Indictment — United States v. Kareem Memon, Southern District of Florida (Document 3)

Summary

A grand jury indictment in United States v. Kareem Memon, Case No. 23-80068-Cr-Singhal/McCabe, in the U.S. District Court for the Southern District of Florida, entered on the docket April 11, 2023 as Document 3. Count 1 charges wire fraud under 18 U.S.C. § 1343, alleging that Memon, President of KSM Enterprises, Inc., submitted a PPP loan application to Kabbage on or about June 25, 2020 reporting monthly average payroll of approximately $154,782 and 15 employees, with false tax documents. It states Kabbage disbursed $386,954.00 to a KSM Wells Fargo account. Counts 2-3 charge money laundering under 18 U.S.C. § 1957 over a $50,000 cash withdrawal and a wire transfer of approximately $288,102.00 to the IRS. The indictment seeks forfeiture and attaches a certificate of trial attorney and a penalty sheet.

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“Indictment — United States v. Kareem Memon, Southern District of Florida (Document 3).” Original at ecf.flsd.uscourts.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/indictment-usa-v-memon-dkt-3-s-d-fla-6f8988c321/, SHA-256 449f6491f912384f6a4fcdcde82b643add46297a93b7c60899570de49a568d9b.

Full text

Case 9:23-cr-80068-AHS Document 3 Entered on FLSD Docket 04/11/2023 Page 1 of 10

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
23-80068-Cr-Singhal/McCabe
CASE NO. - - - - - - -
18 u.s.c. § 1343
18 u.s.c. § 1957
18 U.S.C. § 982(a)(2)(A)
18 U.S.C. § 982(a)(l)

UNITED STATES OF AMERICA
TM
vs.
Apr 11, 2023
KAREEM MEMON,

Defendant. West Palm Beach

_ _ _ _ _ _ _ _ _ _ _ _ _ _.!

INDICTMENT

The Grand Jury charges that:

GENERAL ALLEGATIONS

At all times relevant to this Indictment:

The CARES Act

1. 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.

2. 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.

3. The Coronavirus Aid, Relief, and Economic Security ("CARES") Act was a federal

law enacted in or around March 2020 and designed to provide emergency financial assistance to
Case 9:23-cr-80068-AHS Document 3 Entered on FLSD Docket 04/11/2023 Page 2 of 10

the millions of Americans who were suffering the economic effects caused by the COVID-19

pandemic.

The Economic Injury Disaster Loan Program

4. The Economic Injury Disaster Loan ("EIDL") program was an SBA program that

provided low-interest financing to small businesses, renters, and homeowners in regions affected

by declared disasters. The CARES Act authorized the SBA to provide EID Ls of up to $2 million

to eligible small businesses experiencing substantial financial disruption due to the COVID-19

pandemic.

Paycheck Protection Program

5. Another source of relief provided by the CARES Act was the authorization of

forgivable loans to small businesses for payroll, mortgage interest, rent/lease, utilities, through a

program referred to as the Paycheck Protection Program ("PPP"). In April 2020, Congress

authorized additional PPP funding.

6. The PPP allowed qualifying small businesses and other organizations to receive

PPP loans. Businesses were required to use PPP loan proceeds on payroll costs, interest on

mortgages, rent, and utilities. The PPP allowed the interest and principal on the PPP loan to be

entirely forgiven if the business spent the loan proceeds on these expenses items within a

designated period of time and used a certain percentage of the PPP loan proceeds on payroll

expenses.

7. The amount of PPP loan that a small business was entitled to receive was

determined by the number of employees employed by the business and the business' average

monthly payroll costs.

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

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Case 9:23-cr-80068-AHS Document 3 Entered on FLSD Docket 04/11/2023 Page 3 of 10

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 (SBA Form 2483), 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 small business was eligible to receive under the PPP. In addition, businesses applying for a

PPP loan were required to provide documentation confirming their payroll expenses.

9. A PPP loan application was processed by a participating lender. If a PPP loan

application was approved, the participating lender disbursed the loan funds to the applicant. While

a participating lender issued the PPP loan, the loan was 100% 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 a wire transfer by the lender to the SBA in the

course of processing the loan.

