Indictment — United States v. Nikita Cannady (Dkt. 2, W.D. Tenn.)

Summary

This Western District of Tennessee indictment charges Nikita Cannady, owner of several What About Us businesses in Memphis, with six counts of wire fraud, six counts of false statements in connection with loan applications and two counts of monetary transactions in proceeds of specified unlawful activity. It alleges that between on or about April 24, 2020 and on or about May 15, 2021 Cannady submitted false EIDL applications to SBA and PPP applications to Regions Bank and Itria Ventures LLC, obtaining EIDL advances and loan funds of at least $102,400 and PPP loan funds of at least $224,742.50. The monetary transaction counts cover a $120,000 payment toward real property at 4983 Rowan Oak Cv., Collierville, TN and the purchase of a 2020 Polaris Slingshot. The forfeiture allegation seeks money judgments of at least $327,142.50 and $152,627, the Slingshot and the Collierville property.

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COTTEN

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TENNESSEE
WESTERN DIVISION

UNITED STATES OF AMERICA,

Plaintiff,
CR.No. 22-20/90 Msn

NIKITA CANNADY, 18 U.S.C. §1014
18 U.S.C. §1957
18 U.S.C. § 981

18 U.S.C. § 982

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) 18 U.S.C. §1343
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Defendant. )
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INDICTMENT

THE GRAND JURY CHARGES:

General Allegations

During all times material to this Indictment unless otherwise specified:
The Defendant and Related Entities

1. Defendant Nikita Cannady was the owner of several businesses in the
Memphis, Tennessee area, all using “What About Us” as part of the business name and
located at 3320 Austin Peay Highway, Memphis, Tennessee.

2. What About Us Child Care Center LLC (WAU Child Care) was a Tennessee
limited liability company established February 5, 2020 and owned by Nikita Cannady.

3. What About Us Foundation (WAU Foundation) was a Tennessee non-profit
corporation established December 11, 2019 and owned by Nikita Cannady.

4. What About Us Adult Day Care Center, LLC (WAU Adult Day Care) was a
Tennessee limited liability company established July 17, 2017 and administratively

dissolved August 6, 2019. During its existence, it was owned by Nikita Cannady.
6. What About Us Home Health Care Inc. (WAU Home Health) was a
Tennessee corporation established March 16, 2016 and controlled by Nikita Cannady.
The U.S. Small Business Administration

6. The U.S. Small Business Administration (SBA) was an agency of the
Executive Branch of the U.S. Government, which provided support to entrepreneurs and
small businesses. The mission of the SBA 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.

7. As part of this effort, the SBA enabled and provided for loans through banks,
credit unions, and other lenders. These loans had government-backed guarantees.

The CARES Act, the Economic Injury Disaster Loan Program,
and the Paycheck Protection Program

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 were suffering the economic effects caused
by the COVID-19 pandemic. The CARES Act established several new temporary
programs and provided for the expansion of others including programs created and / or
administered by the SBA.

9. The Economic Injury Disaster Loan ("EIDL") program was a program that
provided low-interest loans to small businesses, renters, and homeowners in regions
affected by declared disasters.

10. The CARES Act authorized the SBA to provide EIDLs of up to $2 million to
eligible small businesses experiencing substantial financial disruptions due to the COVID-

19 pandemic. In addition, the CARES Act authorized the SBA to issue advances of up to
$10,000 to small businesses within three days of applying for an EIDL. These advances
were essentially grants, and did not have to be repaid.

11. In order to obtain an EIDL and advance, a qualifying business was required
to submit an application to the SBA and provide information about its operations, such as
the number of employees, gross revenue for the 12-month period preceding the disaster,
and cost of goods sold in the 12-month period preceding the disaster. In the case of EIDLs
for COVID-19 relief, the 12-month period was the period preceding January 31, 2020.
For a business to be eligible for an EIDL, the business must have been in operation before
February 1, 2020. The applicant was also required to certify that he/she was not engaged
in any illegal activity and that all of the information in the application was true and correct
to the best of the applicant’s knowledge.

