Indictment — United States v. Daniel C. Labrum, District of Idaho (Document 1)

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An Indictment in United States of America v. Daniel C. Labrum, Case 1:22-cr-00152-AKB, in the U.S. District Court for the District of Idaho, Document 1, filed 07/13/22. Counts One through Five charge Bank Fraud under 18 U.S.C. § 1344, alleging a scheme from at least in or around February 2021 through at least in or around May 2021 to defraud Lender-1 through PPP loan applications for Labrum Landscaping LLC, Pro Excavation LLC and Watson Construction LLC. Count Six charges Engaging in a Monetary Transaction in Property Derived from Specified Unlawful Activity under 18 U.S.C. § 1957, alleging a transfer of approximately $54,000 on or about April 15, 2021. The Indictment also contains forfeiture allegations and is dated July 12, 2022.

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JOSHUA D. HURWIT, IDAHO STATE BAR NO. 9527

UNITED STATES ATTORNEY
SEAN M. MAZOROL, OREGON STATE BAR NO, 116398 y.8. COURTS
ASSISTANT UNITED STATES ATTORNEY

DISTRICT OF IDAHO JUL 13 2022

1290 W. MYRTLE ST. SUITE 500 Flled____-time
BOISE, ID 83702-7788 Rove —SFeprieNW. KENYON
TELEPHONE: (208) 334-1211 CLERK, DISTRICT ©

FACSIMILE: (208) 334-1413

LORINDA I. LARYEA
ACTING CHIEF

JENNIFER L. BILINKAS

TRIAL ATTORNEY

UNITED STATES DEPARTMENT OF JUSTICE

CRIMINAL DIVISION, FRAUD SECTION

1400 NEW YORK AVENUE, N.W.

WASHINGTON, D.C. 20005

TELEPHONE: (202) 305-3928 /
FACSIMILE: (202) 514-3708

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO

UNITED STATES OF AMERICA,

Case No. CR 2 o- Of 52 Ҥ DCN

Plaintiff,

INDICTMENT
vs.
‘| 18 U.S.C. §§ 981(a)C)(A), 981(a)(1)(C)
DANIEL C. LABRUM, 18 U.S.C. §§ 982(a)(1), 982(a)(2)
18 U.S.C. § 1344
Defendant. 18 U.S.C. § 1957

28 U.S.C. § 2461(c)

INTRODUCTION

The Grand Jury Charges:

At all times relevant to this Indictment:

INDICTMENT - 1
1. The Defendant, DANIEL C. LABRUM (“LABRUM”), was a resident of South
Jordan, Utah.

2. LABRUM owned and controlled Labrum Landscaping LLC, a Utah-based
business. Labrum Landscaping LLC was incorporated in 2016 and was issued an Employer
Identification Number (“EIN”) by the Internal Revenue Service (“IRS”),

3, LABRUM also owned and controlled another Utah-based business, Pro Excavation
LLC, Pro Excavation LLC was incorporated in 2018 and was issued an EIN by the IRS.

4, Individual-1 owned and controlled Watson Construction LLC, a Utah-based
business. Watson Construction LLC was incorporated in 2013 and was issued an EIN by the IRS.

The U.S, Small Business Administration

5, 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

6. 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”).

7. 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

INDICTMENT - 2
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
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.”

8, 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.

9, 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

10. _Lender-1 was a financial institution based in Boise, Idaho that participated as a

lender in the SBA’s PPP loan program.

INDICTMENT -3
Case 1:22-cr-00152-AKB Document 1

11.

12,

13.

May 2021, in the District of Idaho and elsewhere, the Defendant, DANIEL C. LABRUM
(“LABRUM”), 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 the fraudulent

Overview of the Scheme to Defraud

Filed 07/13/22 Page4of11

Bank-1 was a financial institution based in Salt Lake City, Utah.

Bank-2 was a financial institution based in Oklahoma City, Oklahoma.

