Indictment — United States v. Mitchell Allen Melega, Criminal No. 20-40056 (Dkt. 1, C.D. Ill.)

Summary

This grand jury indictment, Criminal No. 20-40056 in the U.S. District Court for the Central District of Illinois, charges Erik Richard Jones and Mitchell Allen Melega under Title 18, United States Code, Sections 1344, 1349 and 1957. It describes Jones as the sole owner of I-80 Equipment LLC, a Colona, Illinois company that reconditioned and resold vehicles, and Melega as the Controller of I-80 Equipment. The indictment alleges conduct from about August of 2016 through at least November of 2017 to defraud First Midwest Bank and Northwest Bank, including emailed requests for line of credit advances backed by forged invoices, such as $776,867.20 for 23 vehicles on August 5, 2016. The final counts charge transactions of $700,000, $127,654.25 and $96,004.51 out of the I-80 Equipment account at First Midwest Bank.

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4:20-cr-40056-JES-JEH #1 Page 1 of 22
Wednesday, 21 Octo O Ogre) M
Clerk, UAS. ict Flour D

IN THE UNITED STATES DISTRICT COURT OCT 2 0.2020
FOR THE CENTRAL DISTRICT OF ILLINOIS

CLERK OF COURT

AT ROCK ISLAND U.S. DISTRICT
. Cc
CENTRAL DISTRICT OF ILLINOIS

UNITED STATES OF AMERICA, )
)

Plaintiff, ) Criminal No. 20-40056
v. )

) VIO: Title 18, United States Code,

ERIK RICHARD JONES, ) Section 1344, 1349, and 1957
MITCHELL ALLEN MELEGA, )
)
Defendants. )

INDICTMENT

THE GRAND JURY CHARGES:

1. At all times material to this Indictment:

(a) I-80 Equipment LLC (“I-80 Equipment”) was a company that specialized in
reconditioning and reselling vehicles, typically bucket trucks, with its principal place
of business located at 20490 E. 550th Street in Colona, Illinois.

(b) Defendant ERIK RICHARD JONES was the sole owner of I-80 Equipment. JONES
was also the owner of the business entities known as Jones Lease Properties LLC
(“Jones Lease”), and J.P. Rentals LLC (“J.P. Rentals”).

(d) First Midwest Bank was located in Moline, Illinois, and was a financial institution,
the deposits of which were insured by the Federal Deposit Insurance Corporation.

(e) Northwest Bank was located in Davenport, Jowa, and was a financial institution, the

deposits of which were insured by the Federal Deposit Insurance Corporation.
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THE BANK FRAUD SCHEME

2. Beginning in or about August of 2016, and continuing through at least November
of 2017, in the Central District of Illinois, and elsewhere, the defendants,

ERIK RICHARD JONES, and
MITCHELL ALLEN MELEGA,

did devise a scheme and artifice to defraud First Midwest Bank and Northwest Bank, both
financial institutions the deposits of which were insured by the Federal Deposit Insurance
Corporation, and to obtain moneys and funds owned by and under the custody and control of
First Midwest Bank and Northwest Bank, by means of false and fraudulent pretenses,
representations, and promises, which scheme is described in substance in the following
paragraphs.

3. On or about March 10, 2014, JONES, operating I-80 Equipment, executed a Loan
Agreement and Promissory Notes with First Midwest Bank to obtain working capital lines of
credit for I-80 Equipment. In subsequent years, JONES executed a series of renewal loan
agreements with First Midwest Bank, and in sum and substance, all loan agreements provided
that First Midwest Bank would extend to 1-80 Equipment a working capital line of credit loan,
which was to be used to fund vehicle purchases and improvements.

4, Under the terms of the loan agreements, First Midwest Bank would fund 80% of
the cost for I-80 Equipment to purchase vehicles and towards improvements to the vehicles.
Vehicle purchases that were funded by First Midwest Bank would then be identified on a
specific vehicle inventory and tracked by VINs or other traceable identification numbers as
collateral on the lines of credit. First Midwest Bank also required I-80 Equipment LLC to make

interest-only payments towards the advanced funds for the 15 months after the advance was
4:20-cr-40056-JES-JEH #1 Page 3 of 22

made. After that 15 month anniversary of the advance, monthly principal and interest payments

were required based on a four year amortization of the outstanding balance of the advance.

