Indictment — United States v. Jemel Maurice Lyles, Jr., District of Maryland (Document 1)

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A sealed grand jury Indictment in United States v. Jemel Maurice Lyles, Jr., a/k/a "Mauricio Lyles," Case 8:24-cr-00212-DLB, in the United States District Court for the District of Maryland, filed June 27, 2024. Counts One through Three charge wire fraud under 18 U.S.C. § 1343, and the caption also lists aggravated identity theft under 18 U.S.C. § 1028A and money laundering under 18 U.S.C. § 1957. The indictment alleges that Lyles submitted a PPP application to TD Bank for Green Capital Construction and Landscape, LLC that falsely listed another person as 80-percent owner and falsely represented that no 20% owner had a recent felony conviction, leading to approximately $105,382 in PPP funds on or about May 6, 2020. It also alleges a PPP application to Kabbage in another person's name using a falsified Form 1099-MISC and Schedule C.

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Case 8:24-cr-00212-DLB Document1 Filed 06/27/24 Page 1

A
JLW: USAO#2022R00114

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND

UNITED STATES OF AMERICA * — CRIMINALNOSDL BAA CRAAD
Vv. il (Wire Fraud, 18 U.S.C. § 1343;
m Aggravated Identity Theft, 18 U.S.C. §
JEMEL MAURICE LYLES, JR. * 1028A; Money Laundering, 18 U.S.C. §
a/k/a “Mauricio Lyles,” . 1957; Forfeiture, 18 U.S.C. § 982(a)(1),
. (C); 21 U.S.C. § 853(p); 28 U.S.C.
Defendant % § 2461(c))

* UNDER SEAL

INDICTMENT

COUNTS ONE THROUGH THREE
(Wire Fraud)

The Grand Jury for the District of Maryland charges:

Introduction: Relevant Persons, Entities, and Accounts

At all times material to this Indictment:

1. Defendant JEMEL MAURICE LYLES, JR. a/k/a “Mauricio Lyles”
(“LYLES”) was a resident of the District of Columbia and Maryland.

2. LYLES was the controlling owner of Green Capital Construction and Landscape,
LLC (“Green Capital”) — a construction and landscaping business. On or about January 30, 2020,
LYLES filed Articles of Organization with the state of Maryland for Green Capital. On or about
March 26, 2020, Green Capital was “Voided for Non-Payment” by the state of Maryland. On or
about April 9, 2020, LYLES resubmitted Articles of Organization to the state of Maryland for
Green Capital.

3) On or about March 2, 2020, LYLES opened two bank accounts in the name of
Case 8:24-cr-00212-DLB Document1 Filed 06/27/24 Page 2 of 15

Green Capital at a Maryland branch of TD Bank, with account numbers ending in 4402 (the
“4402 Account”) and 4387 (the “4387 Account”). LYLES was the sole signatory on the 4402
Account and the 4387 Account.

4. Individual-1 was a resident of the District of Columbia and Maryland. Individual-
1 and LYLES had an on and off romantic relationship from approximately 2010 to 2021.

5. Individual-2 was a resident of Pennsylvania and the owner of a tax preparation
and bookkeeping business. LYLES retained Individual-2 to provide bookkeeping services and
assist in preparing Paycheck Protection Program loan applications for Green Capital.

6. Individual-3 was a resident of Maryland and a friend of LYLES since
approximately 2002.

7. TD Bank was a federally insured financial institution headquartered in Cherry
Hill, New Jersey. TD Bank participated as a lender in the Paycheck Protection Program (“PPP”)
administered by the United States Small Business Administration (“SBA”).

8. Kabbage, Inc. (“Kabbage”) was an online financial technology company for small
businesses headquartered in Atlanta, Georgia. Kabbage participated as a lender in the PPP
administered by the SBA. The servers that Kabbage used to process PPP loans were located in
Virginia.

The Paycheck Protection Program

9. The PPP was a COVID-19 pandemic relief program administered by the SBA that
provided forgivable loans to small businesses for job retention and certain other expenses. The
PPP permitted participating third-party lenders to approve and disburse SBA-backed PPP loans
to cover payroll, fixed debts, utilities, rent/mortgage, accounts payable and other bills incurred

by qualifying businesses, during and resulting from, the COVID-19 pandemic. PPP loans were
Case 8:24-cr-00212-DLB Document 1 Filed 06/27/24 Page 3 of 15

fully guaranteed by the SBA.

