Indictment — United States of America v. Sabrina Mitlo and Joseph Mitlo, Crim. No. 25-765 (D.N.J.)

Summary

This indictment, returned by a grand jury sitting at Newark in the District of New Jersey (Crim. No. 25-765, Hon. Evelyn Padin), charges Sabrina Mitlo and Joseph Mitlo of Piscataway, New Jersey, with conspiracy to commit bank fraud under 18 U.S.C. § 1349 from in or around May 2020 through in or around July 2020. It alleges that Sabrina Mitlo sought approximately $550,657 in Paycheck Protection Program funds for Dependable Surplus and Salvage LLC, claiming about 20 employees, and that Joseph Mitlo sought approximately $165,140 for All State General Construction LLC, claiming about 10 employees, though neither company had employees. The indictment says both loans were funded on the strength of false IRS tax forms generated by an accountant, and that payroll checks to purported employees were cashed at a check cashing company. The indictment seeks forfeiture.

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2021R00337/RLT

UNITED STATES DISTRICT COURT ED
DISTRICT OF NEW JERSEY | DEC 04 208 yO

atgeo~_1'G° PF
CLERK, U.S-DISTRIGT COURT - DNJ
UNITED STATES OF AMERICA : Hon. Evelyn Padin

; Crim. No. 25- 765 | hereby attest and certify on _/¢ I
v. that the foregaing document is J, tr.
, and correct copy:of the original on file ©
SABRINA MITLO and : 18 U.S.C. § 1349 my office, and in my legal custocly.
JOSEPH MITLO : CLERK, U.S. DISTRICT COURT
DISTRICT OPN A JERSEY

DEPUTY CLERK
INDICTMENT

The Grand Jury in and for the District of New Jersey, sitting at Newark,

charges as follows:

COUNT ONE
(Conspiracy to Commit Bank Fraud)

Background

1. At all times relevant to this Indictment:

Individuals and Entities

a. Defendant Sabrina Mitlo (“SABRINA MITLO”) resided in

Piscataway, New Jersey.

b, Defendant Joseph Mitlo (“JOSEPH MITLO”), resided in

Piscataway, New Jersey.

c. SABRINA MITLO controlled Dependable Surplus and Salvage

LLC (“Dependable Surplus”), a purported scrap metal recycling and salvage business

based in Middlesex, New Jersey, and elsewhere.

d. JOSEPH MITLO controlled All State General Construction LLC

(“All State Construction”), a purported seal coating and paving business based in

Piscataway, New Jersey, and elsewhere.
e. Individual-1 was an accountant who resided in Florida.

f. Non-Employee-1 was an individual who never worked at

Dependable Surplus, yet payroll checks were purportedly issued to him.

g. Lender-1 and Lender-2 were each “financial institutions” within

the meaning of Title 18, United States Code, Section 20.

h. Financial Institution-1 was a “financial institution” within the

meaning of Title 18, United States Code, Section 20.

1. Payroll Company-1 was a provider of payroll services

headquartered in Roseland, New Jersey.

j. Check Cashing Company-1 was a check cashing service with

operations in Carteret, New Jersey.

The Paycheck Protection Program

k. The Coronavirus Aid, Relief, and Economic Security (CARES”)

Act was a federal law enacted in or around March 2020 designed to provide

emergency financial assistance to the millions of Americans suffering the economic

effects caused by the COVID-19 pandemic. One source of relief provided by the

CARES Act was the authorization of up to $349 billion in forgivable loans to small

businesses for job retention and certain other expenses, through a program referred

to as the Paycheck Protection Program, or PPP.

l. To obtain a PPP loan, a business had to submit a PPP loan

application signed by an authorized representative of the business. The applicant of

a PPP loan was required to acknowledge the program rules and make certain

affirmative certifications to be eligible to obtain the PPP loan. In the PPP loan

2
application, the applicant had to truthfully state, among other things, its average

monthly payroll expenses and number of employees. These figures were used to

determine whether the business was eligible for a PPP loan and to calculate the

amount of money the business was eligible to receive under the PPP. In addition,

businesses applying for a PPP loan had to provide documentation showing their

payroll expenses, such as tax forms and bank statements. A business applying for a

PPP loan also had to provide truthful supporting documentation, which could include

the business’s tax information, such as Internal Revenue Service (“IRS”) Forms 941

(Employer's Quarterly Tax Returns) and 940. IRS Form 940 is the employer’s annual

federal unemployment tax return that includes representations regarding payroll.

