Indictment — United States v. Cheryl Lee Labrie, District of Alaska (Document 2)
Summary
A grand jury indictment in United States of America v. Cheryl Lee Labrie, No. 3:24-cr-00009-JMK-MMS, filed January 18, 2024 as Document 2 in the U.S. District Court for the District of Alaska. It charges wire fraud under 18 U.S.C. § 1343, bank fraud under 18 U.S.C. § 1344 and money laundering under 18 U.S.C. § 1957, with forfeiture allegations. The indictment alleges that from April 2020 through August 2022 Labrie, manager of AKBS, LLC, obtained EIDL loans and first and second draw PPP loans from Alaska USA Federal Credit Union with false statements about a prior felony conviction, payroll and employee counts. It alleges a first draw application for $200,000 and a second draw application for $292,573.00, and that EIDL funds went to personal uses including a home purchase. The signature block names Assistant U.S. Attorney Michael J. Heyman.
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“Indictment — United States v. Cheryl Lee Labrie, District of Alaska (Document 2).”
Original at archive.org. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/indictment-no-3-24-cr-00009-dkt-2-b96b32330a/
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S. LANE TUCKER
United States Attorney
MICHAEL J. HEYMAN
Assistant U.S. Attorney
Federal Building & U.S. Courthouse
222 West Seventh Avenue, #9, Room 253
Anchorage, AK 99513-7567
Phone: (907) 271-5071
Email: michael.heyman@usdoj.gov
Attorneys for Plaintiff
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
UNITED STATES OF AMERICA, No. 3:24-cr-00009-JMK-MMS
Plaintiff, COUNT 1-4
WIRE FRAUD
vs. Vio. of 18 U.S.C. § 1343
CHERYL LEE LABRIE, COUNT 5-6
BANK FRAUD
Defendant. Vio. of 18 U.S.C. § 1344
COUNT 7-12
MONEY LAUNDERING
Vio. of 18 U.S.C. § 1957
CRIMINAL FORFEITURE
ALLEGATION 1
18 U.S.C. § 981(a)(1)(C)
CRIMINAL FORFEITURE
ALLEGATION 2
18 U.S.C. § 981(a)(1)(A)
INDICTMENT
The Grand Jury charges that:
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INTRODUCTORY ALLEGATIONS
At all times relevant to this Indictment:
1. Defendant Cheryl Lee Labrie (“Defendant”) was a resident of Anchorage,
Alaska.
2. Defendant was the manager and sole member of AKBS, LLC (“AKBS”),
doing business as Liberty Tax Services and Alaska’s Bookkeeping Services, an Alaska
entity organized to provide bookkeeping, payroll and bill pay services.
3. Defendant was the 50% member of M & C Enterprises, LLC (“M&C”), an
Alaska entity organized to provide payroll services.
4. In 2013, Defendant was convicted of 1st Degree Theft, a felony, in the
Superior Court for the State of Alaska, Third Judicial District, case number 3AN-13-
01139CR. The sentence was suspended, and Defendant was placed on five years’
probation and ordered to pay $70,000 restitution. In January 2019, despite the five years
expiring, the court extended the probationary term because Defendant had not repaid the
restitution.
COVID Disaster-Relief Loans
5. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security
(“CARES”) Act became law. The CARES Act created the Paycheck Protection Program
(“PPP”) and Economic Injury Disaster Loans (“EIDLs”).
6. The PPP authorized the Small Business Administration (“SBA”) to
guarantee loans of up to $10,000,000 to qualifying employers without collateral or
personal guarantees from the borrowers. The Act required lenders making loans under
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the PPP to defer all repayment obligations for not less than six months on such loans and
required borrowers to certify, among other things, that the borrowed “funds [would] be
used to retain workers and maintain payroll or make mortgage payments, lease payments,
and utility payments.” Pursuant to the CARES Act, the amount of PPP funds a business
is eligible to receive is determined by the number of employees employed by the business
and their average payroll costs. The PPP allows qualifying small businesses and other
organizations to receive unsecured SBA-guaranteed loans. PPP loan proceeds must be
used by businesses on payroll costs, mortgage interest, rent, and/or utilities, among other
specified expenses. The PPP allows the interest and principal to be forgiven if businesses
spend the proceeds on these expenses under certain conditions. Businesses applying for a
PPP loan must provide documentation to confirm that they have in the past paid
employees the compensation represented in the loan application. The PPP is overseen by
the SBA, which has authority over all PPP loans, but individual PPP loans are issued by
approved commercial lenders who receive and process PPP applications and supporting
documentation. The first round of PPP closed to new applications on August 8, 2020.