10. To obtain a PPP loan, a qualifying business was required to submit a PPP loan
application, which was supposed to be 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 to be eligible to
obtain the PPP loan. In the PPP loan application, the 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 was eligible to receive under the PPP.

11. Ifan owner of 20% or more of the equity of a qualifying business applying for a
loan had, in the last five years, been convicted for any felony involving fraud, they would have
been ineligible to receive a PPP loan.

12. APPP loan application was required to be processed by a participating lender,
such as a financial institution. If a PPP loan application was approved, the participating lender
funded the PPP loan using its own monies, which were 100% guaranteed by the SBA.

13. | PPP Joan proceeds were required to be used by the business on certain permissible
expenses-—payroll costs, interest on mortgages, rent, and utilities. The PPP allowed the interest
and principal on the PPP loan to be entirely forgiven if the business spent the loan proceeds on
these expense items within a designated period and used a certain percentage of the PPP loan
proceeds on payroll expenses.

14. | When submitting their PPP application, applicants certified that the information
provided in the application and supporting documents was correct subject to criminal and civil
penalties and that they would use the proceeds pursuant to applicable PPP rules and regulations.

15. | The PPP was later extended to include a second round of funding for certain
Case 8:24-cr-00212-DLB Document1 Filed 06/27/24 Page 4 of 15

businesses that received a first PPP loan. These were referred to as “Second Draw PPP Loans.”

16. To obtain a Second Draw PPP loan, a small business submitted a PPP Second
Draw loan application, which was signed by an authorized representative of the business, to an
authorized lender. The PPP loan application required the business (through its authorized
representative) to acknowledge the program rules and to make certain certifications to be eligible
for the PPP loan.

17. The authorized representative of the small business provided information as to the
purpose of the loan, average monthly payroll, number of employees and background of the
business and its owner. The average monthly payroll expenses and the number of employees
were used to calculate the amount of money the small business was eligible to receive under the
PPP. In addition, businesses applying for a PPP Second Draw loan were required to provide
documentation confirming their payroll expenses. If an owner of 20% or more in the equity of
the business had been convicted for a crime involving fraud in the prior five years, the business
would have been ineligible to receive the Second Draw PPP loan.

18. Like First Draw PPPs, Second Draw PPP loan application was processed by a
participating lender. If a PPP loan application was approved, the lender funded the PPP Second
Draw loan using its own monies through a deposit to a bank account of the borrower. While it
was the participating lender that issued the PPP Second Draw loan, the loan was 100%
guaranteed by the SBA.

19. Second Draw PPP loan proceeds were required to be used by the business on
certain permissible expenses—payroll costs, rent for the business premises, or interest on
mortgages on the business premises, utilities for the business, and worker protection costs related
to COVID-19. The PPP Second Draw loan program allowed the interest and principal on the PPP

loan to be forgiven if the business spent the loan proceeds on these expense items within a
Case 8:24-cr-00212-DLB Document1 Filed 06/27/24 Page 5 of 15

designated period and used a defined portion of the PPP loan proceeds on payroll expenses. :

20. As with First Draw PPPs, applicants needed to certify that the information
provided in their Second Draw PPP application and supporting documents was correct subject to
criminal and civil penalties and that they would use the proceeds pursuant to applicable PPP
rules and regulations.

The Scheme to Defraud

21. Beginning in or about April 2020 and continuing until in or about February 2021,

in the District of Maryland and elsewhere, the defendant,
JEMEL MAURICE LYLES,
did knowingly and willfully devise a scheme and artifice to defraud the SBA, a financial
institution, to wit: TD Bank, and a PPP lender, to wit: Kabbage, to obtain money by means of
materially false and fraudulent pretenses, representations, and promises, and for the purpose of
executing and attempting to execute the scheme to defraud, did knowingly and willfully transmit
and cause to be transmitted by means of wire communications, in interstate and foreign
commerce, certain writings, signs, signals, pictures, and sounds, in violation of 18 U.S.C. § 1343
(“the scheme to defraud”).
The Object of the Scheme to Defraud

22. It was the object of the scheme to defraud for LYLES to personally enrich

himself by fraudulently obtaining PPP loans and spending the funds for purposes not permitted

under the PPP loan program.
Case 8:24-cr-00212-DLB Document1 Filed 06/27/24 Page 6 of 15

Manner and Means of the Scheme to Defraud

It was part of the scheme to defraud that:

PPP Loan for Green Capital

23. Onor about April 11, 2020, LYLES submitted and caused to be submitted a false
and misleading PPP joan application to TD Bank in the name of Green Capital, seeking
approximately $105,381 in PPP funds.