12. EIDL applications were submitted directly to the SBA and processed by the
agency with support from a government contractor, Rapid Finance. Approval of a loan
application and the amount of a loan was based, in part, on the information provided on
the application about the number of employees, gross revenue, and cost of goods, as
described above. Upon approval of an application for an EIDL or advance, SBA would
disburse the funds. EIDL loan proceeds were permitted to be used for payroll expenses,
sick leave, production costs, and business obligations, such as debts, rent, and mortgage
payments.

13. | Another 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).
14. 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 applicant 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 or Form 2483-SD for a second draw following a previous
loan), the applicant was required to certify, among other things, that the small business
was in operation on February 15, 2020, its average monthly payroll expenses for the 12
months prior to that date, its number of employees, and that the applicant was not
engaged in any illegal activity. This information was 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.

15. A PPP loan application was processed by a participating lender. If a PPP
loan application was approved, the participating lender funded the PPP loan using its own
monies, which were guaranteed by the SBA. Data from the application, including the
information about the borrower, the total amount of the loan, and the listed number of
employees, was transmitted by the lender to the SBA in the course of processing the
loan.

16. PPP loan proceeds were required to be used for certain permissible
expenses, including payroll costs, mortgage interest, rent, and utilities. Under the
applicable PPP rules and guidance, the interest and principal on the PPP loan was eligible
for forgiveness if the business spent the loan proceeds on these expense items within a

designated period of time and used a certain portion of the loan towards payroll expenses.
Relevant Financial Institutions and Businesses

17. | Regions Bank was a financial institution headquartered in Birmingham,
Alabama and insured by the Federal Deposit Insurance Corporation (FDIC).

18. — Itria Ventures LLC was a financial services company and direct lender
headquartered in New York, New York.

19. Preferred Title & Escrow, PLLC was a full-service real estate title and
escrow company located in Memphis, Tennessee.

20. Sunrise Yamaha Motorsports was a retail seller of motorcycles and other
recreational vehicles located in Searcy, Arkansas.

Scheme to Defraud

21. Between on or about April 24, 2020 and on or about May 15, 2021, the exact
dates being unknown to the Grand Jury, defendant Nikita Cannady devised and
executed a scheme and artifice to defraud and to unlawfully obtain money and other
property by means of false and fraudulent pretenses, representations, and promises.

22. The object of the scheme and artifice to defraud was for defendant Nikita
Cannady to unjustly enrich herself by obtaining EIDL loan funds directly from the SBA
and PPP loan funds backed by the SBA from one or more financial institutions under false
and fraudulent pretenses.

23. ‘It was part of the scheme that defendant Nikita Cannady submitted and
caused to be submitted, EIDL loan applications to SBA containing one or more or the
following false and fraudulent misrepresentations:

a. that the business that was the subject of the application was in

operation on January 31, 2020;
b. that the business that was the subject of the application had a certain
amount of gross revenue for the 12-month period prior to January 31, 2020;

c. that the business that was the subject of the application had a certain
number of employees as of January 31, 2020.

d. that the defendant was not engaged in any illegal activity.

24. ‘It was part of the scheme that defendant Nikita Cannady submitted and
caused to be submitted an SBA Form 2483 and/or Form 2483-SD to Regions Bank and/or
Itria Ventures LLC containing one or more of the following false and fraudulent
misrepresentations:

a. that the business that was the subject of each application was in
operation on February 15, 2020;

b. that the business that was the subject of the application had a certain
amount of average monthly payroll costs for the 12-month period prior to February 15,
2020;

c. that the business that was the subject of the application had a certain
number of employees as of February 15, 2020.

d. that the defendant was not engaged in any illegal activity

25. It was part of the scheme that defendant Nikita Cannady, by means of false
and fraudulent misrepresentations, obtained EIDL advances and loan funds from SBA
totaling at least $102,400.

26. ‘It was part of the scheme that defendant Nikita Cannady, by means of false
and fraudulent misrepresentations, obtained PPP loan funds from Regions Bank and Itria

Ventures LLC totaling at least $224,742.50.
27. It was part of the scheme that defendant Nikita Cannady used the
proceeds of the above-described fraud on expenditures for herself, including, but not

limited to, a down payment on a home and the purchases of vehicles.