7. The EIDL program is an SBA program providing low-interest financing to
small businesses, renters, and homeowners affected by declared disasters. The CARES
Act and Coronavirus Response and Relief Supplemental Appropriations Act of 2021
authorized the SBA to issue EIDLs (and additional EIDL advances of up to $10,000) to
small businesses within three days of applying for an EIDL. EIDLs must be repaid and
are determined based upon the number of certified employes by the applicant. EIDL
advances do not have to be repaid. To obtain an EIDL and/or an EIDL advance,
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qualifying businesses must submit an application to the SBA and provide information
about business operations, such as the number of employees, gross revenues for the 12-
month period preceding the disaster, and cost of goods sold in the 12-month period
preceding the disaster; in the case of EIDLs for COVID-19 relief, the 12-month period
preceding January 31, 2020. The applicant must also certify all application information
submitted is true and correct to the best of the applicant’s knowledge.
8. On December 27, 2020, the Consolidated Appropriations Act of 2021,
which included the Economic Aid to Hard-Hit Small Businesses, Nonprofit, and Venues
Act (the “Relief Act”) was signed into law, providing additional funding for the PPP.
Under the Relief Act, certain businesses that already obtained a PPP loan under the
original PPP were eligible for an additional “second draw” PPP loan, provided they met
certain requirements. The Relief Act also re-opened the application period for “first
draw” PPP loans to businesses that had not been approved for a “first draw” loan prior to
August 8, 2020, or who may have been eligible to receive more funds during the “first
draw” period than they actually received. Borrowers through the PPP second draw
program are also eligible to apply for loan forgiveness once all loan proceeds for which
forgiveness is requested have been used.
9. In order to obtain a PPP loan, an applicant was required to provide
information about the subject business’s operations, such as the date of opening, number
of employees, and past revenues. The applicant was also required to certify all the
information in the application was true and correct to the best of the applicant’s
knowledge. PPP loan applications were submitted over the Internet by participating
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lenders via the SBA’s computer servers. Regardless of originating location, all PPP
applications submitted through August 8, 2020, were received by servers located in
Virginia. PPPs applications submitted after January 11, 2021, were received through
servers located in Oregon, and subsequently transmitted to servers in Virginia.
10. PPP Forgiveness Loan Applications were submitted over the Internet via
SBA’s computer servers. Regardless of originating location, all PPP Forgiveness
Applications were received through servers located in Oregon, and subsequently
transmitted to servers in Virginia.
11. EIDL applications were submitted over the internet via SBA’s computer
servers and transited via interstate wires depending upon their date of application. Prior
to July 11, 2020, applications originating in any state beginning with prefix 36 transited
via wires to Washington, before being routed to Colorado, and subsequently Virginia.
The General Scheme
12. From no later than April 2020, and continuing through August 2022,
Defendant Cheryl Lee Labrie knowingly and willfully executed a scheme and artifice to
defraud the SBA and financial institutions, including Alaska USA Federal Credit Union
(“Alaska USA”), a participating PPP lender, and to obtain money and property by means
of materially false and fraudulent pretenses, representations, and promises.
13. Specifically, Defendant applied for and obtained an EIDL advance, two
EIDL loans, two PPP loans, and the forgiveness of two PPP loans (first and second draw)
for AKBS by means of materially false and fraudulent pretenses, representations, and
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promises, and, in some instances, intended to convert the proceeds of those loans for
unauthorized purposes, including for personal use.
Manner and Means
14. As part of the scheme and artifice to defraud, Defendant committed or
participated in the following acts:
The First EIDL
15. On April 1, 2020, Defendant submitted an EIDL application to the SBA on
behalf of AKBS seeking $110,500.00, plus a $6,000 advance.
16. The EIDL application contained the following false statement: In response
to the question of whether Defendant had ever been convicted, pled guilty, or been placed
on any form of probation, Defendant responded, “No.” In truth, Defendant had been
convicted in 2013 for 1st Degree Theft, a felony, and placed on probation. At the time of
the EIDL application, Defendant remained on probation and was aware of her conviction
and current probationary status, but knowingly and willfully provided false information
about the conviction and probation.