24. Inthe application, LYLES made and caused to be made false statements,
misrepresentations, and omissions related to Green Capital including Green Capital’s average
monthly payroll, the ownership structure of Green Capital, and the intended use of the PPP loan
proceeds.

25. Inthe application, LYLES, through Individual-1, falsely listed Individual-1 as the
80-percent owner of Green Capital and did not list himself as an owner of Green Capital. In fact,
Individual-1 was not an 80-percent owner of Green Capital, and PPP rules and regulations
required LYLES’s ownership of Green Capital to be disclosed on Green Capital’s application.

26. Inconnection with the application, LYLES submitted and caused to be submitted
a fictitious operating agreement, which falsely indicated that Individual-1 was an 80-percent
owner of Green Capital.

27. LYLES directed Individual-1 to sign and initial the required attestations on the
PPP application for Green Capital.

28. Inthe application, LYLES, through Individual-1, falsely promised to spend PPP

funds only on allowable expenses such as payroll, business rent, and business utilities.
Case 8:24-cr-00212-DLB Document 1 Filed 06/27/24 Page 7 of 15

29, Inthe application, LYLES, through Individual-1, attested that the information
presented in the application and all supporting documents and forms to obtain the loans were true
and accurate.

30. Inthe application, LYLES, through Individual-1, falsely represented that the “any
individual owning 20% or more of equity of’ Green Capital had not been convicted of a felony
within the past 5 years when LYLES then and there knew that was not true with respect to
LYLES, the controlling owner of Green Capital.

31. Inthe final version of the application, LYLES falsely stated that Green Capital
had an average monthly payroll of $42,153.

32. On or about April 10, 2020, LYLES sent his bookkeeper, Individual-2, an email
that falsely stated amounts allegedly paid to specific alleged Green Capital employees between
January and February 2020.

33. | Onor about April 10, 2020, LYLES called Individual-2 to discuss the amounts he
purportedly paid specific individuals as Green Capital employees between January and February
2020.

34. Onor about April 10, 2020, by making this phone call to Individual-2 using a cell
tower in Maryland, LYLES caused an interstate wire communication from Maryland to a
location outside Maryland.

35. Inconnection with the PPP application, LYLES submitted and caused the
submission of a false payroll document, which misrepresented the amount of money that Green
Capital allegedly paid specific individuals as Green Capital employees. Individual-2 created this
document using the information LYLES provided in his April 10, 2020 email and call.

36. Inthe PPP loan application, LYLES provided a bank account number into which

PPP loan proceeds were deposited, namely the 4402 Account.
Case 8:24-cr-00212-DLB Document1 Filed 06/27/24 Page 8 of 15

37. Onor about May 6, 2020, LYLES caused TD Bank to distribute approximately.
$105,382 in PPP funds through an ACH transfer sent to the 4402 Account. Immediately prior to
the transfer, the 4402 Account held less than $20.

38. Onor about May 6, 2020, immediately following the deposit of the PPP funds,
LYLES caused $101,000 to be transferred from the 4402 Account to the 4387 Account. The day
before the transfer, the 4387 Account had a balance of approximately $188.

39. Beginning on or about May 6, 2020, and continuing until on or about August 5,
2020, LYLES caused PPP loan proceeds to be transferred and used for personal and
unauthorized expenses not permissible under the PPP.

First Draw PPP Loan in the Name of Individual-3

40. Onor about August 6, 2020, LYLES submitted and caused to be submitted false
and misleading information and supporting documents to Kabbage in connection with a PPP loan
application in the name of Individual-3.

41. Inconnection with the application, on or about August 6, 2020, LYLES
submitted and caused to be submitted Individual-3’s Maryland driver’s license as proof of
identification.

42. In connection with the application, on or about August 6, 2020, LYLES
submitted and caused to be submitted a falsified 2019 Form 1099-MISC showing that
Individual-3 made $50,000 renting property. In fact, that 2019 Form 1099-MISC was never filed
with the IRS and Individual-3 did not make $50,000 renting property.

