First Superseding Indictment — United States v. Michael Lewayne Hill et al., Eastern District of Texas

Summary

A first superseding indictment filed September 13, 2023 as Document 443 in United States of America v. Michael Lewayne Hill, Andrew Charles Moran and others, Case No. 4:22CR110, in the U.S. District Court for the Eastern District of Texas. It alleges a scheme led by Hill and Moran in which recruits used sham or existing businesses to submit PPP applications with false employee and payroll figures and fabricated documents, obtaining at least 16 loans and at least $3.5 million. It alleges, for example, that Cord Newman Global received $225,954 from Kabbage on or about June 23, 2020 after reporting 9 employees, and that Newman wired about $140,000 to Hill. It alleges that funds went to cash, vehicles, jewelry and purported foreign exchange investments, including a wire of about $1.4 million to Australia. The signature block names United States Attorney Damien M. Diggs.

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

Cite this document

“First Superseding Indictment — United States v. Michael Lewayne Hill et al., Eastern District of Texas.” Original at archive.org. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/indictment-no-4-22-cr-00110-dkt-443-e-d-tex-53e32ca4a6/, SHA-256 966f0bb362c72a881ca3dba10ba436c15e3fba69daa3d7cb1ba379bdcf998351.

Full text

Case 4:22-cr-00110-JDK-AGD Document 443 Filed 09/13/23 Page 1 of 15 PageID #: 1353

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION

UNITED STATES OF AMERICA SEALED

§ Case No. 4:22CR110
§ Judge Kernodle
MICHAEL LEWAYNE HILL (1)
a/k/a Tank §
ANDREW CHARLES MORAN (2)
TY ALAN BURKHART (4)
JASON LAWRENCE GEIGER (5) §
a/k/a Austin St. John §
a/k/a the Red Power Ranger §
ERIC REED MARASCIO (6) §
a/k/a Phoenix Marcon §
CHRISTOPHER LEE MCELFRESH (7)
CORD DEAN NEWMAN (8)
ELMER OMAR AYALA (9) §
ARTHUR ATIK PONGTARATIK (12) §
MILES JUSTIN URIAS (13) §
FABIAN C. HERNANDEZ (14) §
§
§
§
§
§
FIRST SUPERSEDING INDICTMENT

THE UNITED STATES GRAND JURY CHARGES:

General Allegations

At all times material to the facts set forth in this First Superseding Indictment:

First Superseding Indictment
Page 1 of 16
Case 4:22-cr-00110-JDK-AGD Document 443 Filed 09/13/23 Page 2 of 15 PageID #: 1354

1. Defendants Michael Hill and Andrew Moran were individuals residing in

the Eastern District of Texas.

2. On or about August 19,2013, defendant Michael Hill opened a bank account

at BB&T Bank ending in 6172 ( Hill s Account ), listing Hill as the sole authorized signer.

3. On or about June 30, 2016, defendant Andrew Moran opened a bank

account at Woodforest National Bank ending in 0079 ( Moran s Account ), listing Moran

as the sole authorized signer.

4. On or about January 2, 2019, Jonathon Spencer opened a personal bank

account at JP Morgan Chase Bank ending in 1815 (“Spencer’s Account ), listing Spencer

as the sole authorized signer.

5. On or about March 15, 2018, defendant Cord Newman registered a business

called Cord Newman Global, LLC with the state of Nevada. On or about May 8, 2018,

Newman opened a business bank account at JP Morgan Chase Bank ending in 1302

(“Newman’s Account ), under the name of Cord Newman Global, listing Cord Newman

as the sole authorized signer.

The Small Business Administration

6. The United States Small Business Administration (SBA) was an executive¬

branch agency of the United States government that provided support to entrepreneurs and

small businesses. The mission of the SB A was to maintain and strengthen the nation’s

economy by enabling the establishment and viability of small businesses and by assisting

in the economic recovery of communities after disasters.

