern District of Illinois, Eastern

Division, and elsewhere,

WILLIAM FREDERICK REED,

defendant herein, knowingly made a false statement to Kabbage, Inc. for the purpose

of influencing the actions of the SBA in guaranteeing and forgiving a PPP loan to

REED, in that REED falsely represented that he qualified for a PPP loan in the

requested amount of $5,862;

In violation of Title 15, United States Code, Section 645(a).

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COUNT TWO

The SPECIAL NOVEMBER 2023 GRAND JURY further charges:

1. Paragraphs 1 and 2 of Count One are re-alleged here.

2. On or about January 29, 2021, REED submitted an application to

ReadyCap Lending LLC, in which REED falsely represented that he was qualified to

receive a PPP loan in the requested amount of $5,800 based on inflated and falsified

average monthly payroll and which application included the Fraudulent 2019

Schedule C, when REED knew that the Fraudulent 2019 Schedule C inflated both

gross receipts and net profit.

3. On or about January 29, 2021, in the Northern District of Illinois,

Eastern Division, and elsewhere,

WILLIAM FREDERICK REED,

defendant herein, knowingly made a false statement to ReadyCap Lending LLC for

the purpose of influencing the actions of the SBA in guarantee and forgiving a PPP

loan to REED, in that REED falsely represented that he qualified for a PPP loan in

the requested amount of $5,800;

In violation of Title 15, United States Code, Section 645(a).

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COUNT THREE

The SPECIAL NOVEMBER 2023 GRAND JURY further charges:

1. Paragraphs 1 and 2 of Count One are re-alleged here.

2. On or about February 27, 2021, REED submitted an application to Cross

River Bank, in which REED falsely represented that he was qualified to receive a

PPP loan in the requested amount of $5,862 based on inflated and falsified average

monthly payroll and which application included the Fraudulent 2019 Schedule C,

when REED knew that the Fraudulent 2019 Schedule C inflated both gross receipts

and net profit.

3. On or about February 27, 2021, in the Northern District of Illinois,

Eastern Division, and elsewhere,

WILLIAM FREDERICK REED,

defendant herein, knowingly made a false statement to Cross River Bank, for the

purpose of influencing the actions of the SBA in guarantee and forgiving a PPP loan

to REED, in that REED falsely represented that he qualified for a PPP loan in the

requested amount of $5,862;

In violation of Title 15, United States Code, Section 645(a).

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COUNT FOUR

The SPECIAL NOVEMBER 2023 GRAND JURY further charges:

1. Subparagraph 1(a) of Count One is re-alleged here.

2. On or about February 20, 2022, at Hazel Crest, in the Northern District

of Illinois, Eastern Division,

WILLIAM FREDERICK REED,

defendant herein, willfully made and subscribed a United States Individual Income

Tax Return (Form 1040 with schedules and attachments), for the calendar year 2021,

which return was verified by written declaration that it was made under the penalties

of perjury and was filed with the Internal Revenue Service, which return he did not

believe to be true and correct as to every material matter, in that defendant falsely

represented and stated:

a) On line 1, that defendant’s wages, salaries, and tips were $22,286; on line
8, that defendant’s other income was $27,453; and, on line 9, that
defendant’s total income was $49,739, when defendant knew that his
wages, salaries, and tips, other income, and total income substantially
exceeded the amounts reported on the return; and

b) On line 25(b) that defendant had $3,740 in federal income tax withheld
from Forms 1099, when defendant knew that he had $0 in federal income
tax withheld from Forms 1099;

In violation of Title 26, United States Code, Section 7206(1).

7
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COUNT FIVE

The SPECIAL NOVEMBER 2023 GRAND JURY further charges:

1. At times material to this count:

a. Paragraphs 1 and 2 of Count One are re-alleged here.