5. Under the terms of the loan agreement, at the time of the sale of any vehicle
included as specific vehicle inventory, I-80 Equipment was required to make payment to First
Midwest Bank to pay off outstanding principal and accrued interest associated with the advance

made for the vehicle sold.

6. When I-80 Equipment wanted to request a loan advance to purchase a vehicle, I-
80 Equipment personnel, typically defendant MELEGA, would send a request for an advance by
email. In order to obtain loan advances, I-80 Equipment would first provide to First Midwest
Bank information about the specific vehicles to be purchased, including purchase receipts or
invoices containing vehicle information such as manufacturer, model year, VIN, seller, purchase
date, and the purchase price. I-80 Equipment would also typically provide a spreadsheet, which
listed identifying information for vehicles included in the specific vehicle inventory and the
current borrowing base for each vehicle held on the line of credit. First Midwest Bank would
approve loan advances at 80% of I-80 Equipment’s vehicle purchase cost as shown in the email

request and attached documents.

7. First Midwest Bank personnel would review the request, and if approved, would
typically deposit the amount of the requested loan proceeds for the specifically-approved
vehicles into J-80 Equipment’s operating bank account. The loaned funds were only to be used
by J-80 Equipment to finance the vehicles specifically requested, not for any other purpose, and
First Midwest Bank retained a security interest in the vehicles that were purchased with the line

of credit. I-80 Equipment was to provide vehicle titles to First Midwest Bank within 90 days of
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purchase. Upon J-80 Equipment selling the vehicle, I-80 Equipment was required to repay First
Midwest Bank related to the vehicle advance. In turn, First Midwest Bank would release the title

to I-80 Equipment.

8. As part of the scheme and artifice to defraud, the defendants submitted and caused
to be submitted advance requests for funds to First Midwest Bank for vehicle purchases that they
knew I-80 Equipment was not purchasing. The defendants supported and caused to be supported
these advance requests with forged and fraudulent invoices purporting to show vehicle purchases
by I-80 Equipment when, as the defendants then and there well knew, I-80 Equipment had no
such agreement to purchase said vehicles for the claimed purchase price. Once the funds were
deposited into I-80 Equipment’s account, the defendants, without First Midwest Bank’s

knowledge or authorization, diverted the vehicle loan proceeds to other unauthorized uses.

9. As a further part of the scheme and artifice to defraud, the defendants also
submitted and caused to be submitted advance requests for funds to First Midwest Bank with
invoices for vehicles that I-80 Equipment actually was purchasing, but with the legitimate
invoices altered to fraudulently inflate the purported purchase price of the vehicles beyond what
I-80 Equipment had actually agreed to pay. Because J-80 Equipment’s loan agreement with First
Midwest Bank provided that the bank would provide financing to I-80 Equipment for up to 80%
of the purchase price, the end result of the inflated invoices and advance requests was that First
Midwest was fraudulently induced to advance additional funds beyond the 80% its agreement

with I-80 Equipment called for.

10. Asa further part of the scheme and artifice to defraud, the defendants submitted

and caused to be submitted advance funding requests to First Midwest Bank against the line of
credit to fund additional improvements to specific vehicles I-80 Equipment had purportedly
purchased and was reconditioning or otherwise improving. But, as the defendants well knew,
some of these vehicle improvement advance requests were false and fraudulent, and included
requests made to improve vehicles I-80 Equipment had not actually purchased and therefore, was
not actually improving. As with other fraudulently-obtained loan proceeds, once the funds were
deposited into I-80 Equipment’s account, the defendants, without First Midwest Bank’s
knowledge or authorization, converted the vehicle improvement loan proceeds to other

unauthorized uses.