m. A PPP loan application had to be processed by a participating

financial institution (the lender). If the PPP loan application was approved, the

lender funded the PPP loan using its own money, which the U.S. Small Business

Administration (“SBA”) guaranteed 100%. Data from the application, including

information about the borrower, the total amount of the loan, and the listed number

of employees, was transmitted by the lender to the SBA when processing the loan.

n. PPP loan proceeds could be used by the business only for certain

permissible expenses, including 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 used the loan proceeds on these expense items within a

designated period after receiving the proceeds and used a certain amount of the PPP

loan proceeds on payroll expenses.
The Bank Fraud Conspiracy

2. From in or around May 2020 through in or around July 2020, in the

District of New Jersey and elsewhere, the defendants,

SABRINA MITLO and
JOSEPH MITLO,

did knowingly and intentionally conspire and agree with each other and others to

execute a scheme and artifice to defraud financial institutions, Lender-1 and Lender-

2, the deposits of which were insured by the Federal Deposit Insurance Corporation,

and to obtain the moneys, funds, credits, assets, securities, and other property owned

by, and under the custody and control of, Lender-1 and Lender-2, by means of

materially false and fraudulent pretenses, representations, and promises, contrary to

Title 18, United States Code, Section 1344(2).

Object of the Conspiracy

3. The object of the conspiracy was for the defendants to financially enrich

themselves by fraudulently obtaining PPP loan proceeds intended for small

businesses distressed by the COVID-19 pandemic through the submission of

fraudulent loan applications that included false statements and attached false and

forged documentation.

4. It was a further object of the conspiracy for the defendants to financially

enrich themselves by obtaining the fraudulent PPP loan proceeds by creating false

payroll documentation, including payroll checks, and cashing those fraudulent

payroll checks for their personal financial benefit.
Manner and Means of the Conspiracy

5. It was part of the scheme that:

a. SABRINA MITLO and JOSEPH MITLO submitted and caused to

be submitted false and fraudulent PPP loan applications on behalf of Dependable

Surplus and All State Construction, seeking federal COVID-19 emergency relief

money.

b. Each fraudulent application contained, among other things, false

information about the respective company’s number of employees and average

monthly payroll and included false and fraudulent supporting tax documents,

including false IRS Forms 940 and 941.

Fraudulent Application-1

C. On or about May 18, 2020, SABRINA MITLO submitted or caused

to be submitted a false and fraudulent PPP application to Lender-1 for Dependable

Surplus seeking approximately $550,657 (the “Application-1”). Application-1

represented that the PPP loan would be used for payroll and utilities, and it listed

SABRINA MITLO as Dependable Surplus’ owner, along with SABRINA MITLO and

JOSEPH MITLO’s home address in Piscataway, New Jersey (“Piscataway

Residence”) as her residence.

d. Application-1 falsely represented that Dependable Surplus had

approximately 20 employees and an average monthly payroll of approximately

$220,263. In reality, Dependable Surplus had no employees and paid no wages before

the submission of Application-1.
e. Application-1 also included false and fraudulent tax documents

that Individual-1 generated and provided to SABRINA MITLO at SABRINA

MITLO’s request, including a false IRS Form 940 for tax year 2019 and false Forms

941 for all four quarters of 2019 and the first quarter of 2020.

f. The false Form 940 stated that Dependable Surplus had paid

approximately $2,643,167 to approximately 20 employees in 2019. The false Forms

941 each listed identical payroll figures of approximately $660,791 paid to

approximately 25 employees. However, neither the Form 940, nor any of the Forms

941, were ever actually filed with the IRS.

g. Based on the false and fraudulent representations in Application-

1, on or about May 18, 2020, Lender-1 disbursed approximately $550,657 into a

Dependable Surplus account at Financial Institution-1 that SABRINA MITLO

controlled (‘Dependable Surplus Account-1”).

h. On or about May 19, 2020, SABRINA MITLO opened a second

bank account at Financial Institution-1 on behalf of Dependable Surplus

(“Dependable Surplus Account-2”). SABRINA MITLO directed the ilicit loan

proceeds from Dependable Surplus Account-1 to Dependable Surplus Account-2.

i. On or about May 21, 2020, SABRINA MITLO enrolled

Dependable Surplus in payroll services provided by Payroll Company-1. SABRINA

MITLO authorized Payroll Company-1 to debit Dependable Surplus Account-2 for the

purpose of issuing payroll to purported employees of Dependable Surplus.

