Indictment — United States v. Khadijah X. Chapman, District of Idaho (Document 1)

Summary

An Indictment filed 07/13/22 as Document 1 in United States v. Khadijah X. Chapman, No. 1:22-cr-00154-AKB, in the U.S. District Court for the District of Idaho. Count One charges bank fraud under 18 U.S.C. § 1344 in connection with a PPP loan application submitted on or about March 19, 2021 seeking a $338,958 loan for Connecting the Dots 101 Group & Network, Corp. The grand jury alleges that the application falsely certified employees, payroll and operations, that fraudulent IRS Forms 1120, 941 and W-3 were never filed with the IRS, and that profit and loss statements were false. A forfeiture allegation follows, and the document is dated July 12, 2022.

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

Text recognized from a scanned document; may contain errors. Page 1 of 7 is not shown because the text could not be recognized reliably.

Case 1:22-cr-00154-AKB Document1 Filed 07/13/22 Page2of7

1. The Defendant, KHADIAH X. CHAPMAN (“CHAPMAN”), was a resident of
Atlanta, Georgia.

2. CHAPMAN owned and controlled Connecting the Dots 101 Group & Network,
Corp., a Georgia-based business. Connecting the Dots 101 Group & Network, Corp. was
registered in 2017 but was not issued an Employer Identification Number (“EIN”) by the Internal
Revenue Service (“IRS”).

The U.S. Small Business Administration

3. The United States Small Business Administration (“SBA”) was an
executive-branch agency of the United States government that 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.

The Paycheck Protection Program

4, The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was a federal
law enacted in or around March 2020 to provide emergency financial assistance to Americans
suffering economic harm related to the COVID-19 pandemic. One form 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 called the Paycheck Protection Program (“PPP”).

5, 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 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

INDICTMENT -2
Case 1:22-cr-00154-AKB Document1 Filed 07/13/22 Page3of7

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 business was eligible
to receive under the PPP. In addition, businesses applying for a PPP loan were required to provide _
documentation showing payroll expenses. To qualify for a PPP loan, every application was also
required to certify that the business seeking the loan “was in operation on February 15, 2020, and
had employees for whom it paid salaries and payroll taxes or paid independent contractors, as
reported on Form(s) 1099-MISC.”

6. A PPP loan application was processed by a participating lender. If a PPP loan
application was approved, the participating lender funded the loan using its own monies, which
was one hundred percent guaranteed by the SBA. 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 in the course of processing the loan,

7, PPP loan proceeds were required to be used on certain permissible business-related
expenses, including payroll costs, mortgage interest, rent, and utilities. Under the applicable PPP
rules and guidance, the interest and principal on the loan were eligible for forgiveness if the
business used the loan proceeds on these expense items within a designated period of time and
used at least a certain portion of the loan towards payroll expenses.

Relevant Financial Institutions

8. Lender-1 was a financial institution based in Boise, Idaho that participated as a
lender in the SBA’s PPP loan program.

Overview of the Scheme to Defraud

9, Beginning in or around February 2021, and continuing until at least in or around

March 2021, in the District of Idaho and elsewhere, the Defendant, KHADIJAH X. CHAPMAN

INDICTMENT - 3
Case 1:22-cr-00154-AKB Document1 Filed 07/13/22 Page4of7

(“CHAPMAN”), together with others known and unknown to the Grand Jury, did execute, and
attempt to execute, a scheme and artifice to defraud Lender-1 in connection with a fraudulent PPP
loan application submitted on or about March 19, 2021 seeking a $338,958 loan for Connecting
the Dots 101 Group & Network, Corp. (the “PPP Loan Application’)

Purpose of the Scheme to Defrand

10. _—‘ It was the purpose of the scheme for CHAPMAN to unjustly enrich herself, and
others, by fraudulently obtaining a PPP loan through false pretenses, representations, and
promises, and to conceal the scheme.

Manner and Means of the Scheme to Defraud

11, It was part of CHAPMAN’s fraudulent scheme to submit the PPP Loan Application
on behalf of Connecting the Dots 101 Group & Network Corp. (“Connecting the Dots”) containing
false information concerning, among other things, the number of employees and its monthly
payroll, certifications about the business, and intended use for the funds.

12. In furtherance of the scheme, CHAPMAN, together with others known and
unknown to the Grand Jury, falsely certified on the PPP Loan Application that Connecting the
Dots was in operation on February 15, 2020, and had employees for whom it paid salaries and
payroll taxes or paid independent contractors, as reported on Form(s) 1099-MISC, However, in
fact, and as CHAPMAN knew, Connecting the Dots had no employees, paid no salaries, and paid
no payroll taxes. CHAPMAN further certified that the PPP loan funds would be used only for
business-related expenses, including to retain workers and cover payroll expenses, and to make
mortgage interest payments, lease payments, and/or utility payments. In fact, however,
CHAPMAN did not intend to use the funds for these purposes because Connecting the Dots had

no employees, payroll expenses, mortgage interest, lease, or utility bills.