11. In approximately July of 2016, defendant ERIK JONES, on behalf of J.P. Rentals,
requested a loan from Northwest Bank to purchase a 32 unit apartment complex located in Silvis,
Illinois, and to fund improvements to that property. On or about July 29, 2016, JONES, on
behalf of J.P. Rentals executed a Commercial Real Estate Mortgage with Northwest Bank to
obtain loan funding, not to exceed a maximum principal amount of $1,959,894. On or about that
same day, $1,540,000, drawn on J.P. Rentals’ note with Northwest Bank, was transferred to

purchase the apartment complex.

12.‘ Asa further part of the scheme and artifice to defraud, the defendants made and
caused to be made additional loan requests to Northwest Bank against the remaining loan funds,
which were to be used to fund improvements to the property, knowing full well that the loan
proceeds would not be used to fund improvements, but instead diverted to other uses without

Northwest Bank’s knowledge or approval.
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ACTS IN FURTHERANCE OF THE BANK FRAUD SCHEME

13. On or about August 3, 2016, defendants JONES and MELEGA directed an I-80
Equipment employee to obtain a list of vehicles from a vehicle supplier for the purpose of
submitting them to First Midwest Bank as if I-80 Equipment were purchasing them, obtaining
advances against the purported purchases, then diverting the money to pay other past due bills of

I-80 Equipment.

14. On or about August 5, 2016, defendants MELEGA and JONES produced and
caused to be produced forged, false, and fraudulent vehicle invoices purporting to represent the
sale of 23 specific vehicles from the list obtained by the employee to I-80 Equipment, when in

fact, no such agreement to sell the vehicles existed.

15. On or about August 5, 2016, defendant JONES prepared and caused to be
prepared a Borrowing Base Certificate in connection with the purported purchase of the 23
vehicles falsely representing that the information submitted in connection with the advance

request was true, complete, and correct.

16. On or about August 5, 2016, defendant MELEGA emailed First Midwest Bank
personnel requesting a line of credit advance of $776,867.20 for the purported purchase of 23
specific vehicles, and attaching the forged invoices purporting to document the sale of the 23
specific vehicles to J-80 Equipment and the false Borrowing Base Certificate executed by

JONES.

17. On or about August 9, 2016, defendants JONES and MELEGA discussed drawing

funds from the Northwest Bank commercial real estate loan that was to be used to purchase and
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renovate an apartment complex in Silvis, Illinois, and instead diverting them to pay expenses of

I-80 Equipment.

18. On or about August 12, 2016, defendants JONES and MELEGA caused $225,000
to be drawn against the Northwest Bank apartment complex loan and deposited into J.P Rentals’

checking account at Northwest Bank.

19, On or about August 13, 2016, defendants JONES and MELEGA caused a
$200,000 check to be drawn on J.P. Rentals’ Northwest Bank checking account, made payable to

I-80 Equipment, and deposited into I-80 Equipment’s bank account at First Midwest Bank.

20. On or about August 16, 2016, defendants JONES and MELEGA caused a
$70,180.79 payment to an I-80 Equipment creditor to be made from funds in I-80 Equipment’s
First Midwest Bank account. This payment was made to one of the creditors specifically

mentioned in the August 9, 2016 discussion between JONES and MELEGA.

21, On or about December 15, 2016, defendant JONES caused $191,880 to be drawn
against the Northwest Bank apartment complex loan and deposited into J.P Rentals’ checking

account at Northwest Bank.

22. On or about December 15, 2016, defendant JONES caused a $200,000 check to
be drawn on J.P. Rentals’ Northwest Bank checking account and made payable to South East
National Bank. The $200,000 check was taken to South East National Bank in Moline, Illinois,
deposited, and applied against an outstanding home equity loan of defendant JONES’s family

members, which had previously been in default status.
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23. On or about April 21, 2017, defendants MELEGA and JONES produced and
caused to be produced forged, false, and fraudulent vehicle invoices purporting to represent the
sale of four specific vehicles to I-80 Equipment, when in fact, no such agreement to sell the

vehicles existed.

24. Onor about April 21, 2017, defendant JONES prepared and caused to be prepared
a Borrowing Base Certificate in connection with the purported purchase of the four vehicles
falsely representing that the information submitted in connection with the advance request was

true, complete, and correct.