43. Inconnection with the application, on or about August 6, 2020, LYLES
submitted and caused to be submitted a falsified 2019 Schedule C Form 1040 showing that
Individual-3 made a profit of $212,550 as a realtor. In fact, that 2019 Schedule C Form 1040 was

never filed with the IRS, and Individual-3 did not make $212,550 profit as a realtor.
Case 8:24-cr-00212-DLB Document1 Filed 06/27/24 Page 9 of 15

44. In these false and misleading supporting documents, LYLES falsely listed
Individual-3 as the applicant and listed Individual-3’s Social Security Number as the relevant
taxpayer identification number.

45. Inthe PPP loan application, LYLES provided a bank account number into which
PPP loan proceeds were deposited, namely the 4387 Account.

46. Onor about August 6, 2020, LYLES used the Internet Protocol address
associated with a location in Montgomery County, Maryland when submitting false and
misleading information and supporting documents to Kabbage in connection with the PPP loan
application in the name of Individual-3.

47. Onor about August 6, 2020, LYLES caused interstate wire communications from
Maryland to Virginia, the location of Kabbage’s server, when submitting false and misleading
information and supporting documents to Kabbage in connection with the PPP joan application
in the name of Individual-3.

48. On or about August 10, 2020, LYLES submitted and caused to be submitted a
false and misleading PPP application to Kabbage in the name of Individual-3.

49, Inthe PPP application, LYLES made and caused to be made false statements,
misrepresentations, and omissions related to Individual-3, including that this application was
submitted by Individual-3, that Individial-3 had an average monthly payroll of $8,334, and the
intended use of the PPP loan proceeds.

50. Inthe application, LYLES falsely listed Individual-3 as the applicant and listed
Individual-3’s Social Security Number as the relevant taxpayer identification number.

51. Onor about August 12, 2020, LYLES caused Kabbage to distribute

approximately $20,833 through an ACH transfer sent to the 4387 Account.
Case 8:24-cr-00212-DLB Document1 Filed 06/27/24 Page 10 of 15

52. Beginning on or about August 12, 2020 and continuing until in or about
December 31, 2020, LYLES caused PPP loan proceeds to be transferred and used for personal
and unauthorized expenses not permissible under the PPP.

Second Draw PPP Loan in the Name of Individual-3

53. On or about February 4, 2021, LYLES electronically signed and caused to be
electronically signed a false and misleading second PPP loan application to Kabbage in the name
of Individual-3.

54. In the application, LYLES made and caused to be made false statements,
misrepresentations, and omissions related to Individual-3, including that this application was
submitted and signed by Individual-3, that Individial-3 had an average monthly payroll of
$8,334, and the intended use of the PPP loan proceeds.

55. Inthe application, LYLES falsely listed Individual-3 as the applicant and listed
Individual-3’s Social Security Number as the relevant taxpayer identification number.

56. On or about February 4, 2021, LYLES used the Internet Protocol address
associated with a location in Montgomery County, Maryland when applying for the PPP loan in
the name of Individual-3.

57. Onor about February 4, 2021, LYLES caused interstate wire communications
from Maryland to Virginia, the location of Kabbage’s server, when electronically signing and
causing to be electronically signed the PPP joan in the name of Individual-3.

58. Onor about February 11, 2021, as a result of the false and misleading second PPP
loan application to Kabbage in the name of Individual-3, LYLES caused Kabbage to distribute
approximately $20,833 through an ACH transfer sent to the 4387 Account.

59. . Beginning on or about February 11, 2021 and continuing until in or about May

31, 2021, LYLES caused PPP loan proceeds to be transferred and used for personal and

10
Case 8:24-cr-00212-DLB Document1 Filed 06/27/24 Page 11 of 15

unauthorized expenses not permissible under the PPP. The 4387 Account was closed on June 1,
2021 with a negative balance.

THE CHARGES

60. Onor about the dates set forth below, in the District of Maryland and elsewhere,
the defendant,
JEMEL MAURICE LYLES,
for the purpose of executing and attempting to execute the scheme and artifice to defraud
described above, did knowingly transmit and cause to be transmitted in interstate commerce by

means of wire communication, certain signals, signs, and sounds, as set forth below:

INTERSTATE WIRE
count | APPROMIMATS DESCRIPTION COMMUNICATION
DETAILS
. Phone call from LYLES to From Maryland to a location
: April 10, 2020 | j .ividual-2 outside of Maryland
Submission of First Draw PPP
application supporting From Maryland to a location
2 August 6, 2020 documents in the name of outside of Maryland
Individual-3
Electronic signing of Second .
3 February 4, 2021 | Draw PPP loan application in From Maen’ hod location
the name of Individual-3 ary

