Indictment — United States v. Raghavender Reddy Budamala, Central District of California (Document 14)
Summary
An Indictment filed March 8, 2022 as Document 14 in United States v. Raghavender Reddy Budamala, No. 2:22-cr-00077-ODW, in the U.S. District Court for the Central District of California. It alleges that the defendant, as manager of Hayventure LLC, Pioneer LLC and XC International LLC, described as shell companies with no substantial business operations or employees, made false representations on PPP loan applications to Celtic, Radius, Newtek and AEF. It lists PPP loan proceeds of $236,597 for Hayventure, $660,000 for the first Pioneer loan, $660,000 for the second Pioneer loan, $1,592,500 for the first XC International loan and $1,842,500 for the second XC International loan. It charges bank fraud under 18 U.S.C. § 1344(2), wire fraud under 18 U.S.C. § 1343 and transactional money laundering under 18 U.S.C. § 1957, with criminal forfeiture under 18 U.S.C. § 982.
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“Indictment — United States v. Raghavender Reddy Budamala, Central District of California (Document 14).”
Original at archive.org. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/indictment-no-2-22-cr-00077-dkt-14-c-d-cal-73988b408b/
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Case 2:22-cr-00077-ODW Document 14 Filed 03/08/22 Page 1 of 14 Page ID #:49
1 3/8/2022
2 VAM
3
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8 UNITED STATES DISTRICT COURT
9 FOR THE CENTRAL DISTRICT OF CALIFORNIA
10 November 2021 Grand Jury
11 UNITED STATES OF AMERICA, CR 2:22-cr-00077-ODW
12 Plaintiff, I N D I C T M E N T
13 v. [18 U.S.C. § 1344(2): Bank Fraud;
18 U.S.C. § 1343: Wire Fraud; 18
14 RAGHAVENDER REDDY BUDAMALA, U.S.C. § 1957: Transactional Money
aka “Reddy Raghav Budamala,” Laundering; 18 U.S.C. § 982:
15 Criminal Forfeiture]
Defendant.
16
17 The Grand Jury charges:
18 COUNTS ONE THROUGH SIX
19 [18 U.S.C. §§ 1344(2), 2(b)]
20 A. INTRODUCTORY ALLEGATIONS
21 At times relevant to this Indictment:
22 1. Defendant RAGHAVENDER REDDY BUDAMALA, also known as “Reddy
23 Raghav Budamala,” resided in Irvine, California.
24 2. Defendant BUDAMALA was the manager of Hayventure LLC
25 (“Hayventure”), Pioneer LLC (“Pioneer”), and XC International LLC
26 (“XC International”), three shell companies with no substantial
27 business operations or employees.
28
Case 2:22-cr-00077-ODW Document 14 Filed 03/08/22 Page 2 of 14 Page ID #:50
1 3. Celtic Bank (“Celtic”), Radius Bank (“Radius”), Newtek
2 Small Business Finance (“Newtek”), and Amur Equipment and Finance
3 (“AEF”) were financial institutions that the Federal Deposit
4 Insurance Company insured and that were approved Small Business
5 Administration (“SBA”) lenders.
6 Paycheck Protection Program
7 4. The Coronavirus Aid, Relief, and Economic Security
8 (“CARES”) Act was a federal law enacted in March 2020 to provide
9 emergency financial assistance to the millions of Americans who
10 suffered from the economic consequences of COVID-19.
11 5. The CARES Act authorized forgivable loans to small
12 businesses for employee retention and certain business expenses
13 through an SBA program called the Paycheck Protection Program (“PPP”
14 or “the program”).
15 6. The program authorized qualifying small businesses and
16 other organizations to receive loans that the SBA guaranteed and that
17 qualified for loan forgiveness. To qualify for the program, the
18 applicant business had to use the PPP loan proceeds on payroll costs,
19 mortgage interest, rent, and utilities, and must have been operating
20 prior to February 15, 2020.
21 7. On the PPP loan application, the applicant was required to
22 truthfully state, among other things, the business’s average monthly
23 payroll expenses and number of employees, figures that were used to
24 calculate the amount of loan proceeds the small business was eligible
25 to receive under the program. The applicant business was also
26 required to provide documentation showing its payroll expenses.
27 8. The SBA administered the program and had authority over the
28 PPP loans. However, approved lenders -- including Celtic, Radius,
2
Case 2:22-cr-00077-ODW Document 14 Filed 03/08/22 Page 3 of 14 Page ID #:51
1 Newtek, and AEF -- administered the loans. The approved lenders
2 received and processed the PPP applications and supporting
3 documentation, then made the loans using their own funds.