25. On or about April 21, 2017, defendant MELEGA emailed First Midwest Bank
personnel requesting a line of credit advance of $197,833 for the purported purchase of the four
specific vehicles, and attaching the forged invoices purporting to document the sale of the four
specific vehicles to I-80 Equipment and the false Borrowing Base Certificate executed by

JONES.

26. On or about May 10, 2017, defendants MELEGA and JONES produced and
caused to be produced a forged, false, and fraudulent vehicle invoice purporting to represent the
sale of a specific vehicle to I-80 Equipment, when in fact, no such agreement to sell the vehicle

existed.

27. On or about May 10, 2017, defendant JONES prepared and caused to be prepared
a Borrowing Base Certificate in connection with the purported purchase of the vehicle falsely
representing that the information submitted in connection with the advance request was true,

complete, and correct.
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28. On or about May 10, 2017, defendant MELEGA emailed First Midwest Bank
personnel requesting a line of credit advance of $32,080 for the purported purchase of the
specific vehicle, and attaching the forged invoice purporting to document the sale of the specific

vehicle to J-80 Equipment and the false Borrowing Base Certificate executed by JONES.

29. Onor about June 29, 2017, defendants MELEGA and JONES produced and
caused to be produced forged, false, and fraudulent vehicle invoices purporting to represent the
sale of six specific vehicles to I-80 Equipment, when in fact, no such agreement to sell the

vehicles existed.

30. On or about June 29, 2017, defendant JONES prepared and caused to be prepared
a Borrowing Base Certificate in connection with the purported purchase of the six vehicles
falsely representing that the information submitted in connection with the advance request was

true, complete, and correct.

31. On or about June 29, 2017, defendant MELEGA emailed First Midwest Bank
personnel requesting a line of credit advance of $219,420 for the purported purchase of the six
specific vehicles, and attaching the forged invoices purporting to document the sale of the six
specific vehicles to J-80 Equipment and the false Borrowing Base Certificate executed by

JONES.

32. Onor about July 17, 2017, defendants MELEGA and JONES produced and
caused to be produced forged, false, and fraudulently-inflated vehicle invoices purporting to
represent the sale of three specific vehicles to I-80 Equipment, when in fact, the genuine invoices

to purchase said vehicles reflected a significantly lower sale prices.
4:20-cr-40056-JES-JEH #1 Page 10 of 22

33. On or about July 17, 2017, defendant JONES prepared and caused to be prepared
a Borrowing Base Certificate in connection with the purported purchase of the three vehicles
falsely representing that the information submitted in connection with the advance request was

true, complete, and correct.

34. Onor about July 17, 2017, defendant MELEGA emailed First Midwest Bank
personnel requesting a line of credit advance of $115,091.04 for the purported purchase of the
three specific vehicles, and attaching the forged and fraudulently-inflated invoices purporting to
document the sale of the three specific vehicles to I-80 Equipment and the false Borrowing Base

Certificate executed by JONES.

35. On or about July 19, 2017, defendants MELEGA and JONES produced and
caused to be produced forged, false, and fraudulently-inflated vehicle invoices purporting to
represent the sale of seven specific vehicles to 1-80 Equipment. In fact, I-80 Equipment received
invoices for the vehicles from a supplier, but at lower prices than the fraudulently-altered

invoices, and never purchased the vehicles.

36. Onor about July 19, 2017, defendant JONES prepared and caused to be prepared
a Borrowing Base Certificate in connection with the purported purchase of the seven vehicles
falsely representing that the information submitted in connection with the advance request was

true, complete, and correct.

37. On or about July 19, 2017, defendant MELEGA emailed First Midwest Bank
personnel requesting a line of credit advance of $245,288 for the purported purchase of the seven

specific vehicles, and attaching the forged invoices purporting to document the sale of the seven

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4:20-cr-40056-JES-JEH #1 Page 11 of 22

specific vehicles to I-80 Equipment and the false Borrowing Base Certificate executed by

JONES.

38. On or about July 25, 2017, defendants MELEGA and JONES produced and
caused to be produced a forged, false, and fraudulent vehicle invoice purporting to represent the
sale of a specific vehicle to I-80 Equipment, when in fact, no such agreement to sell the vehicle

existed.