First Superseding Indictment
Page 2 of 16
Case 4:22-cr-00110-JDK-AGD Document 443 Filed 09/13/23 Page 3 of 15 PageID #: 1355

7. As part of this effort, the SBA enabled and provided for loans through banks,

credit unions, and other lenders. These loans have government-backed guarantees.

The Paycheck Protection P ogram

8. The Coronavirus Aid, Relief, and Economic Security (CARES) Act was a

federal law enacted in March 2020 and designed to provide emergency financial assistance

to the millions of Americans who are suffering the economic effects caused by the COVID-

19 pandemic. One source of relief provided by the CARES Act was the authorization of

forgivable loans to small businesses for job retention and certain other expenses, through

a program referred to as the Paycheck Protection Program (PPP).

9. To obtain a PPP loan, a qualifying business was required to submit 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 make certain affirmative certifications in order to be

eligible to obtain the PPP loan. In the PPP loan application (SBA Form 2483), the small

business (through its authorized representative) was required to state, among other things,

its: (a) average monthly payroll expenses and (b) number of employees. These figures

were used to calculate the amount of money the small business is eligible to receive under

the PPP. In addition, businesses applying for a PPP loan were required to provide

documentation showing their payroll expenses.

10. A PPP loan application was processed by a participating lender. If a PPP

loan application were approved, the participating lender funded the PPP loan using its own

First Superseding Indictment
Page 3 of 16
Case 4:22-cr-00110-JDK-AGD Document 443 Filed 09/13/23 Page 4 of 15 PageID #: 1356

and sounds for the purpose of executing a scheme and artifice to defraud and for obtaining

money and property by means of false and fraudulent pretenses, representations, and

promises.

Overview of the Conspiracy

13. The defendants, led by Michael Hill and Andrew Moran, executed a

scheme to defraud lenders and the SBA. Hill recruited co-conspirators to use an existing

business or create a business to submit applications to obtain PPP funding. Once enlisted,

Moran assisted his co-conspirators with the application paperwork, including fabricating

supporting documentation and submitting the application through the online portals. On

the applications, the defendants misrepresented material information such as the true nature

of their business, the number of employees, and the amount of payroll. Based on these

material misrepresentations, the SBA and other financial institutions approved and issued

loans to the defendants. Once in receipt of the fraudulently obtained funds, the defendants

did not use the money as intended, such as to pay employee salaries, cover fixed debt or

utility payments, or continue health care benefits for employees. Instead, the defendants

typically paid Hill and Moran, transferred money to their personal accounts, and spent the

funds on various personal purchases. In other instances, the defendants sent the

fraudulently obtained funds to Jonathon Spencer for purported investment in foreign

exchange markets. In total, the defendants fraudulently obtained at least 16 loans and at

least $3.5 million.

First Superseding Indictment
Page 5 of 16
Case 4:22-cr-00110-JDK-AGD Document 443 Filed 09/13/23 Page 5 of 15 PageID #: 1357

Purpose of the Conspiracy

14. It was the general purpose of the conspiracy for the defendants to unlawfully

and unjustly enrich themselves by obtaining PPP loan proceeds through materially false

and fraudulent pretenses, representations, and promises.

Manner and Means of the Conspiracy

15. The manner and means by which the defendants sought to accomplish the

purpose of the conspiracy included, among others, the following:

a. The defendants registered and used sham, non-operational businesses, or in
other instances existing businesses, under which they could submit PPP
applications.

b. The defendants opened bank accounts under their name and their businesses to
receive, deposit, and transfer PPP funds.

c. The defendants submitted materially false PPP applications, lying about, among
other things, the number of employees and monthly payroll expenses.

d. The defendants submitted falsified and fabricated supporting documentation
with their loan applications.

e. The defendants submitted the applications and accessed their PPP loan accounts
using the internet, frequently from an internet protocol address ( IP address)
that resolved back to Andrew Moran s residence in Lewisville, Texas, in the
Eastern District of Texas.

f. The defendants and their co-conspirators used the PPP funds for unauthorized
personal purposes, including but not limited to the following: cash
withdrawals; gold and silver purchases; luxury jewelry items; vehicles;
payments to co-conspirators Michael Hill and Andrew Moran; investments
with Jonathon Spencer for use in foreign exchange markets.

g. The defendants caused transmissions that affected interstate commerce by
sending wire transfers and by accessing and submitting the PPP applications
online.