17. Based at least in part on the material false Statements, the SBA approved
the EIDL advance and dispersed it to AKBS’s Alaska Federal Credit Union business
account on April 23, 2020, and the EIDL was subsequently approved and funded on June
3, 2020.
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The Second EIDL
18. In April 2021, Defendant requested a $349,500 increase of the EIDL (for a
total of $460,000.00) on behalf of AKBS. Defendant falsely represented to the SBA that
all statements in the initial application were true and that the funds would be used “solely
as working capital to alleviate economic injury” caused by COVID.
19. Based at least in part on the material false Statements, the SBA approved
the second EIDL and funded it to AKBS’s Northrim Bank business account on July 12,
2021.
20. However, the representation about her criminal history in the original loan
application was not true and Defendant obtained the second draw not for working capital
as a result of economic injury caused by COVID, but primarily for personal expenses,
including, without limitation, to facilitate the purchase of a new home (including
obtaining a downpayment, satisfying an outstanding federal tax lien of M&C, and
satisfying an outstanding student debt lien), and to pay the outstanding restitution order
from her 2013 conviction.
21. On the date she received the EIDL funds, Defendant, among other things,
immediately satisfied the M&C tax lien, a condition required by her mortgage lender to
qualify for the home loan. Defendant paid the M&C tax lien in three payments,
$11,401.92, $20,831.48, and $65,005.04.
22. The next day, July 15, 2021, Defendant opened a new personal account at
Northrim Bank and transferred $80,000 in EIDL proceeds from the AKBS business
account to her new personal account.
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23. Shortly thereafter, Defendant opened two new AKBS accounts at Northern
Skies Bank. Defendant then obtained two cashier’s checks from Northrim Bank in the
amounts of $150,000 and $76,012.36 and deposited them into the new Northern Skies
accounts on July 20, 2021, and August 2, 2021, respectively. Defendant did not use those
proceeds deposited into the new Northerns Skies accounts as working capital to alleviate
economic injury caused by COVID, but for, at least in part, unrelated purposes,
including, without limitation, for payroll expenses of a marijuana dispensary.
The First Draw PPP Loan
24. On April 29, 2020, Defendant submitted a PPP loan application (loan
number 53187473-01) to Alaska USA on behalf of AKBS seeking a PPP loan in the
amount of $200,000.
25. The PPP loan application contained material false statements. Defendant
represented that AKBS’s average monthly payroll was $80,000 and further submitted an
IRS Form W3 claiming that AKBS’s 2019 employee payroll was $1,631,335. According
to filings certified by Defendant to the Alaska Department of Labor (“DOL”), Alaska
Department of Revenue (“DOR”), and Internal Revenue Service (“IRS”), AKBS’s total
payroll for the entirety of 2019 was approximately $67,000.
26. Defendant further represented that the total number of AKBS employees
was 32 and submitted a 2019 IRS Form W3 claiming that AKBS had 86 employees.
According to filings certified by Defendant to the DOL, DOR, and IRS, AKBS had, at
most, 18 employees.
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27. Defendant also certified that she was not engaged in any activity that is
illegal under federal, state or local law, and further certified the information provided in
the first draw PPP loan application and the information provided in all supporting
documents and forms is true and accurate in all material respects.
28. Based at least in part on these material false statements, Alaska USA
approved the loan and dispersed the funds on May 14, 2020. In addition, following
Alaska USA funding of the PPP loan, on June 22, 2020, the SBA paid Alaska FCU
$10,000 in lender fees to finance the PPP loan.
The Second Draw PPP Loan
29. On January 27, 2021, Defendant submitted a PPP loan application (loan
number 8334898300) to Alaska USA on behalf of AKBS seeking a second draw PPP
loan in the amount of $292,573.00.
30. The second draw PPP application contained material false statements.
Defendant represented that AKBS’s average monthly payroll was $118,416 and further
submitted four IRS Form 941s for 2020 claiming that AKBS’s quarterly employee
payroll was $341,383, $337,506.14, $346,764, and $425,613, respectively. Defendant
further submitted a certified 2019 profit and loss statement representing that yearly
payroll was $570,446 ($47,537 average monthly), and a statement representing that
payroll for the first quarter of 2020 was $424,677. According to filings certified by
Defendant to the DOL, AKBS’s total payroll for the entirety of 2020 was approximately
$85,579.
