Indictment — United States v. Mark Farag Shehata, Central District of California (Document 1)
Summary
A grand jury indictment filed June 8, 2023 in United States v. Mark Farag Shehata, CR 2:23-cr-00286-GW, in the U.S. District Court for the Central District of California, as Document 1. Counts One through Seven charge wire fraud under 18 U.S.C. § 1343, alleging that from in or about May 2020 through in or about May 2021 Shehata submitted at least seven false Paycheck Protection Program loan applications to Bank of the West, U.S. Bank, Cross River Bank and Fund-Ex Solutions Group, LLC for companies including Shirmak Group LLC and Alpha and Omega Group. The indictment alleges the named borrowers had no employees or business, that fake payroll tax records and IRS Forms W-3 were supplied, and that the applications requested a total of $5,423,989 and obtained approximately $3,154,265. A forfeiture allegation under 18 U.S.C. § 982 follows.
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“Indictment — United States v. Mark Farag Shehata, Central District of California (Document 1).”
Original at archive.org. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/indictment-no-2-23-cr-00286-dkt-1-c-d-cal-7041988c65/
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Case 2:23-cr-00286-GW Document 1 Filed 06/08/23 Page 1 of 10 Page ID #:1
1
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3 6/8/2023
4 CD
5
6
7
UNITED STATES DISTRICT COURT
8
FOR THE CENTRAL DISTRICT OF CALIFORNIA
9
October 2022 Grand Jury
10
11 UNITED STATES OF AMERICA, CR 2:23-cr-00286-GW
12 Plaintiff, I N D I C T M E N T
13 v. [18 U.S.C. § 1343: Wire Fraud; 18
U.S.C. § 982: Criminal Forfeiture]
14 MARK FARAG SHEHATA,
aka “Mark Fshehata,”
15 aka “Mark Farag,”
aka “Samy Farag,”
16
Defendant.
17
18 The Grand Jury charges:
19 COUNTS ONE THROUGH SEVEN
20 [18 U.S.C. § 1343]
21 A. INTRODUCTORY ALLEGATIONS
22 At times relevant to this Indictment:
23 Defendant and the Relevant Entities
24 1. Defendant MARK FARAG SHEHATA, also known as (“aka”) “Mark
25 Fshehata,” aka “Mark Farag,” aka “Samy Farag,” resided in Marina Del
26 Rey, California.
27 2. Defendant SHEHATA organized, registered, and was a member
28 and/or manager of the following limited liability companies, all of
Case 2:23-cr-00286-GW Document 1 Filed 06/08/23 Page 2 of 10 Page ID #:2
1 which purportedly operated from addresses in Marina Del Rey,
2 California:
3 a. Shirmak Group LLC;
4 b. Cynergy Group Internatioal (sic) LLC;
5 c. Global Network Investments LLC; and
6 d. Alpha and Omega Group LLC.
7 3. Bank of the West, U.S. Bank, and Cross River Bank were
8 financial institutions based in San Francisco, California;
9 Minneapolis, Minnesota; and Teaneck, New Jersey, respectively, and
10 were approved lenders of Paycheck Protection Program loans. Fund-Ex
11 Solutions Group, LLC was an approved non-bank lender of such loans
12 based in Syracuse, New York.
13 4. Defendant SHEHATA controlled at least 18 business checking
14 accounts in his name and in the names of Shirmak Group LLC, Global
15 Network Investments LLC, Alpha and Omega Group LLC, Cynergy Group
16 Internatioal (sic) LLC, and Marsh Research Group LLC at a branch of
17 Bank of the West within the Central District of California.
18 The Paycheck Protection Program
19 5. The Coronavirus Aid, Relief, and Economic Security
20 (“CARES”) Act was a federal law enacted in or about March 2020 that
21 was designed to provide emergency financial assistance to Americans
22 suffering economic harm as a result of the COVID-19 pandemic. One
23 form of assistance provided by the CARES Act was the authorization of
24 United States taxpayer funds in forgivable loans to small businesses
25 for job retention and certain other expenses, through a program
26 referred to as the Paycheck Protection Program (“PPP”). PPP loan
27 proceeds were required to be used by the business to pay certain
28
2
Case 2:23-cr-00286-GW Document 1 Filed 06/08/23 Page 3 of 10 Page ID #:3
1 permissible expenses: payroll costs, interest on mortgages, rent, and
2 utilities.