10. In addition, businesses applying for the PPP loan were required to provide

documentation confirming their payroll expenses. Typically, businesses supplied documents

showing the amount of payroll taxes reported to the Internal Revenue Service ("IRS"). Small

businesses (non-sole proprietorship) had to report and document the business' income and

expenses, as typically reported to the IRS on Form W3 or Form 941. These figures and

documentation were used to calculate the amount of money the small business was eligible to

receive under the PPP.

The Defendant and Relevant Entity

11. Defendant KAREEM MEMON was a resident of Boca Raton, Florida.

3
Case 9:23-cr-80068-AHS Document 3 Entered on FLSD Docket 04/11/2023 Page 4 of 10

12. KSM Enterprises, Inc. ("KSM") was a Florida corporation with an address listed

in Coral Springs, Florida. KAREEM MEMON was the President of KSM.

Relevant Financial Institutions

13. Wells Fargo Bank, N.A. ("Wells Fargo") was a federally insured financial

institution based in South Dakota.

14. ' Kabbage Inc. ("Kabbage"), headquartered in Atlanta, Georgia, was an approved

SBA lender of PPP loans.

PPP and EIDL Applications

15 . On or about June 24, 2020, KAREEM MEMON applied for an EIDL in the name

of KSM. On the application for the EIDL, KAREEM MEMON reported gross revenue for the

twelve months prior to the date of the disaster (January 31 , 2020) as $246,782.00 and 1 employee.

16. On or about June 25, 2020, KAREEM MEMON applied for a PPP loan in the

name of KSM. On the application for the PPP loan, KAREEM MEMON reported KSM's

monthly average payroll of approximately $154,782 and 15 employees.

COUNT 1
Wire Fraud
(18 u.s.c. § 1343)

1. The General Allegations section of this Indictment is re-alleged and incorporated

by reference as though fully set forth herein.

2. From in or around June 2020, continuing through in or around December 2020,

in Palm Beach County, in the Southern District of Florida, and elsewhere, the defendant,

KAREEM MEMON,

did knowingly, and with the intent to defraud, devise, and intend to devise a scheme and artifice

to defraud, and to obtain money and property by means of materially false and fraudulent

4
Case 9:23-cr-80068-AHS Document 3 Entered on FLSD Docket 04/11/2023 Page 5 of 10

pretenses, representations, and promises, knowing that the pretenses, representations, and

promises were false and fraudulent when made, and for the purpose of executing the scheme and

artifice, did knowingly transmit and cause to be transmitted, by means of wire communication in

interstate and foreign commerce, certain writings, signs, signals, pictures, and sounds.

PURPOSE OF SCHEME A D ARTIFICE

3. It was the purpose of the scheme and artifice for the defendant to unlawfully

enrich himself, by submitting a false and fraudulent PPP loan application to Kabbage, which

contained false information about average payroll expenses and number of employees, and then

using the subsequent loan proceeds for his personal benefit.

MANNER AND MEANS OF THE SCHEME AND ARTIFICE

4. The matter and means by which the defendant, KAREEM MEMON, sought to

accomplish the scheme and artifice to defraud included, among others, the following:

5. The PPP loan application submitted, or caused to be submitted, by KAREEM

MEMON for KSM included false and fraudulent tax documents and falsely and fraudulently

represented the borrowing entity's number of employees and amount of monthly payroll for 2019.

6. KAREEM MEMON stated in the PPP loan application that the fund s would be used to

retain workers and maintain payroll or make mortgage interest payments, lease payments, and utility

payments, as spec ified under the Paycheck Protection Program Rule.

7. As a result of the false and fraudulent representations made by the Defendant in

the PPP loan application submitted as part of this scheme, Kabbage disbursed PPP loan proceeds

to KSM's Wells Fargo business account ending in 3088 and controlled by KAREEM MEMON

in the amount of $386,954.00.

8. Having obtained PPP loan proceeds for KSM, KAREEM MEMO used

portions of the loan proceeds for expenses not authorized by the Paycheck Protection Program,

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Case 9:23-cr-80068-AHS Document 3 Entered on FLSD Docket 04/11/2023 Page 6 of 10

including electronically wire transferred portions of the loan proceeds to the IRS.