39. Onor about July 25, 2017, defendant JONES prepared and caused to be prepared
a Borrowing Base Certificate in connection with the purported purchase of the vehicle falsely
representing that the information submitted in connection with the advance request was true,

complete, and correct.

40. On or about July 25, 2017, defendant MELEGA emailed First Midwest Bank
personnel requesting a line of credit advance of $99,723.40 for the purported purchase of the
specific vehicle, and attaching the forged invoices purporting to document the sale of the specific

vehicle to I-80 Equipment and the false Borrowing Base Certificate executed by JONES.

4]. On or about July 27, 2017, defendants MELEGA and JONES produced and
caused to be produced a forged, false, and fraudulently-inflated vehicle invoice purporting to
represent the sale of a specific vehicle to J-80 Equipment, when in fact, the legitimate invoice to

sell the vehicle was for a significantly lower price.

42. Onor about July 27, 2017, defendant JONES prepared and caused to be prepared
a Borrowing Base Certificate in connection with the purported purchase of the vehicle falsely
representing that the information submitted in connection with the advance request was true,
complete, and correct.

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43, On or about July 27, 2017, defendant MELEGA emailed First Midwest Bank
personnel requesting a line of credit advance of $55,273.60 for the purported purchase of the
specific vehicle, and attaching the forged and fraudulently-inflated invoice purporting to
document the sale of the specific vehicle to I-80 Equipment and the false Borrowing Base

Certificate executed by JONES.

44. On or about September 6, 2017, defendants MELEGA and JONES produced and
caused to be produced forged, false, and fraudulently-inflated vehicle invoices purporting to
represent the sale of two specific vehicles to I-80 Equipment, when in fact, the legitimate

invoices to sell the vehicles were for significantly lower prices.

45, On or about September 6, 2017, defendant JONES prepared and caused to be
prepared a Borrowing Base Certificate in connection with the purported purchase of the two
vehicles falsely representing that the information submitted in connection with the advance

request was true, complete, and correct.

46. On or about September 6, 2017, defendant MELEGA emailed First Midwest
Bank personnel requesting a line of credit advance of $89,611.20 for the purported purchase of
the two specific vehicles, and attaching the forged and fraudulently-inflated invoices purporting
to document the sale of the two specific vehicles to I-80 Equipment and the false Borrowing

Base Certificate executed by JONES.

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COUNT ONE
(Conspiracy to Commit Bank Fraud)

47. The Grand Jury re-alleges and incorporates by reference Paragraphs | through 46
of this Indictment as though fully set forth herein.

48. From in or about August of 2016, and continuing through at least November of
2017, in the Central] District of Illinois, and elsewhere, the defendants,

ERIK RICHARD JONES, and
MITCHELL ALLEN MELEGA,

did knowingly and unlawfully conspire with others known and unknown to the Grand Jury to
commit an offense against the United States, that is, bank fraud, in violation of Title 18, United
States Code, Section 1344.

OVERT ACTS

49. In furtherance of this conspiracy and to effect the objects thereof, there were
committed by the defendants, in the Central District of Illinois and elsewhere, one or more of the
following overt acts:

50. On or about August 3, 2016, defendants JONES and MELEGA directed an I-80
Equipment employee to obtain a list of vehicles from a vehicle supplier for the purpose of
submitting them to First Midwest Bank as if I-80 Equipment were purchasing them, obtaining
advances against the purported purchases, then diverting the money to pay other past due bills of
I-80 Equipment.

51. On or about August 5, 2016, defendants MELEGA and JONES produced and
caused to be produced forged, false, and fraudulent vehicle invoices purporting to represent the
sale of 23 specific vehicles from the list obtained by the employee to I-80 Equipment, when in

fact, no such agreement to sell the vehicles existed.

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4:20-cr-40056-JES-JEH #1 Page 14 of 22

52. Onor about August 5, 2016, defendant JONES prepared and caused to be
prepared a Borrowing Base Certificate in connection with the purported purchase of the 23
vehicles falsely representing that the information submitted in connection with the advance
request was true, complete, and correct.