Chapter 7 Bankruptcy Proceedings

b. Chapter 7 of Title 11, United States Code, provided individuals

who were unable to pay their debts with an opportunity to obtain a fresh financial

start through the discharge of pre-existing debts.

c. In order to initiate a Chapter 7 bankruptcy case, an individual,

known as the “debtor,” was required to file a bankruptcy petition with the United

States Bankruptcy Court.

d. The filing of a Chapter 7 bankruptcy petition automatically

stayed collection activity by creditors against the debtor and created a bankruptcy

estate comprised of all legal or equitable interests of the debtor in property including

property acquired by the debtor as of the commencement of the case.

e. In addition to the bankruptcy petition, a debtor was required to

file certain documents with the United States Bankruptcy Court that detailed the

debtor’s financial condition, known as Schedules and a Statement of Financial

Affairs. The debtor was required to sign a statement under penalty of perjury that

the Schedules and Statement of Financial Affairs were true and correct before filing

them with the United States Bankruptcy Court.

f. With respect to the Schedules, the debtor was required to disclose

his current financial circumstances and sign a statement under penalty of perjury

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that the Schedules were true and correct before filing them with the United States

Bankruptcy Court. The information the debtor was required to provide in the

Schedules included that:

i. Schedule A/B required the debtor to disclose whether there

were tax refunds owing to him, and, if so, to provide specific information about the

refunds, including the amounts of the refunds and whether the debtor had already

filed the returns and the tax years; and

ii. Schedule E/F required the debtor to disclose unsecured

creditors.

g. With respect to the Statement of Financial Affairs, the debtor was

required to disclose his financial history, including:

i. Whether, in addition to income from employment and

operating a business, he had any other income in the year of filing or the two previous

years; and

ii. Whether, within 1 year before he filed bankruptcy, any

financial accounts held in his name, or for his benefit, were closed, moved, or

transferred.

h. The United States Trustee was responsible for ensuring the

integrity of the bankruptcy system, and for promoting compliance with the

bankruptcy laws and rules applicable to bankruptcy proceedings. To this end, the

United States Trustee appointed and oversaw the activities of a trustee (the “Chapter

7 Trustee”), who was responsible for administering individual Chapter 7 bankruptcy

cases for the benefit of the debtor’s creditors.

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i. A debtor was required to appear at a meeting of creditors (known

as a “341 Meeting”) and to testify under oath concerning his financial affairs.

j. Prior to the 341 Meeting, a debtor was required to provide the

Chapter 7 Trustee with a copy of the debtor’s federal income tax return filed with the

Internal Revenue Service for the most recent tax year prior to the commencement of

the case.

k. The information provided in Schedules and the Statement of

Financial Affairs was material to a determination by the United States Trustee, the

Chapter 7 Trustee, and creditors whether the debtor had properly filed a Chapter 7

bankruptcy petition and whether the United States Trustee, Chapter 7 Trustee or

creditors should object to the discharge of his debts or move to dismiss the bankruptcy

case.

2. Beginning in or around June 22, 2020, and continuing until in or around

July 22, 2022, at Chicago and Hazel Crest, in the Northern District of Illinois, Eastern

Division, and elsewhere,

WILLIAM FREDERICK REED,

defendant herein, devised and intended to devise a scheme to defraud, and for the

purpose of executing and concealing the scheme and attempting to do so, filed and

caused to be filed documents in a bankruptcy case under Title 11 of the United States

Code.

3. It was part of the scheme that, on or about June 22, 2020, REED

submitted a fraudulent application to Kabbage, Inc., for a $5,862 PPP loan in which

he made false representations, including through the Fraudulent 2019 Schedule C.

10
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4. It was further part of the scheme that, on or about June 24, 2020, REED

fraudulently caused Kabbage, Inc., to directly deposit $5,862 in proceeds of PPP loan

#7902 into the National Bank of Kansas City Account.

5. It was further part of the scheme that, on or about January 29, 2021,

REED submitted a fraudulent application to ReadyCap Lending, LLC, Inc., for a

$5,800 PPP loan in which he made false representations, including through the

Fraudulent 2019 Schedule C.

6. It was further part of the scheme that, on or about February 27, 2021,

REED submitted a fraudulent application to Cross River Bank for a $5,862 PPP loan

in which he made false representations, including through the Fraudulent 2019

Schedule C.

7. It was further part of the scheme that, on or about March 1, 2021, REED

fraudulently caused Cross River Bank to directly deposit $5,862 in proceeds of PPP

loan #8506 into the Chime Account.

8. It was further part of the scheme that, on or about May 6, 2021, REED

fraudulently caused ReadyCap Lending, LLC, to directly deposit $5,860 in proceeds

of PPP loan #8900 into the US Bank Account.