INDICTMENT - 4
Case 1:22-cr-00154-AKB Document1 Filed 07/13/22 Page5of7

13. In furtherance of the scheme, CHAPMAN, together with others known and
unknown to the Grand Jury, submitted, and caused to be submitted, fraudulent IRS Forms 1120,
941, and W-3 to Lender-1 for the 2019 tax year. The IRS Forms 1120, 941, and W-3 contained
materially false and fraudulent information concerning total income and salaries and wages for
Connecting the Dots as it did not appear to have any legitimate business operations or employees
in 2019, Moreover, the IRS Forms 1120, 941, and W-3 were never filed with the IRS.

14. In furtherance of the scheme, CHAPMAN, together with others known and
unknown to the Grand Jury, submitted, and caused to be submitted, fraudulent profit and loss
statements for Connecting the Dots in support of the PPP Loan Application to Lender-1. A profit
and loss statement for the first quarter of 2019 falsely claimed Connecting the Dots earned
$725,445 in gross profit and paid $406,750 in wages. A profit and loss statement for the first
quarter of 2020 falsely claimed Connecting the Dots earned $534,038 in gross profit and paid
$406,750 in wages. In fact, however, Connecting the Dots did not appear to have any legitimate
business operations or employees in 2019 and 2020.

COUNT ONE

Bank Fraud
18 U.S.C. § 1344

The Grand Jury further charges:

15. The allegations in paragraphs 1 through 14 of this Indictment are realleged and
incorporated by reference as though fully set forth herein.

16. From at least in or around February 2021 through at least in or around March 2021,
in the District of Idaho, and elsewhere, the Defendant, KHADIJAH X. CHAPMAN, together with
others known and unknown to the Grand Jury, did knowingly, and with intent to defraud, execute

and attempt to execute a scheme and artifice to defraud one or more financial institutions, to wit:

INDICTMENT - 5
Case 1:22-cr-00154-AKB Document1 Filed 07/13/22 Page6of/7

Lender-1, a mortgage lending business, and to obtain moneys, funds, and credits owned by and
under the control of such financial institution by means of materially false and fraudulent
pretenses, representations, and promises.
Purpose
17. The Grand Jury realleges and incorporates by reference paragraph 10 of this
Indictment as a description of the purpose of the schemé and artifice to defraud.

Scheme and Artifice to Defraud

18. The Grand Jury realleges and incorporates by reference paragraphs 11 through 14
of this Indictment as a description of the scheme and artifice to defraud.

19, On or about March 19, 2021, KHADIJAH X. CHAPMAN, together with others
known and unknown to the Grand Jury, in the District Idaho, and elsewhere, did knowingly execute
the above-described scheme, by submitting the fraudulent PPP Loan Application for Connecting
the Dots 101 Group & Network, Corp. to Lender-1 for $338,958,

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

FORFEITURE ALLEGATION

Bank Fraud Forfeiture
18 U.S.C. §§ 981(a)(1)(C), 982(a)(2); 28 U.S.C. § 2461 (c)

The Grand Jury alleges:

Upon conviction of any offense set forth in this Indictment, the Defendant, KHADIJAH
X, CHAPMAN, shall forfeit to the United States, pursuant to Title 18, United States Code,
Sections 981(a)(1)(C) and 982(a)(2), and Title 28, United States Code, Section 2461(c), any
property, real or personal, which constitutes or is derived from proceeds traceable to the offense.

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

1, cannot be located upon the exercise of due diligence;

INDICTMENT - 6
Case 1:22-cr-00154-AKB Document1 Filed 07/13/22 Page/7of7

2. has been transferred or sold to, or deposited with, a third person;

3. has been placed beyond the jurisdiction of the Court;

4, has been substantially diminished in value; or

5. 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).
All pursuant to Title 18, United States Code, Sections 981(a)(1)(C) and 982(a)(2), Title
21, United States Code, Section 853(p), and Title 28, United States Code, Section 2461(c).
Dated this 12th day of July, 2022.
A TRUE BILL

/s/ [signature on reverse]

FOREPERSON

JOSHUA D. HURWIT
UNITED STATES ATTORNEY
By:

SEAN M. MAZOROL °C
ASSISTANT UNITED STATES ATTORNEY

LORINDA I. LARYEA

ACTING CHIEF, FRAUD SECTION
CRIMINAL DIVISION

UNITED STATES DEPARTMENT OF JUSTICE
By:

CRIMINAL DIVISION, FRAUD SECTION

INDICTMENT - 7


File and source

File

1-indictment-as-to-khadijah-x-chapman.pdf

Size

223,217 bytes

SHA-256

67ca2d894f94165a9a1e6922808a81299c27859f6a099713e9ca8e5747e943fc

Our copy

1-indictment-as-to-khadijah-x-chapman.pdf

Original

PACER (login required)