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

PPP loan applications described in the table below (together, the “PPP Loan Applications”):

icatt Approx.
Application Relevant Entity Date of Lender Approx. Loan Amount
No. ‘cati Sought
Application
Labrum February
} Landscaping LLC | 25,2021 Lender-1 $205,639
2 Pro Excavation LLC Mar 2, Lender-1 $344,000
3 Pro Excavation LLC aoe ; 2, Lender-1 $344,062
Watson March 8,
4 Construction LLC 2021 Lender-1 $407,600
Watson April 16, ;
> Construction LLC 2021 Lender-1 $407,604

INDICTMENT - 4
Case 1:22-cr-00152-AKB Document1 Filed 07/13/22 Page5of11

Purpose of the Scheme to Defraud

14. ‘It was the purpose of the scheme for LABRUM to unjustly enrich himself, and
others, by fraudulently obtaining PPP loans through false pretenses, representations, and promises,
and to conceal the scheme.

Manner and Means of the Scheme to Defraud

15. ‘It was part of LABRUM’s fraudulent scheme to submit the PPP Loan Applications
on behalf of Labrum Landscaping LLC, Pro Excavation LLC, and Watson Construction LLC
(hereinafter, the “Relevant Entities”) containing false information concerning, among other things,
the number of employees and their monthly payroll, certifications about the Relevant Entities’
business, and intended use for the funds.

16. In furtherance of the scheme, LABRUM, together with others known and unknown
to the Grand Jury, falsely certified on the PPP Loan Applications that the Relevant Entities were
in operation on February 15, 2020, and had employees for whom they paid salaries and payroll
taxes or paid independent contractors, as reported on Form(s) 1099-MISC, However, in fact, and
as LABRUM knew, the Relevant Entities had no employees, paid no salaries, and paid no payroll
taxes. LABRUM 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, LABRUM did not intend to
use the funds for these purposes because the Relevant Entities had no employees, payroll expenses,
mortgage interest, lease, or utility bills.

17. ‘In furtherance of the scheme, LABRUM, together with others known and unknown
to the Grand Jury, submitted, and caused to be submitted, fraudulent IRS Forms 1120 to Lender-1

for the 2019 tax year on behalf of the Relevant Entities. Further, LABRUM submitted, and caused

INDICTMENT -5
Case 1:22-cr-00152-AKB Document1 Filed 07/13/22 Page6of11

to be submitted, fraudulent 2019 IRS Forms 940 and 941 to Lender-1 for Labrum Landscaping
LLC, a fraudulent 2020 IRS Form 940 to Lender-1 for Pro Excavation LLC, and fraudulent 2020
IRS Forms 940 and 941 to Lender-1 for Watson Construction LLC. The IRS Forms 1120, 940,
and 941 contained materially false and fraudulent information concerning total income and salaries
and wages for the Relevant Entities as the Relevant Entities did not appear to have any legitimate
business operations or employees in 2019 and 2020. Moreover, the Form 1120 for the Relevant
Entities and the Form 940 for Watson Construction LLC were never filed with the IRS.

18, In furtherance of the scheme, LABRUM, together with others known and unknown
to the Grand Jury, submitted, and caused to be submitted, the following fraudulent profit and loss
statements for the Relevant Entities in support of the PPP Loan Applications to Lender-1.

a. A profit and loss statement for Labrum Landscaping LLC for the second quarter
of 2019 falsely claimed Labrum Landscaping LLC earned $600,127 in gross
profit and paid $248,400 in wages. A profit and loss statement for the second
quarter of 2020 falsely claimed Labrum Landscaping LLC earned $432,095 in
gross profit and paid $248,400 in wages. In fact, however, Labrum
Landscaping LLC did not appear to have any legitimate business operations or
employees in 2019 and 2020.

b. A profit and loss statement for Pro Excavation LLC for the third quarter of 2019
falsely claimed Pro Excavation LLC earned $648,905 in gross profit and paid
$412,875 in wages. A profit and loss statement for the third quarter of 2020
falsely claimed Pro Excavation LLC earned $485,905 in gross profit and paid
$412,875 in wages. In fact, however, Pro Excavation LLC did not appear to

have any legitimate business operations or employees in 2019 and 2020.