9. It was further part of the scheme that, on or about February 9, 2022,

REED fraudulently caused the SBA to forgive the $5,862 Kabbage, Inc. PPP loan

#7902 and the $5,862 Cross River Bank PPP loan #8506, in part, through submission

of the Fraudulent 2019 Schedule C.

10. It was further part of the scheme that, on or about February 20, 2022,

REED knowingly filed a fraudulent 2021 Form 1040 United States Individual Income

11
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Tax Return, in which defendant intentionally under-reported his income and inflated

his withholdings as further described in Count Four above, and which represented

that defendant had over-paid his income taxes and was entitled to a refund.

11. It was further part of the scheme that, on or about March 4, 2022, REED

filed a bankruptcy petition in the United States Bankruptcy Court for the Northern

District of Illinois, thereby initiating a Chapter 7 bankruptcy case captioned In re

William Reed, No. 22-02502 (the “Reed Bankruptcy Case”), in which REED made

false statements and provided false documents to conceal his receipt of PPP loan

proceeds and submitted the fraudulent 2021 Form 1040 to cause the United States

Trustee, the Chapter 7 Trustee and his creditors not to inquire further into his

financial affairs.

12. It was further a part of the scheme that, on or about March 4, 2022,

REED filed schedules in the Reed Bankruptcy Case that were fraudulent including

in that:

a. REED falsely represented in Schedule A/B that there were no tax
refunds owing to him, when REED’s fraudulent 2021 Form 1040 had
caused a refund to be owed to him: and

b. REED intentionally did not disclose in Schedule E/F ReadyCap
Lending, LLC and PPP loan #8900 in the amount of $5,860.

13. It was further a part of the scheme that, on or about March 4, 2022,

REED filed a Statement of Financial Affairs in the Reed Bankruptcy Case that was

fraudulent including in that:

a. REED intentionally did not disclose as “other income” in 2022 the
$5,862 in proceeds of the forgiven Kabbage, Inc., PPP loan #7902 and
the $5,862 in proceeds of the forgiven Cross River Bank, PPP loan
#8506; and

12
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b. REED falsely represented that there were no financial accounts in
his name closed within a year of filing bankruptcy, when he knew
that that he had at least two accounts closed within a year of his
filing bankruptcy, including the US Bank Account into which the
$5,860 proceeds of the ReadyCap Lending, LLC, PPP loan #8900 had
been deposited, and the National Police Credit Union.

14. It was further part of the scheme that, on or about April 5, 2022, REED

fraudulently provided the Chapter 7 Bankruptcy Trustee with a purported copy of

his 2021 Form 1040 Individual Income Tax Return, which defendant had further

falsified by altering it to remove the false withholdings from Forms 1099 and to

represent that defendant owed income tax, instead of having overpaid and being owed

a refund.

15. On or about March 4, 2022, at Chicago, in the Northern District of

Illinois, Eastern Division,

WILLIAM FREDERICK REED,

defendant herein, for the purpose of executing and concealing the above-described

scheme and attempting to do so, filed and caused to be filed a document, namely,

Schedules and a Statement of Financial Affairs in a proceeding under Title 11,

namely, a Chapter 7 bankruptcy case, In re William Reed, No. 22-02502;

In violation of Title 18, United States Code, Section 157(2).

13
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COUNT SIX

The SPECIAL NOVEMBER 2023 GRAND JURY further charges:

1. Paragraph 1 of Count Five is realleged here.

2. On or about March 4, 2022, at Chicago, in the Northern District of

Illinois, Eastern Division,

WILLIAM FREDERICK REED,

defendant herein, knowingly and fraudulently made and caused to be made a

materially false statement under penalty of perjury in relation to a case under Title