18 U.S.C. § 1343

11
Case 8:24-cr-00212-DLB Document1 Filed 06/27/24 Page 12 of 15

COUNTS FOUR AND FIVE

(Aggravated Identity Theft)

The Grand Jury for the District of Maryland further charges:

1. Paragraphs 1 through 20 of Counts One through Three are realleged here.

2. On or about the dates listed below, in the District of Maryland and elsewhere, the

defendant,

JEMEL MAURICE LYLES

did knowingly possess and use, without lawful authority, a means of identification of another

real person, namely Individual-3, by submitting the name and Social Security Number for

Individual-3, during and in relation to Wire Fraud, in violation of 18 U.S.C. § 1343, as alleged in

the Counts of the Indictment listed below:

COUNT | APPROXIMATE DESCRIPTION Wire Fraud
DATE Count
Submitting supporting documents for First
4 August 6, 2020 | Draw PPP loan using the name and Social 2
Security Number of Individual-3
Signing Second Draw PPP loan ap lication
7 February 4, 2021 using the name of Individual-3 ' 3

18 U.S.C. § 1028A
18 U.S.C. §2

12
Case 8:24-cr-00212-DLB Document1 Filed 06/27/24 Page 13 of 15

COUNT SIX
(Money Laundering)

The Grand Jury for the District of Maryland further charges:
1. Paragraphs 1 through 20 of Counts One through Three are realleged here.
THE CHARGE

2. On or about May 6, 2020, in the District of Maryland and elsewhere, the

defendant,
JEMEL MAURICE LYLES,

did knowingly engage and attempt to engage in a monetary transaction by, through, and to a
financial institution, affecting interstate and foreign commerce, in criminally derived property of
a value greater than $10,000, that is, the transfer of funds from the 4402 Account to the 4387
Account, such property being derived from a specified unlawful activity, that is, wire fraud, in

violation of 18 U.S.C. § 1343.

i8 U.S.C. § 1957
18 U.S.C. §2

13
Case 8:24-cr-00212-DLB Document1 Filed 06/27/24 Page 14 of 15

FORFEITURE ALLEGATION

The Grand Jury for the District of Maryland further finds that:

1. Pursuant to Fed. R. Crim. P. 32.2, notice is hereby given to the defendant that, in
the event of the defendant’s conviction on any of the offenses alleged in Counts One through
Three or Six of this Indictment, the United States will seek forfeiture as a part of any sentence in
accordance with 18 U.S.C. §§ 981(a)(1)(C) and 982, 21 U.S.C. § 853(p), and 28 U.S.C. §
2461(c).

Wire Fraud Forfeiture

2. Upon conviction of any of the offenses alleged in Counts One, Two, and Three of
this Indictment, the defendant,
JEMEL MAURICE LYLES,
shall forfeit to the United States, pursuant to 18 U.S.C. § 981(a)(1)(C) and 28 U.S.C. § 2461(c),
any property, real or personal, which constitutes or is derived from proceeds traceable to the
scheme to defraud.

Money Laundering Forfeiture

3. Upon conviction of the offense alleged in Count Six of this Indictment, the
defendant,
JEMEL MAURICE LYLES,
shall forfeit to the United States, pursuant to 18 U.S.C. § 982(a)(1), any property, real or
personal, involved in such offense, or any property traceable to such property.

Substitute Assets

4. If, as a result of any act or omission of the defendant, any of the property
described above as being subject to forfeiture:

a. cannot be located upon the exercise of due diligence;

14
Case 8:24-cr-00212-DLB Document1 Filed 06/27/24 Page 15 of 15

b. has been transferred or sold to, or deposited with, a third person;
c. has been placed beyond the jurisdiction of the Court;
d. has been substantially diminished in value; or
| e. has been commingled with other property that cannot be divided without
difficulty;

the United States shall be entitled to forfeiture of substitute property up to the value of the
forfeitable property described above pursuant to 21 U.S.C. § 853(p), as incorporated by
18 U.S.C. § 982(b)(1) and 28 U.S.C. § 2461(c).

18 U.S.C. § 981(ay1)(C)

18 U.S.C. § 982
21 US.C. § 853(p)

28 U.S.C. § 2461(c) LL J ia

Erek L. Barron
United States Attorney
___ AWRUE BILL:
| _SIGNATURE REDACTED | Date: Gr 27-2024
Fdteperson—
15


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