COUNTS 1-6
(Wire Fraud)

28. The allegations in paragraphs 1-27 above are hereby reallaged and
incorporated by reference as if fully set forth herein.

29. Onor about the dates set forth below, in the Western District of Tennessee
and elsewhere, the defendant

NIKITA CANNADY

for the purpose of executing the scheme described above, and attempting to do so,
caused to be transmitted by means of wire communication in interstate commerce the
signals and sounds described below for each count, each transmission constituting a

separate count:

Count # | Date Description

1 June 17, 2020 Electronic transmission of EIDL loan
application #3305071926 to SBA applying
for EIDL advance and loan funds for
WAU Child Care.

2 July 9, 2020 Electronic transmission EIDL loan
application #3309688918 applying for
EIDL advance and loan funds for WAU
Foundation.

3 September 6, 2020 Electronic transmission EIDL loan
application #3314295580 applying for
EIDL advance and loan funds for WAU
Adult Daycare

4 April 15, 2021 Electronic transmission EIDL loan
application #3318509763 applying for
EIDL advance and loan funds for WAU
Adult Daycare
5 March 9, 2021 Electronic transmission of SBA Form
2483 to Regions Bank for PPP loan
#76004086-08 applying for PPP funding
for WAU Child Care

6 April 5, 2021 Electronic transmission of SBA Form
2483-SD to Itria Ventures LLC for PPP
loan #3400768706 applying for PPP
funding for WAU Home Health Care

All in violation of Title 18, United States Code, Section 1343.

COUNT 7-10
(False Statements in Connection with Loan Application)

30. The allegations in paragraphs 1-27 above are hereby reallaged and
incorporated by reference as if fully set forth herein.

31. On or about the dates below, in the Western District of Tennessee and
elsewhere, the defendant,

NIKITA CANNADY

knowingly made a false statement and report for the purpose of influencing the action of
the U.S. Small Business Administration (SBA) in connection with an application for a loan
under the SBA’s Economic Injury Disaster Loan Program (EIDL) in that the defendant
represented that each of the businesses set forth below was in operation on January 31,
2020 and had a certain number of employees on that date, and had generated a certain
amount of gross revenue during the preceding 12-month period, when in truth and in fact,
as the defendant then well knew, the business had not been in operation on the

represented date and did not have the represented number of employees and revenue:

Count# | Date EIDL Loan Application # | Business Name
7 June 17, #3305071926 WAU Child Care
2020
8 July 9, #3309688918 WAU Foundation
2020

9 September | #3314295580 WAU Adult Day Care
6, 2020

10 April 15, #3318509763 WAU Adult Day Care
2021

All in violation of Title 18 United States Code, Section 1014.

COUNT 11
(False Statements in Connection with Loan Application)

32. The allegations in paragraphs 1-27 above are hereby reallaged and
incorporated by reference as if fully set forth herein.

33. On or about March 9, 2021 in the Western District of Tennessee and
elsewhere, the defendant,

NIKITA CANNADY

knowingly made a false statement and report for the purpose of influencing the action of
the U.S. Small Business Administration (SBA) and/or Regions Bank, a financial institution
insured by the Federal Deposit Insurance Corporation in connection with an application
for a loan under the SBA’s Paycheck Protection Program (PPP) in that the defendant
represented in an application for PPP loan #76004086-08 that her business, What About
Us Child Care, was in operation on February 15, 2020, and had a certain number of
employees on that date, and had incurred certain amount of average monthly payroll
costs during the preceding 12-month period, when in truth and in fact, as the defendant
then well knew, the business had not been in operation on that date, and did not have the
represented number of employees, and had not incurred the represented average
monthly payroll costs.

All in violation of Title 18 United States Code, Section 1014
COUNT 12
(False Statements in Connection with Loan Application)

34. The allegations in paragraphs 1-27 above are hereby reallaged and
incorporated by reference as if fully set forth herein.