53. On or about August 5, 2016, defendant MELEGA emailed First Midwest Bank
personnel requesting a line of credit advance of $776,867.20 for the purported purchase of 23
specific vehicles, and attaching the forged invoices purporting to document the sale of the 23
specific vehicles to J-80 Equipment and the false Borrowing Base Certificate executed by
JONES.

34. On or about August 9, 2016, defendants JONES and MELEGA discussed drawing
funds from the Northwest Bank commercial real estate loan that was to be used to purchase and
renovate an apartment complex in Silvis, Illinois, and instead diverting them to pay expenses of
I-80 Equipment.

55. On or about August 12, 2016, defendants JONES and MELEGA caused $225,000
to be drawn against the Northwest Bank apartment complex loan and deposited into J.P Rentals’
checking account at Northwest Bank.

56. On or about August 13, 2016, defendants JONES and MELEGA caused a
$200,000 check to be drawn on J.P. Rentals’ Northwest Bank checking account, made payable to
I-80 Equipment, and deposited into I-80 Equipment’s bank account at First Midwest Bank.

57. On or about August 16, 2016, defendants JONES and MELEGA caused a
$70,180.79 payment to an I-80 Equipment creditor to be made from funds in I-80 Equipment’s
First Midwest Bank account. This payment was made to one of the creditors specifically

mentioned in the August 9, 2016 discussion between JONES and MELEGA.

14
4:20-cr-40056-JES-JEH #1 Page 15 of 22

58. On or about December 15, 2016, defendant JONES caused $191,880 to be drawn
against the Northwest Bank apartment complex loan and deposited into J.P Rentals’ checking
account at Northwest Bank.

59. On or about December 15, 2016, defendant JONES caused a $200,000 check to
be drawn on J.P. Rentals’ Northwest Bank checking account and made payable to South East
National Bank. The $200,000 check was taken to South East National Bank in Moline, Illinois,
deposited, and applied against an outstanding home equity loan of defendant JONES’s family
members, which had previously been in default status.

60. Onor about April 21, 2017, defendants MELEGA and JONES produced and
caused to be produced forged, false, and fraudulent vehicle invoices purporting to represent the
sale of four specific vehicles to I-80 Equipment, when in fact, no such agreement to sell the
vehicles existed.

61. | Onor about April 21, 2017, defendant JONES prepared and caused to be prepared
a Borrowing Base Certificate in connection with the purported purchase of the four vehicles
falsely representing that the information submitted in connection with the advance request was
true, complete, and correct.

62. Onor about April 21, 2017, defendant MELEGA emailed First Midwest Bank
personnel requesting a line of credit advance of $197,833 for the purported purchase of the four
specific vehicles, and attaching the forged invoices purporting to document the sale of the four
specific vehicles to I-80 Equipment and the false Borrowing Base Certificate executed by
JONES.

63. On or about May 10, 2017, defendants MELEGA and JONES produced and

caused to be produced a forged, false, and fraudulent vehicle invoice purporting to represent the

15
4:20-cr-40056-JES-JEH #1 Page 16 of 22

sale of a specific vehicle to I-80 Equipment, when in fact, no such agreement to sell the vehicle
existed.

64. Onor about May 10, 2017, defendant JONES prepared and caused to be prepared
a Borrowing Base Certificate in connection with the purported purchase of the vehicle falsely
representing that the information submitted in connection with the advance request was true,
complete, and correct.

65. On or about May 10, 2017, defendant MELEGA emailed First Midwest Bank
personnel requesting a line of credit advance of $32,080 for the purported purchase of the
specific vehicle, and attaching the forged invoice purporting to document the sale of the specific
vehicle to I-80 Equipment and the false Borrowing Base Certificate executed by JONES.

66. On or about June 29, 2017, defendants MELEGA and JONES produced and
caused to be produced forged, false, and fraudulent vehicle invoices purporting to represent the
sale of six specific vehicles to I-80 Equipment, when in fact, no such agreement to sell the
vehicles existed.

67. On or about June 29, 2017, defendant JONES prepared and caused to be prepared
a Borrowing Base Certificate in connection with the purported purchase of the six vehicles
falsely representing that the information submitted in connection with the advance request was
true, complete, and correct.