4 B. THE SCHEME TO DEFRAUD
5 9. Beginning in or about March 2020, and continuing through in
6 or about February 2022, in Los Angeles and Orange Counties, within
7 the Central District of California, and elsewhere, defendant
8 BUDAMALA, together with others known and unknown to the Grand Jury,
9 knowingly and with intent to defraud, devised, participated in,
10 executed, and attempted to execute a scheme to obtain money and
11 property owned by and in the custody and control of Celtic, Radius,
12 Newtek, AEF, and the SBA by means of material false and fraudulent
13 pretenses, representations, and promises, and the concealment of
14 material facts.
15 10. The fraudulent scheme operated and was carried out, in
16 substance, as follows:
17 Hayventure
18 a. On or about April 30, 2020, defendant BUDAMALA applied
19 to Celtic for a PPP loan on behalf of Hayventure, stating on the
20 application that he was the sole owner of Hayventure. On the loan
21 application, defendant BUDAMALA falsely represented to Celtic and the
22 SBA, among other things, that Hayventure had 10 employees and monthly
23 payroll of $94,639. In support of the application, defendant BUDAMALA
24 submitted to Celtic a forged bank statement and false Internal
25 Revenue Service (“IRS”) Forms 941 (“Forms 941”).
26 b. Defendant BUDAMALA caused Celtic to rely on the false
27 representations and certifications defendant BUDAMALA made on the
28 Hayventure PPP loan application, and on or about May 4, 2020, to
3
Case 2:22-cr-00077-ODW Document 14 Filed 03/08/22 Page 4 of 14 Page ID #:52
1 credit an Azlo Bank (“Azlo”) account ending in 5756, that defendant
2 BUDAMALA had opened in the name of Hayventure (“Azlo 5756”), with
3 $236,597 in PPP loan proceeds.
4 c. On or about September 14, 2021, defendant BUDAMALA
5 applied to Celtic and the SBA to have the Hayventure PPP loan
6 forgiven. On the forgiveness application, defendant BUDAMALA falsely
7 represented, among other things, that Hayventure had 10 employees at
8 the time of the forgiveness application, and that Hayventure used all
9 of the PPP loan proceeds on payroll costs. In support of the
10 forgiveness application, defendant BUDAMALA submitted to Celtic false
11 documents including false payroll summaries.
12 Pioneer
13 d. On or about June 4, 2020, defendant BUDAMALA acquired
14 Pioneer, a shell company with no substantial business operations or
15 employees.
16 e. On or about June 10, 2020, defendant BUDAMALA applied
17 to Radius for a PPP loan on behalf of Pioneer (“the first Pioneer
18 loan”). On the first Pioneer loan application, defendant BUDAMALA
19 falsely represented to Radius and the SBA, among other things, that
20 Pioneer had 33 employees and monthly payroll of $264,000. In support
21 of the first Pioneer loan application, defendant BUDAMALA submitted
22 to Radius false documents, including false Forms 941.
23 f. Defendant BUDAMALA caused Radius to rely on the false
24 representations and certifications defendant BUDAMALA made on the
25 first Pioneer loan application and, on or about June 24, 2020, to
26 credit an Azlo account ending in 7635, that defendant BUDAMALA had
27 opened in the name of Pioneer (“Azlo 7635”), with $660,000 in PPP
28 loan proceeds.
4
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1 g. On or about October 7, 2020, defendant BUDAMALA
2 applied to Radius and the SBA to have the first Pioneer loan
3 forgiven. On the forgiveness application, defendant BUDAMALA falsely
4 represented, among other things, that Pioneer had 33 employees at the
5 time of both the loan and forgiveness applications, and that Pioneer
6 used all of the PPP loan proceeds on payroll costs. In support of the
7 forgiveness application, defendant BUDAMALA submitted to Radius false
8 payroll summaries, a false Form 941, and false profit and loss
9 statements.
10 h. On or about January 20, 2021, defendant BUDAMALA
11 applied to Radius for a second PPP loan on behalf of Pioneer (“the
12 second Pioneer loan”). On the second Pioneer loan application,
13 defendant BUDAMALA falsely represented to Radius and the SBA, among
14 other things, that Pioneer had 33 employees and monthly payroll
15 expenses of $264,000. In support of the second Pioneer loan
16 application, defendant BUDAMALA submitted to Radius a forged letter
17 from Azlo, a false Form 941, and false payroll summaries.
