Indictment — United States v. Ronald Philip Wallace and Stace Yater Wallace, No. 22-CR-0211-PAB (Dkt. 1, D. Colo.)

Summary

This indictment (D. Colo., Case No. 22-CR-0211-PAB) charges Ronald Philip Wallace with nine counts of wire fraud for drawing investors into companies producing CBD products with false or misleading information between September 2014 and August 2019; the listed transfers run from $33,000 to $499,980. Counts 10 to 40 charge Ronald Philip Wallace and Stace Yater Wallace with laundering the proceeds through accounts including Sophic Solutions and TYW, LLC. Counts 41 to 43 charge both with bank fraud over PPP loans to NATURLFX, Inc. from Vectra Bank of Colorado: a $65,200 loan funded May 26, 2020, a $113,492 loan funded about February 22, 2021, and a second draw of $54,854 about April 27, 2021, with applications electronically signed by Stace Yater Wallace. Count 44 charges a transfer of more than $10,000.00 to a law firm's trust account, and the indictment seeks forfeiture.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Full text

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO

Case No. 22-CR-0211-PAB

UNITED STATES OF AMERICA,

Plaintiff,

1. RONALD PHILIP WALLACE and
2. STACE YATER WALLACE,

Defendants.

INDICTMENT

The Grand Jury charges:

COUNTS 1 - 9

1. Between September 2014 through August 2019, defendant RONALD

PHILIP WALLACE devised and intended to devise a scheme to defraud and to obtain

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

promises.

2. As part of the scheme, RONALD PHILIP WALLACE sought investments

from individuals as a means of capitalizing companies with which he was associated

which were involved in producing and selling CBD products. 1

3. As a part of the scheme RONALD PHILIP WALLACE provided potential

investors with false or misleading information for the purpose of inducing them to

1
CBD is a reference to cannabidiol. CBD is an active ingredient derived from marijuana
but also can be derived from hemp. CBD is marketed as an ingredient in products too numerous
to list.
invest. Based upon the representations of RONALD PHILIP WALLACE, investors

provided monies for the purpose of funding the production and marketing of CBD

products.

4. On or about the dates listed below, in the State and District of Colorado

and elsewhere, RONALD PHILIP WALLACE, for the purpose of executing the aforesaid

scheme and artifice to defraud, directed and caused investors (identified herein by

initials) to transfer investment funds to bank accounts identified by RONALD PHILIP

WALLACE and in so doing caused writings, signs and signals to be transmitted by

means of wire communications in interstate commerce for the purpose of executing the

scheme as listed below:

Count Date Amount Investor Deposited to Account
1 11/9/2017 $33,000 S.C. BD Cann, Vectra x2990

2 1/21/2018 $80,000 S.C. Fource Management,
Vectra x2097
3 7/18/2018 $60,000 E.W. Lipro, Wells Fargo x9291

4 8/17/2018 $60,000 W.N. Lipro,Wells Fargo x9291

5 1/9/2019 $499,980 N.C. Lipro, JPMC x9101

6 2/11/2019 $499,980 N.C. Lipro, JPMC x9101

7 4/19/2019 $50,000 T.H. Lipro, JPMC x9101

8 5/10/2019 $150,000 T.H. Lipro, JPMC x9101

9 7/3/2019 $50,000 M.C. Lipro, JPMC x9101

All in violation of Title 18, United States Code, Sections 1343 and 2.