First Superseding Indictment
Page 6 of 16
Case 4:22-cr-00110-JDK-AGD Document 443 Filed 09/13/23 Page 6 of 15 PageID #: 1358

Acts in Furtherance of the Conspiracy

In furtherance of the conspiracy, the following acts, among others, were

committed in the Easte District of Texas and elsewhere.

Cord Newman GlobaVs Fr udulent PPP Applic tio

16. On or about June 20, 2020, Cord Newman Global submitted a materially

false PPP loan application to Kabbage, Inc. Cord Newman signed the PPP application

as the primary contact and designated Newman s Account as the bank account to receive

the loan funds. On the application, Ne man certified that:

The funds will be used to retain workers and maintain payroll or make
mortgage interest payments, lease payments, and utility payments as
specified under the Paycheck Protection Program Rule; I understand that if
the funds are knowingly used for unauthorized purposes, the federal
gove ment may hold me legally liable, such as for charges of fraud.

The Cord Newman Global PPP loan account was accessed electronically from an IP

address that resolved to defendant Andrew Moran s residence in Lewisville, Texas, in the

Eastern District of Texas. This same IP address was also tied to the PPP loan accounts

for the following co-conspirators, among others: Miles Urias, Elmer Ayala, Fabian

Hernandez, and Jason Geiger.

17. The Cord Newman Global PPP application falsely stated that the business

had 9 employees and had an average monthly payroll expense of approximately $90,382.

In reality, Cord Newman Global had no employees other than Newman and had no payroll

or other identifiable business expenses. In support of the PPP application, Newman

submitted documentation such as voided checks, IRS Schedule C forms, and invoices.

First Superseding Indictment
Page 7 of 16
Case 4:22-cr-00110-JDK-AGD Document 443 Filed 09/13/23 Page 7 of 15 PageID #: 1359

However, the documentation was false and fabricated, as the invoices contained basic

errors such as references to Cord Welborn Global instead of the actual business name

Cord Newman Global.

18. On or about June 23, 2020, Kabbage funded the PPP loan for Cord Newman

Global, and sent $225,954 to Newman s Account.

Misuse of PPP Funds

19. On or about June 24, 2020, approximately one day after obtaining the PPP

loan, Newman wired more than half the PPP funds approximately $140,000 to Hill s

Account. Two days later, on or about June 26, 2020, Newman wired approximately

$22,600 to Moran’s Account. Neither Hill nor Moran were employees of Cord Newman

Global.

20. Once in receipt of Cord Newman Global’s PPP funds, Hill then transferred

that money, along with other PPP funds, to Spencer’s Account for investment in purported

foreign exchange markets. Specifically:

a. On or about June 13, 2020, Hill applied for and received a $225,895 PPP
loan for his own business, Alpha Operators.

b. Between on or about June 23, 2020 and on or about July 2, 2020, Cord
Newman, Andrew Moran, Jason Geiger, and Alexander Cortesano
transferred a total of approximately $421,000 of PPP funds to Hill’s Account.

c. On or about July 3, 2020, Hill combined $179,000 from the Alpha Operators
PPP loan along with the $421,000 from his co-conspirators, and sent
approximately $600,000 of PPP funds to Spencer’s Account.

First Superseding Indictment
Page 8 of 16
Case 4:22-cr-00110-JDK-AGD Document 443 Filed 09/13/23 Page 8 of 15 PageID #: 1360

21. Less than three weeks later, on or about July 24, 2020, Spencer wired

approximately $1.4 million to an account at the Commonwealth Bank of Australia in

Sydney. The $1.4 million dollars consisted of approximately $600,000 sourced by Hill

as well as approximately $830,000 sent directly from co-conspirators recruited by Hill,

including Ty Burkhart, Eric Marascio, Christopher McElfresh, Elmer Ayala,

and Andrew Moran.