35. On or about April 5, 2021, in the Western District of Tennessee and
elsewhere, the defendant,

NIKITA CANNADY

knowingly made a false statement and report for the purpose of influencing the action of
the U.S. Small Business Administration (SBA) in connection with an application for a loan
under the SBA’s Paycheck Protection Program (PPP) in that the defendant represented
in an application for PPP loan #3400768706 for her business What About Us Home
Health Care that she was not engaged in any illegal activity, when in truth and in fact, as
the defendant then well knew, the defendant was engaged in illegal activity, that is, the
scheme alleged in paragraphs 1-27 above and the specific conduct set forth in Counts 1-
11 above.

All in violation of Title 18, United States Code, Section 1014

COUNTS 13-14
(Monetary Transactions in Proceeds of Specified Unlawful Activity)

36. The allegations in paragraphs 1-27 above are hereby reallaged and
incorporated by reference as if fully set forth herein.

37. |Onor about the dates set forth below, in the Western District of Tennessee
and elsewhere, the defendant,

NIKITA CANNADY

10
did knowingly engage and attempt to engage, and did cause others to engage, in
monetary transactions affecting interstate commerce, in criminally derived property of a
value greater than $10,000, that is, the transfer of funds as set forth in each count below
having been derived from specified unlawful activity, that is wire fraud and making false
statements in connection with a loan application, in violation of Title 18, United States

Code, Sections 1343 and 1014.

COUNT # | DATE(S) AMOUNT DESCRIPTION

13 August 21, 2020 $120,000 Payment to Preferred Title &
Escrow toward the purchase of
one parcel of real property located
at 4983 Rowan Oak Cv.,
Collierville, TN

14 March 30, 2021 $32 627 Payment to Sunrise Yamaha
Motorsports for the purchase of
one 2020 Polaris Slingshot

All in violation of Title 18, United States Code, Section 1957

11
CRIMINAL FORFEITURE

1. The allegations contained in paragraphs 1-27 and Counts 1-14 of this
indictment are hereby realleged and incorporated by reference for the purpose of alleging
forfeitures pursuant to Title 18, United States Code, Sections 981(a)(1)(C) and 982(a)(1),
and Title 28, United States Code, Section 2461(c).

2. Pursuant to Title 18, United States Code, Section 981(a)(1)(C) and Title 28,
United States Code, Section 2461(c), upon conviction of an offense(s) in violation of Title
18, United States Code, Section 1343 and/or 1014 the defendant, NIKITA CANNADY,
shall forfeit to the United States of America any property, real or personal, which
constitutes or is derived from proceeds traceable to the offense(s).

3. Pursuant to Title 18, United States Code, Section 982(a)(1), upon conviction
of an offense in violation of Title 18, United States Code, Section 1957, the defendant,
NIKITA CANNADY, shall forfeit to the United States any property, real or personal,
involved in such offense, and/or any property traceable to such property.

4. The property to be forfeited includes, but is not limited to, the following:

a. Money Judgments as follows:

1) A personal money judgment representing the
aggregate of the proceeds of the offenses charged in
Counts 1-12, that is at least three hundred twenty-
seven thousand one hundred forty-two dollars fifty
cents ($327,142.50) in U.S. funds; and,

2) A_ personal money judgment representing the
aggregate of the funds involved in Counts 13-14, that

is at least one hundred fifty-two thousand six hundred
twenty-seven dollars ($152,627) in U.S. funds.

b. One 2020 Polaris Slingshot, VIN
57XAARHB8L8140290, with all appurtenances and
attachments thereon:

12
C. One parcel of real property located at 4983 Rowan Oak
Cv., Collierville, TN, with all appurtenances and
improvements thereon.
2. If any of the property described above, as a result of any act or omission

of the defendant:

cannot be located upon the exercise of due diligence;

has been transferred 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,

the United States of America shall be entitled to forfeiture of substitute property pursuant

to Title 21, United States Code, Section 853(p), as incorporated by Title 18, United States

Code, Section 982(b)(1) and Title 28, United States Code, Section 2461(c).

DATE:

A TRUE BILL:

FOREPERSON

JOSEPH C. MURPHY, JR.
UNITED STATES ATTORNEY

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