3 6. In order to obtain a PPP loan, a qualifying business was
4 required to submit a PPP loan application signed by an authorized
5 representative of the business. The PPP loan application required the
6 applicant business (through its authorized representative) to
7 acknowledge the program rules and make certain affirmative
8 certifications in order to be eligible to obtain the PPP loan. Such
9 certifications required the applicant to affirm that “The [PPP loan]
10 funds will be used to retain workers and maintain payroll or make
11 mortgage interest payments, lease payments, and utility payments,”
12 and that the “loan proceeds will be used only for business-related
13 purposes as specified in the loan application” and consistent with
14 the PPP rules. The authorized representative of the applicant was
15 also required to certify that “the information provided in this
16 application and the information provided in all supporting documents
17 and forms is true and accurate in material respects,” and “I
18 understand that if the funds are knowingly used for unauthorized
19 purposes, the federal government may hold me legally liable, such as
20 for charges of fraud.”
21 7. In the PPP loan application, the applicant was required to
22 state, among other things, the business’s: (a) average monthly
23 payroll expenses and (b) number of employees. These figures were used
24 to calculate the amount of money the small business was eligible to
25 receive under the PPP. In addition, the applicant was required to
26 provide documentation showing its payroll expenses.
27 8. A small business’s PPP loan application was received and
28 processed by a participating lender approved by the Small Business
3
Case 2:23-cr-00286-GW Document 1 Filed 06/08/23 Page 4 of 10 Page ID #:4
1 Administration (“SBA”). If a PPP loan application was approved, the
2 participating lender would fund the PPP loan using its own monies,
3 which were guaranteed by the SBA.
4 B. THE SCHEME TO DEFRAUD
5 9. Beginning in or about May 2020, and continuing through in
6 or about May 2021, in Los Angeles County, within the Central District
7 of California, and elsewhere, defendant SHEHATA, knowingly and with
8 intent to defraud, devised, participated in, and executed a scheme to
9 defraud Bank of the West, U.S. Bank, Cross River Bank, and Fund-Ex
10 Solutions Group, LLC, and the SBA, as to material matters, and to
11 obtain money and property owned by and in the custody and control of
12 Bank of the West, U.S. Bank, Cross River Bank, and Fund-Ex Solutions
13 Group, LLC, and the SBA, by means of material false and fraudulent
14 pretenses, representations, and promises, and the concealment of
15 material facts.
16 10. The fraudulent scheme operated and was carried out, in
17 substance, as follows:
18 a. Beginning in or about May 2020, defendant SHEHATA
19 submitted, and caused to be submitted, at least seven false and
20 fraudulent PPP loan applications to Bank of the West, U.S. Bank,
21 Cross River Bank, and Fund-Ex Solutions Group, LLC, and the SBA, on
22 behalf of Shirmak Group LLC, Global Network, LLC, Global Network,
23 Global Network Investments, Alpha and Omega Group, and Cynergy Group.
24 More specifically:
25 i. On or about May 27, 2020, defendant SHEHATA
26 submitted a loan application for Shirmak Group LLC to Fund-Ex
27 Solutions Group, LLC to request a PPP loan in the amount of $30,354;
28 the requested loan was funded on or about May 29, 2020;
4
Case 2:23-cr-00286-GW Document 1 Filed 06/08/23 Page 5 of 10 Page ID #:5
1 ii. On or about June 16, 2020, defendant SHEHATA
2 submitted a loan application for Global Network, LLC to Fund-Ex
3 Solutions Group, LLC to request a PPP loan in the amount of
4 $1,517,709; the requested loan was not funded because Fund-Ex
5 Solutions Group, LLC suspected fraud;
6 iii. On or about June 23, 2020, defendant SHEHATA
7 submitted a loan application for Global Network to U.S. Bank to
8 request a PPP loan in the amount of $752,015; the requested loan was
9 initially funded but, because U.S. Bank N.A. suspected fraud, U.S.