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31. Defendant further represented that the total number of AKBS employees
was 75 and submitted four quarterly IRS Form W3s for 2020 representing that AKBS had
37, 32, 34, and 41 employees per quarter, respectively. According to filings certified by
Defendant to the DOL, AKBS had, at most, 11 employees in 2020.
32. Defendant also certified she was not engaged in any activity that is illegal
under federal, state or local law, and further certified the information provided in the
second draw PPP Loan application and the information provided in all supporting
documents and forms is true and accurate in all material respects.
33. Based at least in part on these material false statements, Alaska USA
approved the second draw loan and dispersed the funds on February 3, 2021. In
addition, following Alaska USA funding of the second draw PPP loan, on March 15,
2021, the SBA paid Alaska USA $14,628.65 in lender fees to finance the PPP loan
increase.
Forgiveness of the First PPP Loan
34. On February 23, 2021, Defendant submitted a PPP Loan Forgiveness
Application for the first PPP loan (covered period of 5/14/2020 to 10/22/2020). The
application contained material false statements. Defendant represented that that payroll
expenses for the applicable five-month period were $658,473.72 when, according to
filings certified by Defendant to the DOL, payroll expenses for the entire 2019 were
$67,270 and payroll expenses for the entire 2020 were approximately $80,000.
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35. Defendant further represented that the total number of AKBS employees
was 71, but according to filings certified by Defendant to the DOL, DOR, and IRS,
AKBS had, at most, 19 employees.
36. The SBA approved the first PPP Loan Forgiveness Application on March
10, 2021, and paid Alaska USA a total of $201,643.84 in principal and interest payments.
But for the false statements, the SBA would not have approved the loan forgiveness.
Forgiveness of the Second PPP Loan
37. On July 8, 2021, Defendant submitted a PPP Loan Forgiveness Application
for the second draw PPP loan (covered period of 2/3/2021 to 6/30/2021). The application
contained material false statements. Defendant represented that payroll expenses for the
applicable period were $752,550.45 when, according to filings certified by Defendant to
the DOL, payroll expenses for the entire 2020 were approximately $80,000 and payroll
expenses for the first and second quarter of 2021 were $138,549.
38. Defendant further represented that the total number of AKBS employees
was 54, but, according to filings certified by Defendant to DOL, AKBS had five
employees.
39. The SBA approved the second PPP Loan Forgiveness Application on July
20, 2021, and paid Alaska USA a total of $293,911.62 in principal and interest payments.
But for the false statements, the SBA would not have approved the loan forgiveness.
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COUNTS 1-4
(Wire Fraud - 18 U.S.C. § 1343)
40. The allegations contained in paragraphs 1 to 39 are hereby incorporated by
reference.
41. On or about the dates set forth in the separate counts below, within the
District of Alaska, Defendant did knowingly, and with intent to defraud, devise and
intend to devise a scheme and artifice to defraud as to a material matter and to obtain
money and property by means of materially false and fraudulent pretenses,
representations, and promises, and by concealment of material facts, and, for the purpose
of executing such scheme and artifice and attempting to do so, did transmit and cause to
be transmitted, by means of wire communication in interstate commerce, certain writings,
signs and signals, namely:
COUNT DATE DESCRIPTION OF WIRE
COMMUNICATION
1 April 1, 2020 EIDL Application from servers in the State of Alaska to
SBA servers in the State of Washington
2 April 24, 2021 EIDL Increase Application from servers in the State of
Alaska to SBA servers in the State of Washington
3 February 23, 2021 PPP Loan (1st Draw) Forgiveness Application from
servers in the State of Alaska to SBA servers in the State
of Oregon
4 July 8, 2021 PPP Loan (2nd Draw) Forgiveness Application from
servers in the State of Alaska to SBA servers in the State
of Oregon
All in violation of Title 18, United States Code, Section 1343.
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COUNT 5
(Bank Fraud - 18 U.S.C. § 1344)
42. The allegations contained in paragraphs 1 to 39 are hereby incorporated by
reference.
43. On or about April 29, 2020, within the District of Alaska, Defendant did
knowingly execute said scheme or artifice to defraud Alaska USA, a federally insured
financial institution, of something of value, and obtain money or property from Alaska
USA by means of materially fraudulent pretenses and representations, in that Defendant
applied for and obtained a PPP loan of $200,000 from Alaska USA while knowingly and
willfully misrepresenting AKBS’s average monthly payroll and number of employees.