2
COUNTS 10-40

5. On or about the dates noted below per count, in the State and District of

Colorado, and elsewhere, the defendants RONALD PHILIP WALLACE and STACE

YATER WALLACE, knowing that property involved in a financial transaction

represented the proceeds of some form of unlawful activity, conducted or attempted to

conduct such a financial transaction which involved the proceeds of a specified unlawful

activity, wire fraud in violation of Title 18, United States Code, Sections 1343 and 2,

knowing that the transaction was designed in whole or in part to conceal or disguise the

nature, the location, the source, the ownership, and the control of the proceeds of the

specified unlawful activity:

Count Date From Account To Account Amount

10 11/10/2017 BD Cann-x2920 Stace Yater Wallace- $11,200
x1010
11 11/10/2017 BD Cann-x2920 Sophic Solutions-x2768 $9,000

12 11/10/2017 Stace Yater Wallace- TYW, LLC- x0460 $3,486
x1010
13 11/10/2017 Stace Yater Wallace- TYW, LLC- x0460 $3,250
x1010
14 11/10/2017 Sophic Solutions- Ronald Wallace Pinnacle $2,200
x2768 Bank
15 11/10/2017 Sophic Solutions- TYW, LLC-x0460 $1,500
x2768
16 1/9/2019 Lipro-x9101 Sophic Solutions-x2768 $23,000

17 1/9/2019 Sophic Solutions- Stace Yater Wallace- $5,000
x2768 x1010
18 1/9/2019 Sophic Solutions- Stace Yater Wallace- $3,500
x2768 8264
19 1/9/2019 Stace Yater Wallace- TYW, LLC-x0460 $5,000
x1010
20 1/9/2019 Sophic Solutions- TYW, LLC-x0460 $3,399
x2768

3
21 1/9/2019 Sophic Solutions- Ronald Wallace Pinnacle $2,300
x2768 Bank
22 1/9/2019 Sophic Solutions- TYW, LLC-x0460 $1,200
x2768
23 1/9/2019 Sophic Solutions- Stace Yater Wallace- $1,100
x2768 x1010
24 1/11/2019 Sophic Solutions- Stace-Yater Wallace- $4,500
x2768 x1010
25 1/11/2019 Stace Yater Wallace- TYW LLC-x0460 $3,775
x1010
26 1/14/2019 TYW LLC-x0460 Ishmael Arquata $1,700
27 2/11/2019 TYW LLC-x0460 Ishmael Arquata $1,700
28 2/14/2019 Lipro-x9101 Sophic Solutions-x2768 $5,000

29 2/14/2019 Lipro-x9101 Stace Yater Wallace- $3,800
x1010
30 2/14/2019 Stace Yater Wallace- TYW, LLC-x0460 $1,800
x2768
31 2/19/2019 Lipro-x9101 TYW, LLC-x0460 $4,456

32 2/25/2019 Lipro-x9101 TYW, LLC-x0460 $2,507.03
33 3/20/2019 Sophic Solutions- TYW, LLC-x0460 $2,215.98
x2768
34 5/10/2019 Lipro-x9101 Sophic Solutions-x2768 $10,000
35 5/10/2019 Sophic Solutions- Ronald Wallace Pinnacle $2,500
x2768 Bank
36 5/14/2019 Sophic Solutions- Stace Yater Wallace- $2,500
x2768 x1010
37 5/14/2019 Sophic Solutions- TYW, LLC-x2768 $1,490
x2768
38 5.14.2019 Ronald Wallace TYW, LLC-x2768 $750
Pinnacle Bank
39 5/14/2019 Stace Yater Wallace- TYW, LLC-x2768 $1,175
x1010
40 5/17/2019 TYW, LLC-x2768 Ishmael Arquata $1,700.00

All in violation of Title 18, United States Code, Sections 1956(a)(1)(B)(i) and 2.

COUNT 41

6. The Coronavirus Aid, Relief, and Economic Security ("CARES") Act was a
4
federal law enacted in March 2020 and was designed to provide emergency financial

assistance to Americans impacted by the economic effects caused by the COVID-19

pandemic. The CARES Act authorized the SBA to issue loans to small businesses and

non-profit entities experiencing revenue loss due to the pandemic.

7. One form of assistance 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").

Repayment of the loans was guaranteed by the United States government through the

Small Business Administration (SBA).