INDICTMENT - 6
c. A profit and loss statement for Watson Construction LLC for the second quarter
of 2019 falsely claimed Watson Construction LLC earned $721,446 in gross
profit and paid $547,697 in wages. A profit and loss statement for the second
quarter of 2020 falsely claimed Watson Construction LLC earned $540,446 in
gross profit and paid $357,825 in wages. In fact, however, Watson
Construction LLC did not appear to have any legitimate business operations or
employees in 2019 and 2020.

19. In furtherance of the scheme, after Lender-1 transferred approximately $205,639 in
PPP loan proceeds to the Labrum Landscaping LLC account at Bank-1, LABRUM conducted a
monetary transaction of a value greater than $10,000 by transferring approximately $54,000 from
Bank-1 to Bank-2, which transaction was used for the payment to a separately charged co-schemer.

COUNTS ONE THROUGH FIVE

Bank Fraud
18 U.S.C, § 1344

The Grand Jury further charges:

20. The allegations in paragraphs 1 through 19 of this Indictment are realleged and
incorporated by reference as though fully set forth herein.

21. From at least in or around February 2021 through at least in or around May 2021,
in the District of Idaho and elsewhere, the Defendant, DANIEL C. LABRUM, 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:
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.

INDICTMENT - 7
Purpose

22. The Grand Jury realleges and incorporates by reference paragraph 14 of this
Indictment as a description of the purpose of the scheme and artifice to defraud.

Scheme and Artifice to Defraud

23, The Grand Jury realleges and incorporates by reference paragraphs 15 through 19
of this Indictment as a description of the scheme and artifice to defraud.

24. | Onor about the dates specified as to each count below, in the District Idaho, and
” elsewhere, the Defendant, DANIEL C, LABRUM, together with others known and unknown to
the Grand Jury, did knowingly execute the above-described scheme, each execution constituting

a separate count:

Count Approx. Date Execution
5 April 16, 2021 Submission radon ber on faelcation for Watson

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

INDICTMENT - 8
COUNT SIX

Engaging in a Monetary Transaction in Property Derived from Specified Unlawful Activity
18 U.S.C. § 1957

The Grand Jury further charges:

25, The allegations of paragraphs 1 through 19 are realleged and incorporated by
reference as though fully set forth herein.

26. Onor about April 15, 2021, in the District of Idaho and elsewhere, the Defendant,
DANIEL C. LABRUM, together with others known and unknown to the Grand Jury, knowing
that the funds involved represented proceeds of some form of unlawful activity, engaged in and
willfully caused others to engage in a monetary transaction, in and affecting interstate commerce,
in criminally derived property of a value greater than $10,000, namely, the transfer of
approximately $54,000 by the Defendant from the Defendant’s account at Bank-1 in Utah to an
account at Bank-2 in Oklahoma, which property, in fact, was derived from a specified unlawful
activity, that is, bank fraud, in violation of Title 18, United States Code, Section 1344(2). In
violation of Title 18, United States Code, Section 1957.

FORFEITURE ALLEGATIONS

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 Counts 1 through 5 set forth in this Indictment, the Defendant,
DANIEL C, LABRUM, 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:

INDICTMENT - 9
1. cannot be located upon the exercise of due diligence;

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).

Money Laundering Forfeiture
18 U.S.C. §§ 981(a)(1)(A), 981(a)(1)(C), 982(a)(1); 28 U.S.C. § 2461 (c)

The Grand Jury alleges:

Upon conviction of Count 6 set forth in this Indictment, the Defendant, DANIEL C.
LABRUM, shall forfeit to the United States, pursuant to Title 18, United States Code, Sections
981(a)(1)(C), 981(a)C1)(A), and 982(a)(1), 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;

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;

INDICTMENT - 10
Case 1:22-cr-00152-AKB Document1 Filed 07/13/22 Page11of11

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)(A), 981(a)(1)(C), and
982(a)(1), 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

SEAN M. MAZOROL
ASSISTANT UNITED STATES ATTORNEY

LORINDA I. LARYEA

ACTING CHIEF, FRAUD SECTION
CRIMINAL DIVISION

UNITED STATES DEPARTMENT OF JUSTICE
By:

AL ATTORNEY
MINAL DIVISION, FRAUD SECTION

INDICTMENT - 11


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