18 i. Defendant BUDAMALA caused Radius to rely on the false
19 representations and certifications defendant BUDAMALA made on the
20 second Pioneer loan application and, on or about March 3, 2021, to
21 credit Azlo 7635 with $660,000 in PPP loan proceeds.
22 XC International
23 j. On or about August 6, 2020, defendant BUDAMALA applied
24 to Newtek for a PPP loan on behalf of XC International (“the first XC
25 International loan”). On the first XC International loan application,
26 defendant BUDAMALA falsely represented to Radius and the SBA, among
27 other things, that XC International had 42 employees and monthly
28 payroll of $637,000. In support of the first XC International loan
5
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1 application, defendant BUDAMALA submitted to Newtek a forged letter
2 from Azlo, a false Form 941, and false payroll summaries.
3 k. Defendant BUDAMALA caused Newtek to rely on defendant
4 BUDAMALA’s false representations and certifications on the first XC
5 International loan application, and on or about August 10, 2020, to
6 credit Azlo 5756 with $1,592,500 in PPP loan proceeds.
7 l. On or about August 10, 2020, four days after he had
8 applied for the first XC International loan, defendant BUDAMALA
9 acquired XC International, a shell company with no substantial
10 business operations or employees.
11 m. On or about February 2, 2021, defendant BUDAMALA
12 applied to Newtek for a second PPP loan on behalf of XC
13 International. On the loan application, defendant BUDAMALA falsely
14 represented to Newtek and the SBA, among other things, that XC
15 International had 42 employees and monthly payroll expenses of
16 $637,000. In support of this application, defendant BUDAMALA
17 submitted to Newtek false documents, including false payroll
18 summaries and false profit and loss statements.
19 n. On or about March 19, 2021, following Newtek’s denial
20 of XC International’s second PPP loan application, defendant BUDAMALA
21 applied to AEF for a second PPP loan on behalf of XC International
22 (“the second XC International loan”). On the loan application,
23 defendant BUDAMALA falsely represented to AEF and the SBA, among
24 other things, that XC International had 42 employees with an average
25 monthly payroll of $737,000. In support of the application, defendant
26 BUDAMALA submitted to AEF a forged Azlo bank statement, a forged
27 letter from Azlo, and false Forms 941.
28
6
Case 2:22-cr-00077-ODW Document 14 Filed 03/08/22 Page 7 of 14 Page ID #:55
1 o. Defendant BUDAMALA caused AEF to rely on the false
2 representations and certifications defendant BUDAMALA made on the
3 second XC International loan application, and on or about March 30,
4 2021, to credit Azlo 5756 with $1,842,500 in PPP loan proceeds.
5 Fraudulent Expenditure of Loan Proceeds
6 p. Once Celtic, Radius, Newtek, and AEF funded the PPP
7 loans to Hayventure, Pioneer, and XC International, defendant
8 BUDAMALA -- in contravention of his promises on the PPP loan
9 applications to spend the loan proceeds on supporting those
10 companies’ payroll and operations -- used the SBA loan proceeds for
11 personal expenditures, including to pay for personal retail
12 purchases, living expenses, and personal legal expenses; purchase
13 real estate for investment purposes; and fund investment accounts
14 including, an account at TD Ameritrade, that defendant BUDAMALA held
15 personally.
16 C. EXECUTIONS OF THE FRAUDULENT SCHEME
17 11. On or about the following dates, in Los Angeles and Orange
18 Counties, within the Central District of California, and elsewhere,
19 defendant BUDAMALA committed and willfully caused others to commit
20 the following acts, each of which constituted an execution or
21 attempted execution of the fraudulent scheme:
22 COUNT DATE ACT
ONE 4/30/20 Submission of an application for a PPP
23 loan to Celtic in the name of Hayventure
(Execution).
24
TWO 6/10/20 Submission of an application for a PPP
25 loan to Radius in the name of Pioneer
(Execution).
26 THREE 8/6/2020 Submission of an application for a PPP
loan to Newtek in the name of XC
27 International (Execution).
28
7
Case 2:22-cr-00077-ODW Document 14 Filed 03/08/22 Page 8 of 14 Page ID #:56
1 COUNT DATE ACT
FOUR 1/20/2021 Submission of an application for a PPP
2 loan to Radius in the name of Pioneer
(Execution).
3
4 FIVE 2/2/2021 Submission of an application for a PPP
loan to Newtek in the name of XC
5 International (Attempted Execution).
6 SIX 3/19/2021 Submission of an application for a PPP
loan to AEF in the name of XC
7
International (Execution).