68. On or about June 29, 2017, defendant MELEGA emailed First Midwest Bank
personnel requesting a line of credit advance of $219,420 for the purported purchase of the six
specific vehicles, and attaching the forged invoices purporting to document the sale of the six
specific vehicles to I-80 Equipment and the false Borrowing Base Certificate executed by

JONES.

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69. Onor about July 17, 2017, defendants MELEGA and JONES produced and
caused to be produced forged, false, and fraudulently-inflated vehicle invoices purporting to
represent the sale of three specific vehicles to I-80 Equipment, when in fact, the genuine invoices
to purchase said vehicles reflected a significantly lower sale prices.

70. On or about July 17, 2017, defendant JONES prepared and caused to be prepared
a Borrowing Base Certificate in connection with the purported purchase of the three vehicles
falsely representing that the information submitted in connection with the advance request was
true, complete, and correct.

71. On or about July 17, 2017, defendant MELEGA emailed First Midwest Bank
personnel requesting a line of credit advance of $115,091.04 for the purported purchase of the
three specific vehicles, and attaching the forged and fraudulently-inflated invoices purporting to
document the sale of the three specific vehicles to I-80 Equipment and the false Borrowing Base
Certificate executed by JONES.

72. On or about July 19, 2017, defendants MELEGA and JONES produced and
caused to be produced forged, false, and fraudulently-inflated vehicle invoices purporting to
represent the sale of seven specific vehicles to I-80 Equipment. In fact, I-80 Equipment received
invoices for the vehicles from a supplier, but at lower prices than the fraudulently-altered
invoices, and never purchased the vehicles.

73. On or about July 19, 2017, defendant JONES prepared and caused to be prepared
a Borrowing Base Certificate in connection with the purported purchase of the seven vehicles
falsely representing that the information submitted in connection with the advance request was

true, complete, and correct.

74. On or about July 19, 2017, defendant MELEGA emailed First Midwest Bank

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4:20-cr-40056-JES-JEH #1 Page 18 of 22

personnel requesting a line of credit advance of $245,288 for the purported purchase of the seven
specific vehicles, and attaching the forged invoices purporting to document the sale of the seven
specific vehicles to J-80 Equipment and the false Borrowing Base Certificate executed by
JONES.

75. On or about July 25, 2017, defendants MELEGA and JONES produced and
caused to be produced a forged, false, and fraudulent vehicle invoice purporting to represent the
sale of a specific vehicle to I-80 Equipment, when in fact, no such agreement to sell the vehicle
existed.

76. On or about July 25, 2017, defendant JONES prepared and caused to be prepared
a Borrowing Base Certificate in connection with the purported purchase of the vehicle falsely
representing that the information submitted in connection with the advance request was true,
complete, and correct.

77. On or about July 25, 2017, defendant MELEGA emailed First Midwest Bank
personnel requesting a line of credit advance of $99,723.40 for the purported purchase of the
specific vehicle, and attaching the forged invoices purporting to document the sale of the specific
vehicle to I-80 Equipment and the false Borrowing Base Certificate executed by JONES.

78. On or about July 27, 2017, defendants MELEGA and JONES produced and
caused to be produced a forged, false, and fraudulently-inflated vehicle invoice purporting to
represent the sale of a specific vehicle to I-80 Equipment, when in fact, the legitimate invoice to
sell the vehicle was for a significantly lower price.

79. On or about July 27, 2017, defendant JONES prepared and caused to be prepared
a Borrowing Base Certificate in connection with the purported purchase of the vehicle falsely

representing that the information submitted in connection with the advance request was true,

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4:20-cr-40056-JES-JEH #1 Page 19 of 22

complete, and correct.

80. On or about July 27, 2017, defendant MELEGA emailed First Midwest Bank
personnel requesting a line of credit advance of $55,273.60 for the purported purchase of the
specific vehicle, and attaching the forged and fraudulently-inflated invoice purporting to
document the sale of the specific vehicle to I-80 Equipment and the false Borrowing Base
Certificate executed by JONES.