11, namely, a Chapter 7 bankruptcy case, In re William Reed, No. 22-02502 in that:

a. in response to question 28 of Schedule A/B concerning “tax
refunds owed to you,” REED falsely represented that he had no
tax refunds owed to him, when REED knew that as a result of the
fraudulent 2021 Form 1040 that he had filed with the IRS, as
charged in Count Four, that he had a tax refund owing to him;

b. in response to question 3 of Schedule E/F, requiring REED to list
all of his non-priority unsecured claims, REED intentionally did
not list ReadyCap Lending, LLC, and PPP Loan #8900 in the
amount of $5,860;

c. in response to question 5 of the Statement of Financial Affairs
which required REED to disclose income, in addition to income
from employment and operating a business, in the year of filing
and the two previous years; REED intentionally did not disclose
as “other income” in 2022 the $5,862 in proceeds of the forgiven
Kabbage, Inc., PPP loan #7902 and the $5,862 in proceeds of the
forgiven Cross River Bank, PPP loan #8506; and

d. in response to question 20 of the Statement of Financial Affairs
which asked whether “within 1 year before you filed bankruptcy,
were any financial accounts . . . held in your name, or for your
benefit, closed, moved, or transferred,” defendant falsely
answered no, when REED knew that he had at least two accounts
closed within a year of his filing bankruptcy, including the US
Bank Account into which the $5,860 in proceeds of the ReadyCap

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Lending, PPP loan #8900 had been deposited, and the National
Police Credit Union Account;

In violation of Title 18, United States Code, Section 152(3).

15
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COUNT SEVEN

The SPECIAL NOVEMBER 2023 GRAND JURY further charges:

1. Paragraph 1 of Count Five is realleged here.

2. On or about April 5, 2022, REED provided to the Chapter 7 Trustee what

REED falsely represented to be a copy of his 2021 Form 1040 Individual Income Tax

Return.

3. On or about April 5, 2022, at Chicago and Hazel Crest, in the Northern

District of Illinois, Eastern Division,

WILLIAM FREDERICK REED,

defendant herein, after the filing of a case under Title 11, namely, a Chapter 7

bankruptcy case captioned In re William Reed, No. 22-02502, knowingly and

fraudulently falsified and made false entries in recorded information relating to the

financial affairs of debtor WILLIAM REED, in that REED falsified for the purpose of

providing to the Chapter 7 Trustee and the United States Trustee a purported copy

of his 2021 Form 1040 Individual Income Tax Return, which was materially false in

that it was not a copy of the tax return that REED had filed with the IRS, as REED

had altered the tax return by removing the false representation that REED had

withholdings from Forms 1099 and causing the tax return to represent that REED

had tax due and owing, instead of REED having overpaid and being owed a refund;

In violation of Title 18, United States Code, Section 152(8).

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COUNT EIGHT

The SPECIAL NOVEMBER 2023 GRAND JURY further charges:

1. Subparagraph 1(a) of Count One is re-alleged here.

2. Beginning on or about January 1, 2022, and continuing through on or

about December 31, 2022, at Hazel Crest, in the Northern District of Illinois, Eastern

Division,

WILLIAM FREDERICK REED,

defendant herein, had and received gross income of approximately $101,953,

including from his employment as a police officer for the Villages of Robbins and

Dolton. By reason of such gross income, defendant was required by law, following the

close of the calendar year 2022 and on or before April 18, 2023, to make an income

tax return to the Internal Revenue Service, stating specifically the items of his gross

income and any deductions and credits to which he was entitled. Knowing the

foregoing, defendant did willfully fail, on or about April 18, 2023, in the Northern

District of Illinois, and elsewhere, to make an income tax return;

In violation of Title 26, United States Code, Section 7203.

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COUNT NINE

The SPECIAL NOVEMBER 2023 GRAND JURY further charges:

1. Subparagraph 1(a) of Count One is re-alleged here.

2. Beginning on or about January 1, 2023, and continuing through on or

about December 31, 2023, at Hazel Crest, in the Northern District of Illinois, Eastern

Division,

WILLIAM FREDERICK REED,

defendant herein, had and received gross income of approximately $189,092 including

from his employment as a police officer by the Village of Dolton. By reason of such

gross income, defendant was required by law, following the close of the calendar year

2023 and on or before April 15, 2024, to make an income tax return to the Internal

Revenue Service, stating specifically the items of his gross income and any deductions

and credits to which he was entitled. Knowing the foregoing, defendant did willfully

fail, on or about April 15, 2024, in the Northern District of Illinois, and elsewhere, to

make an income tax return;

In violation of Title 26, United States Code, Section 7203.

A TRUE BILL:

__________________________________
FOREPERSON

______________________________________
Signed by Sarah Streicker on behalf of
ANDREW S. BOUTROS
United States Attorney

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