Other F audulent PPP Loans

22. The defendants and their co-conspirators fraudulently applied for and

obtained several other PPP loans during the course of their scheme. The funds were not

used for the designated purposes under the CARES Act, such as employee payroll, health

care benefits, or utilities payments. Instead, the funds were withdrawn in cash, spent on

vehicles and jewelry, or sent to co-conspirators such as Hill, Moran, or Spencer. For

instance:

a. On or about June 16,2020, Ty Burkhart obtained a PPP loan for approximately
$213,925 for SmartRX. Of the PPP funds obtained, Burkhart paid
approximately $5,000 to Moran and invested approximately $200,000 with
Spencer.

b. On or about June 17,2020, Jason Geiger obtained a PPP loan for approximately
$225,754 for St. John Enterprises. Of the PPP funds obtained, Gei er sent
approximately $22,579 to Moran and invested approximately $170,000 with
Spencer.

c. On or about June 19, 2020, Eric Marascio obtained a PPP loan for
approximately $225,745 for Hazelnut Cafe. Of the PPP funds obtained,
Marascio sent approximately $25,000 to Moran and invested approximately
$150,000 with Spencer.

First Superseding Indictment
Page 9 of 16
Case 4:22-cr-00110-JDK-AGD Document 443 Filed 09/13/23 Page 9 of 15 PageID #: 1361

d. On or about June 20, 2020, Christopher McElfresh obtained a PPP loan for
approximately $233,231 for Ceemac Holdings. Of the PPP funds obtained,
McElfresh sent approximately $10,000 to Moran and invested approximately
$180,000 with Spencer.

e. On or about June 20, 2020, Elmer Ayala obtained a PPP loan for approximately
$215,939 for Green Forest Sprinklers. Of the PPP funds obtained, Ayala sent
approximately $100,000 to Moran and invested approximately $100,000 with
Spencer.

f. On or about June 24, 2020, obtained a PPP loan for
approximately $227,422 for 3RDMNSN. The loan funds were deposited in an
account opened by and in the name of Arthur Pongtaratik. Of the PPP funds
obtained, Pon taratik retained $10,000 for himself and paid a co-conspirator,
P.K., $209,000. P.K. then purchased and provided a $30,000 cashier s
check drawn on these loan funds.

g. On or about June 26, 2020, Miles Urias obtained a PPP loan for approximately
$222,385 for NXT Level Autos. Of the PPP funds obtained, Urias sent
approximately $100,000 to Moran and used the funds at restaurants and for
travel.

h. On or about June 26, 2020, Fabian Hernandez obtained a PPP loan for
approximately $224,214 for FMP Media Group. Of the PPP funds obtained,
Hernandez sent approximately $22,400 to Moran and made various luxury
purchases, including at Louis Vuitton.

i. On or about June 27,2020, obtained a PPP loan for approximately
$223,885 for Harry Chang S Corp. Of the PPP funds obtained, sent
approximately $100,000 to Moran and invested approximately $100,000 with
Spencer.

j. On or about June 25, 2020, obtained a PPP loan for approximately
$227,195 for Quantum Wellness. Of the PPP funds obtained, Lewis withdrew
and deposited approximately $154,000 into a personal account, which were then
used for a non-profit housing project.

k. On or about June 27, 2020, obtained a PPP loan for
approximately $220,545 for his sole proprietorship called Frederick
McKnight. Of the PPP funds obtained, Pa at east $10,000 to a

First Superseding Indictment
Page 10 of 16
Case 4:22-cr-00110-JDK-AGD Document 443 Filed 09/13/23 Page 10 of 15 PageID #: 1362

third party for a Return on Investment and made numerous personal purchases.

1. On or about June 29,2020, obtained a PPP loan for approximately
$ 197,189 for S Coip. Of the PPP funds obtained, transferred the entirety
of the loan amount to a separate personal account.