81. | Onor about September 6, 2017, defendants MELEGA and JONES produced and
caused to be produced forged, false, and fraudulently-inflated vehicle invoices purporting to
represent the sale of two specific vehicles to I-80 Equipment, when in fact, the legitimate
invoices to sell the vehicles were for significantly lower prices.

82. On or about September 6, 2017, defendant JONES prepared and caused to be
prepared a Borrowing Base Certificate in connection with the purported purchase of the two
vehicles falsely representing that the information submitted in connection with the advance
request was true, complete, and correct.

83. On or about September 6, 2017, defendant MELEGA emailed First Midwest
Bank personnel requesting a line of credit advance of $89,611.20 for the purported purchase of
the two specific vehicles, and attaching the forged and fraudulently-inflated invoices purporting
to document the sale of the two specific vehicles to I-80 Equipment and the false Borrowing
Base Certificate executed by JONES.

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

19
4:20-cr-40056-JES-JEH #1 Page 20 of 22

COUNTS TWO through SEVEN
(Bank Fraud)

84. The Grand Jury re-alleges and incorporates by reference Paragraphs | through 83
of this Indictment as though fully set forth herein.
85. On or about the date listed below for each count, in the Central District of Illinois,

and elsewhere, the defendants,

ERIK RICHARD JONES, and
MITCHELL ALLEN MELEGA,

executed the scheme and artifice to defraud First Midwest Bank, as set forth above, in the
manner set forth below, that is, that the defendants submitted and caused to be submitted the
following requests for line of credit advances against the purported purchase of the following
vehicles, when in fact, as the defendants then and there well knew, I-80 Equipment had no
agreement to purchase said vehicles from their purported sellers for the purported prices, that the
purported invoices submitted in connection with the below-listed requests for funds were false,

fraudulent, and forged:

Each in violation of Title 18, United States Code, Sections 1344 and 2.

20
4:20-cr-40056-JES-JEH #1 Page 21 of 22

COUNTS EIGHT through NINE
(Bank Fraud)

86. The Grand Jury re-alleges and incorporates by reference Paragraphs 1 through 85
of this Indictment as though fully set forth herein.

87. On or about the date listed below for each count, in the Central District of Illinois,
and elsewhere, the defendants,

ERIK RICHARD JONES, and
MITCHELL ALLEN MELEGA,

executed the scheme and artifice to defraud Northwest Bank, as set forth above, in the manner
set forth below, that is, that the defendants submitted and caused to be submitted requests to
Northwest Bank against J.P Rentals’ line of credit for improvements that were to be made to a
particular apartment complex owned by J.P. Rentals, when in fact, as the defendants then and
there well knew, the funds would not be used to fund property improvements, but were instead

diverted to other uses on the dates and in the amounts set forth below:

Each in violation of Title 18, United States Code, Sections 1344 and 2.

21
4:20-cr-40056-JES-JEH #1 Page 22 of 22

COUNTS TEN through TWELVE
(Money Laundering)

88. | The Grand Jury re-alleges and incorporates by reference Paragraphs | through 87
of this Indictment as though fully set forth herein.

89. On or about the dates set forth below, in the Central District of Illinois, and
elsewhere, the defendants,

ERIK RICHARD JONES, and
MITCHELL ALLEN MELEGA,

did knowingly engage and attempt to engage in the following monetary transactions by, through,
and to a financial institution, affecting interstate or foreign commerce, in criminally derived
property of a value greater than $10,000, that is the withdrawal and transfer of funds set out

below, such property having been derived from a specified unlawful activity, that is, bank fraud:

Count | Date Amount | Transaction : |
10 August 8, 2016 $700,000 Wire transfer out of I-80 Equipment
account at First Midwest Bank

‘1d July 1 8, 2017 7 $127,654.25 Wire transfer out of I-80 Equipment
- | ___| account at First Midwest Bank _|
12 July 19, 2017 $96,004.51 Payment from I-80 Equipment

account at First Midwest Bank to pay
off First Midwest Bank loan advance

All in violation of Title 18, United States Codes, Sections 1957 and 2.
A TRUE BILL

/s/ Foreperson

/s/ AUSA John Mehochko ROREPERSON
JOHN C. MILHISER—

UNITED STATES ATTORNEY

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