All in violation of Title 18, United States Code, Section 1344.
COUNT 6
(Bank Fraud - 18 U.S.C. § 1344)
44. The allegations contained in paragraphs 1 to 39 are hereby incorporated by
reference.
45. On or about January 27, 2021, within the District of Alaska, Defendant did
knowingly execute said scheme or artifice to defraud Alaska USA, a federally insured
financial institution, of something of value, and obtain money or property from Alaska
USA by means of materially fraudulent pretenses and representations, in that Defendant
applied for and obtained a PPP loan of $292,573.00 from Alaska USA while knowingly
and willfully misrepresenting AKBS’s average monthly payroll and number of
employees.
All in violation of Title 18, United States Code, Section 1344.
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COUNTS 7-12
(Money Laundering – 18 U.S.C. § 1957)
46. The allegations contained in paragraphs 1 to 39 are hereby incorporated by
reference.
47. On or about the dates set forth in the chart below for Counts 7-12, in the
District of Alaska, Defendant did knowingly engage and attempt to engage in a monetary
transaction by, through or to a financial institution, affecting interstate or foreign
commerce, in criminally derived property of a value greater than $10,000, to wit: the
withdrawal, deposit, and transfer of EIDL proceeds from and to the financial institutions
identified below, such property, having been derived from specified unlawful activity,
that is, wire fraud and bank fraud:
COUNT DATE DESCRIPTION OF MONETARY TRANSACTION
7 July 14, 2021 Defendant transferred the amount of $11,401.92 from
AKBS’s Northrim Bank account -3595 to the IRS to
satisfy M&C’s federal tax lien
8 July 14, 2021 Defendant transferred the amount of $20,831.48 from
AKBS’s Northrim Bank account -3595 to the IRS to
satisfy M&C’s federal tax lien
9 July 14, 2021 Defendant transferred the amount of $65,005.04 from
AKBS’s Northrim Bank account -3595 to the IRS to
satisfy M&C’s federal tax lien
10 July 15, 2021 Defendant transferred the amount of $80,000 from
AKBS’s Northrim Bank account -3595 to Northrim Bank
account -7636
11 July 20, 2021 Defendant obtained a cashier’s check from AKBS’s
Northrim Bank account -3595 in the amount of $150,000
and deposited it into AKBS’s new Northern Skies account
-588
12 August 2, 2021 Defendant obtained a cashier’s check from AKBS’s
Northrim Bank account -3595 in the amount of $76,012.36
and deposited it into AKBS’s new Northern Skies account
-588
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All in violation of Title 18, United States Code, Section 1957.
CRIMINAL FORFEITURE ALLEGATION 1
48. Upon conviction of the wire fraud and bank fraud offenses alleged in
Counts 1 through 6 of this Indictment, defendant shall forfeit to the United States
pursuant to 18 U.S.C. § 981(a)(1)(C) and 28 U.S.C. § 2461(c) any and all property, real
or personal, involved in or derived from said offense and all property traceable to such
property, including but not limited to a money judgment for a sum of money equal to the
amount of property involved in or derived from that offense.
CRIMINAL FORFEITURE ALLEGATION 2
49. Upon conviction of the money laundering offenses alleged in Counts 7
through 12 of this Indictment, defendant shall forfeit to the United States pursuant to
18 U.S.C. § 981(a)(1)(A) and 28 U.S.C. § 2461(c) any property, real or personal,
involved in a transaction or attempted transaction in violation of 18 U.S.C. § 1957, or any
property traceable to such property
50. If the above-described forfeitable property identified in Criminal Forfeiture
Allegations 1 or 2, as a result of any act or omission of 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
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e. has been commingled with other property which cannot be divided
without difficulty; the United States of America shall be entitled to
forfeiture of substitute property pursuant to 21 U.S.C. § 853(p), as
incorporated by 28 U.S.C. § 2461(c)
A TRUE BILL
s/ Grand Jury Foreperson
GRAND JURY FOREPERSON
s/ Michael J. Heyman
MICHAEL J. HEYMAN
Assistant U.S. Attorney
United States of America
s/ S. Lane Tucker
S. LANE TUCKER
United States Attorney
DATE: 1/16/2024
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