The chart below summarizes some of the fraudulent loans obtained by the defendants:

Date of Loan Business Na e Application Signer s) Amount Funded
(on or about) an Funds Recipient(s) (Approximate)
Ju e 13, 2020 Alpha Operators Michael Hill $225,895

June 16, 2020 SmartRX Ty Burkhart $213,925

June 17, 2020 St. John Enterprises Jason Geiger $225,754

June 19, 2020 Hazelnut Cafe Eric Marascio $225,745

June 20, 2020 Ceemac Holdings Christopher McElfresh $233,231

June 20, 2020 Cord Newman Cor Newman $225,954
Global
June 20, 2020 Green Forest Elmer Ayala $215,939
Sprinklers
June 24, 2020 3RDMNSN $227,422
Arthur Pongtaratik
June 26, 2020 NXT Level Autos Miles Urias $222,385

June 26, 2020 FMP Media Group Fabian Hernandez $224,214

June 27, 2020 Ha ry Chang S Corp $223,885

June 25, 2020 Quantum Wellness $227,195
June 27, 2020 Frederick McKni ht $220,545
June 29, 2020 S Corp. $197,189

First Supe seding Indictment
Page 11 of 16
Case 4:22-cr-00110-JDK-AGD Document 443 Filed 09/13/23 Page 11 of 15 PageID #: 1363

23. In sum, the defendants and their co-conspirators obtained at least 16 loans,

fraudulently drawing on at least $3.5 million of funds that were earmarked for emergency

pandemic relief.

All in violation of 18 U.S.C. § 1349.

First Superseding Indictment
Page 12 of 16
Case 4:22-cr-00110-JDK-AGD Document 443 Filed 09/13/23 Page 12 of 15 PageID #: 1364

COUNT TWO

Violation: 18 U.S.C. § 1956(h)
(Conspiracy to Commit Money
Laundering)

24. Paragraphs 1 - 23 of this First Superseding Indictment are realleged and

incorporated by reference as though fully set forth herein.

25. On or about the dates set forth below, in the Eastern District of Texas and

elsewhere, the defendants,

Michael Hill Cord Newman Jonathon Spencer
Andrew Moran Elmer Ayala
Ty Burkhart Arthur Pon taratik
Jason Geiger Miles Urias
Eric Marascio Fabian Hernandez
Christopher McElfresh

did knowingly conspire with each other and with other persons known and unknown to the

Grand Jury to violate Title 18, United States Code, Section 1956 and Section 1957, to wit:

to knowingly engage and attempt to engage, in monetary transactions by, through or to a

financial institution, affecting interstate and foreign commerce, in criminally derived

property of a value greater than $10,000, such property having been derived from a

specified unlawful activity, that is, wire fraud, a violation of Title 18 United States Code

Section 1343.

26. The defendants used their fraudulently obtained proceeds in ways not

permitted by the PPP program. Specifically, the defendants engaged in the following

transactions, among many others, in excess of $10,000:

First Superseding Indictment
Page 13 of 16
Case 4:22-cr-00110-JDK-AGD Document 443 Filed 09/13/23 Page 13 of 15 PageID #: 1365

Defendant Date Lo n Date of Description of Trans ction in
Proceeds Transaction Excess of $10,000 With
Obtained (Approximate) Fraudulently Obtained Loan
(Approximate) Funds
Michael Hill June 13, 2020 July 1,2020 $50,000 transfer to ersonal account
Ty Burkhart June 16, 2020 June 29, 2020 $200,010 cash withdrawal

Jason Geiger June 17, 2020 June 23, 2020 $100,000 wire transfer to Hill

Eric Marascio June 19, 2020 June 30, 2020 $25,000 purchase of cashier s check

Christopher June 20, 2020 July 3, 2020 $180,000 wire transfer to Spencer
McElfresh

Corti Newman June 20, 2020 June 26, 2020 $22,600 wire t ansfer to Moran

Elmer Ayala June 20, 2020 June 24, 2020 $100,000 wire transfer to Moran

Arthur June 24, 2020 July 7, 2020 $209,650 wire transfer to co¬
Pongtaratik conspirator P.K.
June 24, 2020 July 10, 2020 Receipt, deposit, and partial cash
withdrawal of $30,000 cashier s
check purchased with loan funds
Miles Urias June 26, 2020 July 6, 2020 $100,000 wire transfer to Moran