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Case 2:22-cr-00077-ODW Document 14 Filed 03/08/22 Page 9 of 14 Page ID #:57
1 COUNT SEVEN
2 [18 U.S.C. § 1343]
3 12. The Grand Jury realleges paragraphs 1 through 8 and 10 of
4 this Indictment here.
5 A. INTRODUCTORY ALLEGATIONS
6 Economic Injury Disaster Loan Program
7 At times relevant to this Indictment:
8 13. An Economic Injury Disaster Loan (“EIDL”) was an SBA-
9 administered loan program designed to provide assistance to small
10 businesses that suffered substantial economic injury as a result of a
11 declared disaster. An EIDL loan helped businesses meet financial
12 obligations that could have been met had the disaster not occurred.
13 It provided relief from economic injury that the disaster caused and
14 permitted businesses to maintain a reasonable working capital
15 position during the disaster period.
16 14. In March 2020, due to the COVID-19 pandemic, the SBA issued
17 an Economic Injury Disaster Loan declaration. The declaration made
18 EIDL loans available nationwide to small businesses to help alleviate
19 the economic injury that COVID-19 caused.
20 B. THE SCHEME TO DEFRAUD
21 15. Beginning in or about March 2020, and continuing through in
22 or about February 2022, in Los Angeles and Orange Counties, within
23 the Central District of California, and elsewhere, defendant
24 BUDAMALA, together with others known and unknown to the Grand Jury,
25 knowingly and with intent to defraud, devised, participated in, and
26 executed a scheme to defraud the SBA as to material matters, and to
27 obtain moneys, funds, assets, and other property owned by and in the
28 custody and control of the SBA by means of material false and
9
Case 2:22-cr-00077-ODW Document 14 Filed 03/08/22 Page 10 of 14 Page ID #:58
1 fraudulent pretenses, representations, and promises, and the
2 concealment of material facts.
3 16. The fraudulent scheme operated and was carried out, in
4 substance, as follows:
5 a. On or about June 18, 2020, defendant BUDAMALA
6 electronically applied to the SBA for an EIDL loan on behalf of
7 Hayventure. On the loan application, defendant BUDAMALA falsely
8 represented to the SBA, among other things, that Hayventure had 13
9 employees, that Hayventure had $264,000 in monthly payroll expenses,
10 and that he would use the loan proceeds for the operation of
11 Hayventure.
12 b. Defendant BUDAMALA caused the SBA, through the United
13 States Department of the Treasury, to rely on defendant BUDAMALA’s
14 false representations and certifications in the Hayventure EIDL
15 application, and on or about June 22, 2020, to credit Azlo 5756 with
16 $149,900 in EIDL loan proceeds.
17 C. USE OF THE WIRES
18 17. On or about June 18, 2020, in Los Angeles and Orange
19 Counties, within the Central District of California, and elsewhere,
20 for the purpose of executing the above-described scheme to defraud,
21 defendant BUDAMALA transmitted and caused the transmission of an
22 electronic application to the SBA for an EIDL loan on behalf of
23 Hayventure by means of wire and radio communication in interstate
24 commerce.
25
26
27
28
10
Case 2:22-cr-00077-ODW Document 14 Filed 03/08/22 Page 11 of 14 Page ID #:59
1 COUNTS EIGHT THROUGH TEN
2 [18 U.S.C. §§ 1957, 2(b)]
3 18. The Grand Jury realleges paragraphs 1 through 8, 10, 12,
4 and 13 of this Indictment here.
5 19. On or about the dates set forth below, in Los Angeles and
6 Orange Counties, within the Central District of California, and
7 elsewhere, defendant BUDAMALA, knowing that the funds involved
8 represented the proceeds of some form of unlawful activity, engaged
9 in and willfully caused others to engage in the following monetary
10 transactions, in criminally derived property of a value greater than
11 $10,000, which property, in fact, was derived from specified unlawful
12 activity, namely, bank fraud, committed in violation of Title 18,
13 United States Code, Section 1344(2), as charged in Counts One through
14 Six of this Indictment, and wire fraud, committed in violation of
15 Title 18, United States Code, Section 1343, as charged in Count Seven
16 of this Indictment:
17 COUNT DATE MONETARY TRANSACTION
EIGHT 03/29/2021 Transfer of $970,000 from a Citibank
18 account ending 4850 in the name of
defendant BUDAMALA (“Citibank 4850”) to
19
a First Midwest Bank NA account in the
20 name of Company 1.