10 Bank recalled the loan;
11 iv. On or about July 2, 2020, defendant SHEHATA
12 submitted a loan application for Shirmak Group LLC to Cross River
13 Bank to request a PPP loan in the amount of $958,911; the requested
14 loan was funded on or about July 7, 2020;
15 v. On or about January 19, 2021, defendant SHEHATA
16 submitted a loan application for the Alpha and Omega Group to Bank of
17 the West to request a PPP loan in the amount of $780,000; the
18 requested loan was funded on or about March 26, 2021;
19 vi. On or about January 23, 2021, defendant SHEHATA
20 submitted a loan application for the Cynergy Group to Bank of the
21 West to request a PPP loan in the amount of $630,000; the requested
22 loan was funded on or about April 5, 2021; and
23 vii. On or about April 29, 2021, defendant SHEHATA
24 submitted a loan application for Global Network Investments to Bank
25 of the West to request a PPP loan in the amount of $755,000; the
26 requested loan was funded on May 24, 2021.
27 b. In each of the above-listed PPP loan applications that
28 he submitted, defendant SHEHATA certified that he, as authorized
5
Case 2:23-cr-00286-GW Document 1 Filed 06/08/23 Page 6 of 10 Page ID #:6
1 representative of the named borrower, i.e., Shirmak Group LLC, Global
2 Network, LLC, Global Network, Global Network Investments, Alpha and
3 Omega Group, and Cynergy Group, respectively, knew and understood the
4 terms and rules of the PPP loan program, which provided that PPP loan
5 proceeds were to be used by the recipient to pay only certain
6 authorized business expenses, such as payroll, mortgage interest,
7 lease, and utilities.
8 c. In support of the PPP loan applications, defendant
9 SHEHATA falsely represented that the named borrower, i.e., Shirmak
10 Group LLC, Global Network, LLC, Global Network, Global Network
11 Investments, Alpha and Omega Group, and Cynergy Group, respectively,
12 was operating a business that had employees and business expenses,
13 when, in fact, as defendant SHEHATA then knew, it did not. Defendant
14 SHEHATA knew that none of the named borrowers had any employees or
15 was conducting any type of business at the time defendant SHEHATA
16 submitted the false PPP loan applications on their behalf. In further
17 support of the PPP loan applications, defendant SHEHATA also
18 knowingly provided fake quarterly payroll tax records, IRS Forms W-3,
19 and profit and loss statements concerning the named borrowers to Bank
20 of the West, U.S. Bank, Cross River Bank, and Fund-Ex Solutions
21 Group, LLC, and the SBA.
22 d. Defendant SHEHATA caused Bank of the West, U.S. Bank,
23 Cross River Bank, and Fund-Ex Solutions Group, LLC, and the SBA, who
24 he knew would rely on the false statements in the PPP applications he
25 filed, to pay and transfer the fraudulently obtained PPP loan funds
26 into bank accounts at Bank of the West that defendant SHEHATA
27 maintained in the names of Shirmak Group LLC, Global Network
28 Investments LLC, Cynergy Group Internatioal (sic) LLC, and Alpha and
6
Case 2:23-cr-00286-GW Document 1 Filed 06/08/23 Page 7 of 10 Page ID #:7
1 Omega Group LLC, all of which bank accounts defendant SHEHATA owned
2 and controlled.
3 e. None of the PPP loan proceeds defendant SHEHATA
4 fraudulently obtained were used to make payments to employees for
5 payroll or any business expenses.