8. To obtain a PPP loan, a qualifying business was required to submit a

PPP loan application, signed by an authorized representative of the business. The

PPP loan application required the small 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

small business, through its authorized representative, was required to provide, among

other things, its average monthly payroll expenses and number of employees. These

figures were used by financial institutions or lenders delegated by the SBA to

underwrite and approve the loans to calculate the amount of money the small business

was eligible to receive under the PPP. In addition, businesses applying for a PPP loan

were required to provide documentation showing their payroll expenses. The

applicant was required to certify that the information was true and accurate in all

material respects.

5
9. PPP loan applications were processed by a participating financial

institution. 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 submitted

in 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 in

the course of processing the loan.

10. PPP loan proceeds could only be used by the business on certain

permissible expenses, such as payroll costs, interest on mortgages, rent and utilities.2

The PPP allowed the interest and principal on the PPP loan to be entirely forgiven if

the business spent the loan proceeds on the allowable expenses within a designated

period of time and used a certain percentage of the PPP loan proceeds towards

payroll expenses.

11. Between on or about May 20, 2020, and on about April 27, 2021,

RONALD PHILIP WALLACE and STACE YATER WALLACE did knowingly and

intentionally execute, and attempt to execute, a scheme and artifice to defraud a

financial institution, and to obtain monies, funds, credits, assets, and other property

owned by, and under the custody and control of, a financial institution, by means of

materially false and fraudulent pretenses, representations and promises.

2
The authorized representative of the applicant was required to affirm that “The [PPP
loan] funds will be used to retain workers and maintain payroll or make mortgage interest
payments, lease payments and utility payments, as specified under the Paycheck Protection
Program Rules. I understand that if the funds are knowingly used for unauthorized purposes,
the federal government may hold me legally liable, such as charges for fraud.”

6
12. In furtherance of the scheme, on or about May 21, 2020, a false and

misleading PPP loan application in the name of NATURLFX, Inc. 3 was submitted to

Zions Bank dba Vectra Bank of Colorado, a federally insured bank and a PPP loan

application processor and approved SBA lender of PPP loans. The application was

electronically signed by STACE YATER WALLACE. The information provided in the

application, as well as supporting documents and forms, were certified as true and

accurate. The application contained materially false information. As a result of the

application, on May 26, 2020, Vectra Bank of Colorado, funded NATURLFX, Inc. with a

$65,200 loan. All in violation of Title 18, United States Code, Sections 1344 and 2.

COUNT 42

13. Paragraphs 6 – 12 are realleged and incorporated by reference.

14. In furtherance of the scheme, on or about April 22, 2021, a false and

misleading PPP loan application in the name of NATURLFX, Inc. was submitted to

Zions Bank dba Vectra Bank of Colorado. The application requested an increase in the

$65,200.00 loan approved in May 2020. The information provided in the application, as

well as supporting documents and forms, were certified as true and accurate. The

application contained materially false information. As a result of the application, on or

about April 27, 2021, Vectra Bank funded NATURLFX, Inc. with a second draw on the

loan in the amount of $54,854.

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

3
NATURLFX, Inc., was incorporated on August 13, 2019. On the same date, LiPro, Inc.,
notified the Colorado Secretary of State that it changed its corporate name to NATURLFX, Inc.
STACE YATER WALLACE was a member of the Board of Directors of NATURLFX, Inc., and
signed a corporate resolution which approved applying for “government assistance loans” on
May 12, 2020.
7
COUNT 43

15. Paragraphs 6 – 11 are realleged and incorporated by reference.

16. In furtherance of the scheme, on or about February 4, 2021, a false and

misleading PPP application for a loan in the name of NATURLFX, Inc. was submitted to

Zions Bank dba Vectra Bank of Colorado, a federally insured bank and a PPP loan

application processor and approved SBA lender of PPP loans. The application was

electronically signed by STACE YATER WALLACE. The information provided, as well

as supporting documents and forms, were certified as true and accurate. The

application contained materially false information. As a result of the application, on or

about February 22, 2021, Vectra Bank funded NATURALFX, Inc. with a $113,492 loan.