21 NINE 07/02/2021 Transfer of $578,115 from Citibank 4850
to a Comerica Bank California account in
22 the name of Company 2.
23
TEN 07/27/2021 Transfer of $1,211,487.30 from Citibank
24 4850 to a First American Trust FSB
account in the name of Company 3 for a
25 real estate investment.
26
27
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11
Case 2:22-cr-00077-ODW Document 14 Filed 03/08/22 Page 12 of 14 Page ID #:60
1 FORFEITURE ALLEGATION ONE
2 [18 U.S.C. § 982]
3
1. Pursuant to Rule 32.2(a) of the Federal Rules of Criminal
4
Procedure, notice is hereby given that the United States of America
5
will seek forfeiture as part of any sentence, pursuant to Title 18,
6
United States Code, Section 982(a)(2), in the event of the
7
defendant’s conviction of the offenses set forth in any of Counts One
8
through Seven of this Indictment.
9
2. The defendant, if so convicted, shall forfeit to the United
10
States of America the following:
11
(a) All right, title and interest in any and all property,
12
real or personal, constituting, or derived from, any proceeds
13
obtained, directly or indirectly, as a result of the offense; and
14
(b) To the extent such property is not available for
15
forfeiture, a sum of money equal to the total value of the property
16
described in subparagraph (a).
17
3. Pursuant to Title 21, United States Code, Section 853(p),
18
as incorporated by Title 18, United States Code, Section 982(b), the
19
defendant, if so convicted, shall forfeit substitute property, up to
20
the total value of the property described in the preceding paragraph
21
if, as the result of any act or omission of the defendant, the
22
property described in the preceding paragraph, or any portion
23
thereof: (a) cannot be located upon the exercise of due diligence;
24
(b) has been transferred, sold to or deposited with a third party;
25
(c) has been placed beyond the jurisdiction of the court; (d) has
26
been substantially diminished in value; or (e) has been commingled
27
with other property that cannot be divided without difficulty.
28
12
Case 2:22-cr-00077-ODW Document 14 Filed 03/08/22 Page 13 of 14 Page ID #:61
1 FORFEITURE ALLEGATION TWO
2 [18 U.S.C. § 982]
3 1. Pursuant to Rule 32.2(a) of the Federal Rules of Criminal
4 Procedure, notice is hereby given that the United States will seek
5 forfeiture as part of any sentence, pursuant to Title 18, United
6 States Code, Section 982(a)(1), in the event of the defendant’s
7 conviction of the offenses set forth in any of Counts Eight through
8 Ten of this Indictment.
9 2. The defendant, if so convicted, shall forfeit to the United
10 States of America the following:
11 (a) Any property, real or personal, involved in such
12 offense, and any property traceable to such property; and
13 (b) To the extent such property is not available for
14 forfeiture, a sum of money equal to the total value of the property
15 described in subparagraph (a).
16 3. Pursuant to Title 21, United States Code, Section 853(p),
17 as incorporated by Title 18, United States Code, Section 982(b)(1),
18 and Title 18, United States Code, Section 982(b)(2), the defendant,
19 if so convicted, shall forfeit substitute property, if, by any act or
20 omission of the defendant, the property described in the preceding
21 paragraph, or any portion thereof: (a) cannot be located upon the
22 exercise of due diligence; (b) has been transferred, sold to, or
23 deposited with a third party; (c) has been placed beyond the
24 jurisdiction of the court; (d) has been substantially diminished in
25 value; or (e) has been commingled with other property that cannot be
26 divided without difficulty. Substitution of assets shall not be
27 ordered, however, where the convicted defendant acted merely as an
28 intermediary who handled but did not retain the property in the
13
Case 2:22-cr-00077-ODW Document 14 Filed 03/08/22 Page 14 of 14 Page ID #:62
1 course of the money laundering offense unless the defendant, in
2 committing the offense or offenses giving rise to the forfeiture,
3 conducted three or more separate transactions involving a total of
4 $100,000.00 or more in any 12-month period.
5
6 A TRUE BILL
7
8
/S/
Foreperson
9
10 TRACY L. WILKISON
United States Attorney
11
12
13 SCOTT M. GARRINGER
Assistant United States Attorney
14 Chief, Criminal Division
15 RANEE A. KATZENSTEIN
Assistant United States Attorney
16 Chief, Major Frauds Section
17 KRISTEN A. WILLIAMS
Assistant United States Attorney
18 Deputy Chief, Major Frauds Section
19 GREGORY BERNSTEIN
Assistant United States Attorney
20 Major Frauds Section
21
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