6 11. In furtherance of the scheme, defendant SHEHATA submitted
7 to Bank of the West, U.S. Bank, Cross River Bank, and Fund-Ex
8 Solutions Group, LLC, and the SBA, false applications requesting a
9 total of $5,423,989 in PPP loans, and fraudulently obtained
10 approximately $3,154,265 in PPP loan proceeds, which defendant
11 SHEHATA caused the PPP lenders to deposit into the Bank of the West
12 accounts that defendant SHEHATA owned and controlled.
13 C. USE OF INTERSTATE WIRES
14 12. On or about the dates set forth below, in Los Angeles
15 County, within the Central District of California, and elsewhere, for
16 the purpose of executing the above-described scheme to defraud,
17 defendant SHEHATA transmitted and caused the transmission of the
18 following items by means of wire communications in interstate
19 commerce:
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Case 2:23-cr-00286-GW Document 1 Filed 06/08/23 Page 8 of 10 Page ID #:8
1 COUNT DATE INTERSTATE WIRE TRANSMISSION
2 ONE 5/27/2020 Electronic submission from Marina Del Rey,
California, of a Paycheck Protection
3 Program Borrower Application Form in the
name of Shirmak Group LLC to Fund-Ex
4
Solutions Group, LLC through its servers
5 in Syracuse, New York
TWO 6/16/2020 Electronic submission from Marina Del Rey,
6 California, of a Paycheck Protection
Program Borrower Application Form in the
7 name of Global Network, LLC to Fund-Ex
Solutions Group, LLC through its servers
8
in Syracuse, New York
9 THREE 6/23/2020 Electronic submission from Marina Del Rey,
California, of a Paycheck Protection
10 Program Borrower Application Form in the
name of Global Network to U.S. Bank N.A.
11 through servers in Minneapolis, Minnesota
FOUR 7/2/2020 Electronic submission from Marina Del Rey,
12
California, of a Paycheck Protection
13 Program Borrower Application Form in the
name of Shirmak Group LLC to Cross River
14 Bank through its servers in Teaneck, New
Jersey
15 FIVE 1/19/2021 Electronic submission from Marina Del Rey,
California, of a Paycheck Protection
16
Program Borrower Application Form in the
17 name of Alpha and Omega Group to Bank of
the West through its servers in Omaha,
18 Nebraska
SIX 1/23/2021 Electronic submission from Marina Del Rey,
19 California, of a Paycheck Protection
Program Borrower Application Form in the
20
name of Cynergy Group to Bank of the West
21 through its servers in Omaha, Nebraska
SEVEN 4/29/2021 Electronic submission from Marina Del Rey,
22 California, of a Paycheck Protection
Program Second Draw Borrower Application
23 Form in the name of Global Network
Investments to Bank of the West through
24
its servers in Omaha, Nebraska
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Case 2:23-cr-00286-GW Document 1 Filed 06/08/23 Page 9 of 10 Page ID #:9
1 FORFEITURE ALLEGATION
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 any of the offenses set forth in of Counts
8 One 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 //
27 //
28 //
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Case 2:23-cr-00286-GW Document 1 Filed 06/08/23 Page 10 of 10 Page ID #:10
1 been substantially diminished in value; or (e) has been commingled
2 with other property that cannot be divided without difficulty.
3 A TRUE BILL
4
5 /S/
Foreperson
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7 E. MARTIN ESTRADA
United States Attorney
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10 MACK E. JENKINS
Assistant United States Attorney
11 Chief, Criminal Division
12 RANEE A. KATZENSTEIN
Assistant United States Attorney
13 Chief, Major Frauds Section
14 KRISTEN A. WILLIAMS
Assistant United States Attorney
15 Deputy Chief, Major Frauds Section
16 VALERIE L. MAKAREWICZ
Assistant United States Attorney
17 Major Frauds Section
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