All in violation of Title 18, United States Code, Sections1344 and 2.

COUNT 44

17. On or about February 23, 2021, in the State and District of Colorado,

and elsewhere, STACE YATER WALLACE and RONALD PHILLIP WALLACE, did

knowingly engage and attempt to engage in a monetary transaction, as defined in Title

18, United States Code, Section 1957(f)(1), in criminally derived property of a value

greater than $10,000.00, to wit: a wire transfer from a bank account of NATURLFX

Inc., to a trust account of a law firm identified herein as D.W., which was derived

from a specified unlawful activity, that is, bank fraud (a violation of Title 18, United

States Code, Section 1344) in violation of Title 18, United States Code, Sections

1957 and 2.

8
NOTICE OF FORFEITURE

18. The allegations contained in Counts 1 through 44 of this Indictment hereby

are re-alleged and incorporated by reference for the purpose of alleging forfeiture

pursuant to the provisions of Title 18, United States Code, Sections 981(a)(1)(C),

982(a)(1), 982(a)(2), and Title 28, United States Code, Section 2461(c).

19. Upon conviction of one or more of the violations alleged in Counts 1

through 9 of this Indictment involving the commission of violations of Title 18, United

States Code, Sections 1343 and 2, the defendant RONALD PHILIP WALLACE shall

forfeit to the United States, pursuant to Title 18, United States Code, Section

981(a)(1)(C), and Title 28, United States Code, Section 2461(c), any and all rights, title,

and interest in all property constituting and derived from any proceeds obtained directly

and indirectly as a result of such offense or offenses, including in the form of a money

judgment in the amount of the proceeds obtained by the defendant and the scheme.

20. Upon conviction of one or more of the violations alleged in Counts 10

through 40 and 44 of this Indictment involving the commission of violations of Title 18,

United States Code, Sections 1956(a)(1)(B)(i), 1957, and 2, the defendants RONALD

PHILIP WALLACE and STACE YATER WALLACE shall forfeit to the United States,

pursuant to Title 18, United States Code, Section 982(a)(1), any and all rights, title, and

interest in all property involved in such offense or offenses, or property traceable to

such property, including in the form of a money judgment in the amount of the proceeds

obtained by the defendants.

21. Upon conviction of one or more of the violations alleged in Counts 41

through 43 of this Indictment involving the commission of violations of Title 18, United

9
States Code, Sections 1344 and 2, the defendants RONALD PHILIP WALLACE and

STACE YATER WALLACE shall forfeit to the United States, pursuant to Title 18, United

States Code, Sections 982(a)(2), any and all rights, title, and interest in all property

constituting and derived from any proceeds obtained directly and indirectly as a result of

such offense or offenses, including in the form of a money judgment in the amount of

the proceeds obtained by the defendants and the scheme.

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

of RONALD PHILIP WALLACE and STACE YATER WALLACE, cannot be located

upon the exercise of due diligence; has been transferred or sold to, or deposited with, a

third party; has been substantially diminished in value; or has been commingled with

other property that cannot be divided without difficulty, it is the intent of the United

States, pursuant to Title 28, United States Code, Section 2461(c), incorporating Title 21,

United States Code, Section 853(p), to seek forfeiture of any other property of RONALD

PHILIP WALLACE and STACE YATER WALLACE up to the value of the forfeitable

property described above.

A TRUE BILL: Ink signature on file in Clerk’s Office
FOREPERSON

COLE FINEGAN
United States Attorney

By: s/Robert Brown
ROBERT BROWN
Assistant U.S. Attorney
1801 California St., Ste. 1600
Denver, CO 80202

File and source

File: gov.uscourts.cod.216162.1.0.pdf
Size: 184,697 bytes
SHA-256: 00dd66b4578cfa05b8f99d947ae2784f62f0e8b2c826cce91c34cec1ec9c932a
Our copy: gov.uscourts.cod.216162.1.0.pdf
Original: archive.org