Fabian June 26, 2020 July 8, 2020 $22,400 wire transfer to Moran
Hernandez

June 27, 2020 July 3, 2020 $100,000 wire transfer to Moran

June 25, 2020 July 21, 2020 $154,00 transfer to account for non¬
profit housing project
June 27, 2020 July 2, 2020 $10,037 wire transfer to M.W. fo
Return on Investment
June 29, 2020 July 14, 2020 $268,796 (including full amount of
loan funds) wire transfer to separate
personal account
Jonathon June and July July 24, 2020 $1.4 million wire transfer to
Spencer 2020 Commonwealth Bank of Australia

All in violation of 18 U.S.C. § 1956(h).

First Superseding In ictment
Page 14 of 16
Case 4:22-cr-00110-JDK-AGD Document 443 Filed 09/13/23 Page 14 of 15 PageID #: 1366

NOTICE OF INTENT TO SEEK CRIMINAL FORFEITURE

1. The allegations contained in Counts 1 and 2 of this First Superseding

Indictment are realleged and incorporated by reference as though fully set forth herein for

the purpose of alleging forfeiture to the United States of America of certain property in

which the defendant has an interest.

2. Upon conviction of any violation of 18 U.S.C. § 1349, the defendants shall

forfeit to the United States any property, real or personal, that constitutes or is derived from

proceeds traceable to the offense(s), pursuant to 18 U.S.C. § 981(a)(1)(C) and 28 U.S.C. §

2461(c). The property, which is subject to forfeiture, includes but is not limited to, a

money judgment, and all interest and proceeds traceable thereto, representing the proceeds

of the offenses, for which the defendants are jointly and severally personally liable.

3. Upon conviction of any violation of 18 U.S.C. § 1956, the defendants shall

forfeit to the United States any property, real or personal, involved in such offense, or any

property traceable to such property, pursuant to 18 U.S.C. § 982(a)(1), including a money

judgment representing funds involved in the offense.

4. Pursuant to 21 U.S.C. § 853(p), as incorporated by reference by 18 U.S.C. §

982(b), if any of the forfeitable property, or any portion thereof, as a result of any act or

omission of the defendants:

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;

First Superseding Indictment
Page 15 of 16
Case 4:22-cr-00110-JDK-AGD Document 443 Filed 09/13/23 Page 15 of 15 PageID #: 1367

d. Has been substantially diminished in value; or

e. Has been commingled with other property which cannot be subdivided

without difficulty;

it is the intent of the United States to seek the forfeiture of other property of the defendants

up to the value of the above-described forfeitable properties, including, but not limited to,

any identifiable property in the names of the defendants, pursuant to Title 21, United States

Code, Section 853(p), as incorporated by Title 28, United States Code, Section 2461(c).

5. By virtue of the commission of the offenses alleged in this First Superseding

Indictment, any and all interest that the defendants have in the above-described property is

vested in the United States and hereby forfeited to the United States pursuant to 18 U.S.C.

§ 981(a)(1)(C), 18 U.S.C. § 982(a)(1), and 28 U.S.C. § 2461(c).

All pursuant to 18 U.S.C. § 981(a)(1)(C), 18 U.S.C. § 982(a)(1), and 28 U.S.C. §

2461(c) and the procedures set forth at 21 U.S.C. § 853, as made applicable through 18

U.S.C. § 982(b)(1).

A TRUE BILL

GRAND JURY FOREPERSON

DAMIEN M. DIGGS
UNITED STATES ATTORNEY

ANAND VARADARAJAN Date
G.R. JACKSON
Assistant United States Attorneys

First Superseding Indictment
Page 16 of 16

File and source

File: 443-indictment.pdf
Size: 5,253,564 bytes
SHA-256: 966f0bb362c72a881ca3dba10ba436c15e3fba69daa3d7cb1ba379bdcf998351
Our copy: 443-indictment.pdf
Original: archive.org