j. To effectuate the fraud scheme and take possession of the ill-

gotten proceeds, SABRINA MITLO caused Payroll Company-1 to issue payroll checks

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out of Dependable Surplus Account-2 to purported Dependable Surplus employees

that did not in fact work at Dependable Surplus. Instead of remitting these checks

to those purported employees, SABRINA MITLO personally cashed them at Check

Cashing Company-1 and kept the proceeds of those checks, falsely claiming that she

was doing so on behalf of one or more of the purported employees that did not in fact

work at Dependable Surplus.

k. For example, on or about May 29, 2020, SABRINA MITLO cashed

a check issued to Non-Employee-1 in the amount of approximately $1,455.72 at Check

Cashing Company-1.

Fraudulent Application-2

lL. On or about May 20, 2020, JOSEPH MITLO submitted or caused

to be submitted a false and fraudulent PPP application to Lender-2 for All State

Construction seeking approximately $165,140 (the “Application-2”). Application-2

represented that the PPP loan would be used for payroll and utilities, and it listed

JOSEPH MITLO as the owner of All State Construction, along with the Piscataway

Residence as his residence.

m. Application-2 falsely represented that All State Construction had

approximately 10 employees and an average monthly payroll of approximately

$66,056. In reality, All State Construction had no employees and paid no wages

before the submission of Application-2.

n. Application-2 also included false and fraudulent tax documents

that Individual-1 generated and provided to JOSEPH MITLO at JOSEPH MITLO’s
request, including false IRS Forms 941 for the first quarters of tax years 2019 and

2020.

0. Each false Form 941 listed identical payroll figures of

approximately $198,168 paid to approximately 10 purported employees. However,

neither of the Forms 941 were ever actually filed with the IRS.

p. Based on the false and fraudulent representations in Application-

2, on or about May 21, 2020, Lender-2 disbursed approximately $165,140 into an All

State Construction account at Financial Institution-1 that JOSEPH MITLO

controlled (“All State Construction Account-1”).

q. On or about May 26, 2020, JOSEPH MITLO’s purported

electronic signature appeared on account opening documents used to open a second

bank account at Financial Institution-1 on behalf of All State Construction (“All State

Construction Account-2”). Illicit loan proceeds from All State Construction Account-

1 were subsequently transferred to All State Construction Account-2.

Yr. On or about May 26, 2020, All State Construction was enrolled in

payroll services provided by Payroll Company-1. SABRINA MITLO and J OSEPH

MITLO authorized Payroll Company-1 to debit All State Construction Account-2 for

the purpose of issuing payroll to purported employees of All State Construction.

s. To effectuate the fraud scheme and take possession of the ill-

gotten proceeds, SABRINA MITLO and JOSEPH MITLO caused Payroll Company-1

to issue payroll checks out of All State Construction Account-2 to purported All State

Construction employees that did not in fact work at All State Construction. Instead

of remitting these checks to those purported employees, SABRINA MITLO personally

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cashed them at Check Cashing Company-1 and kept the proceeds of those checks,

falsely claiming that she was doing so on behalf of one or more purported employees

that did not work at All State Construction.

All in violation of Title 18, United States Code, Section 1349.
FORFEITURE ALLEGATION

Upon conviction of the conspiracy offense charged in this Indictment,

defendants SABRINA MITLO and JOSEPH MITLO shall forfeit to the United States,

pursuant to Title 18, United States Code, Section 982(a)(2)(A), any property, real or

personal, constituting, or derived from, proceeds obtained directly or indirectly as a

result of the offense charged in this Indictment.

SUBSTITUTE ASSET PROVISION

If any of the property described above, as a result of any act or omission of the

defendants charged in this Indictment:

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

b. has been transferred to or sold to, or deposited with, a third party;

has been placed beyond the jurisdiction of the court;

has been substantially diminished in value; or

. has been commingled with other property which cannot be divided

without difficulty;

it is the intent of the United States, pursuant to Title 21 United States Code, Section

853(p), as incorporated by Title 18 United States Code, Section 982(a)(1) and Title 28

United States Code, Section 2461(c), to seek forfeiture of any other property of such

defendants up to the value of the forfeitable property described above.

A TRUE BILL

FOREPERSON
10
TODD BLANCHE
U.S. Deputy Attorney General

Is) hina Mullis | bal
ALINA HABBA
Acting U.S. Attorney
Special Attorney

/s/ Robert L. Toll
Robert L. Toll
Assistant United States Attorney

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