USE OF THE WIRES

9. On or about June 25, 2020, in Palm Beach County, in the Southern District of

Florida, and elsewhere, the defendant KAREEM MEMON, for the purpose of executing and in

furtherance of aforesaid scheme and artifice to defraud, and to obtain money and property by

means of materially false and fraudulent pretenses, representations, and promises, knowing that

the pretenses, representations, and promises were false and fraudulent when made, did knowingly

transmit and cause to be transmitted, by means of wire communication, certain writings, signs,

signals, pictures, and sounds, that is, an electronic transmission of a fraudulent PPP loan

application in the name of KSM Enterprises to Kabbage.

In violation of Title 18, United States Code, Section 1343.

COUNTS 2-3
Money Laundering
(18 u.s.c. § 1957)

1. The General Allegations section of this Indictment is re-alleged and incorporated

by reference as though fully set forth herein.

2. On or about the dates and in the County set forth in each count below, in the

Southern District of Florida, and elsewhere, the defendant,

KAREEM MEMON,

did knowingly engage in a monetary transaction by, through, and to a financial institution affecting

interstate commerce in criminally derived property of a value greater than $10,000, and such

property having been derived from a specified unlawful activity, knowing that the property

involved in the monetary transactions represented the proceeds of some form of specified unlawful

activity, that is, wire fraud , in violation of Title 18 United States Code, Section 1343.

6
Case 9:23-cr-80068-AHS Document 3 Entered on FLSD Docket 04/11/2023 Page 7 of 10

COUNT APPROXIMATE DESCRIPTION DESCRIPTION OF FINANCIAL
DATE OF OF COUNTY TRANSACTION
TRANSACTION
2 July 6, 2020 Broward Cash withdrawal in the amount of
$50,000, from KSM Wells Fargo
account ending in 3088, identified
with withdrawal receipt # 4057.
3 July 22, 2020 Broward Wire transfer of approximately
$288,102.00 from KSM Wells Fargo
account ending in 3088 to the United
States Internal Revenue Service.

In violation of Title 18, United States Code, Section 1957.

FORFEITURE ALLEGATIONS

l. The allegations of this Indictment are hereby realleged and incorporated by

reference for the purpose of alleging forfeiture to the United States of America of certain property

in which the defendant, KAREEM MEMON, has an interest.

2. Upon conviction of a violation of Title 18, United States Code, Section 1343, the

defendant shall forfeit to the United States any property constituting, or derived from, proceeds

obtained, directly or indirectly, as a result of such violation, pursuant to Title 18, United States

Code, Section 982(a)(2)(A).

3. Upon conviction of a violation of Title 18, United States Code, Section 1957, the

defendant shall forfeit to the United States any property, real or personal, involved in such offense,

and any property traceable to such property, pursuant to Title 18, United States Code, Section

982(a)(l).

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

defendant:

a. cannot be located upon the exercise of due diligence;

b. has been transferred or sold to, or deposited with, a third party;

7
Case 9:23-cr-80068-AHS Document 3 Entered on FLSD Docket 04/11/2023 Page 8 of 10

c. has been placed beyond the jurisdiction of the court;

d. has been substantially diminished in value; or

e. 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 982(a)(l) and 982(a)(2)(A) and the

procedures set forth at Title 21, United States Code, Section 853 , as incorporated by Title 18,

United States Code, Section 982(b)(l).

A TRUE BILL

TUNITED S ATTORNEY

8
Case 9:23-cr-80068-AHS Document 3 Entered on FLSD Docket 04/11/2023 Page 9 of 10
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA

UNITED STATES OF AMERICA CASE NO.: _ _ _ _ _ _ _ _ _ _ _ _ _ __

v.
CERTIFICATE OF TRIAL ATTORNEY
KAREEM MEMON,
Defendant. Superseding Case Information:
- - - - - - - - - - - - - -I NewDefend ant(s) (Yes or No)
---
Court Division (select one) Number of New Defendants
□ Miami □ Key West □ FTP Total number of counts
□ FTL i'EIWPB

I do hereby certify that:
1. I have carefully considered the allegations of the indictment, the number of defendants, the number of probable
witnesses and the legal complexities of the Indictment/Information attached hereto.
2. I am aware that the information supplied on this statement wi ll be relied upon by the Judges of this Court in setting
their calendars and scheduling criminal trials under the mandate of the Speedy Trial Act, Title 28 U.S .C. §316 1.

3. Interpreter: (Yes or No) No
---
List language and/or dialect:
------
4. This case will take _ 3_ days for the parties to try.

5. Please check appropriate category and type of offense li sted below:
(Check only one) (Check on ly one)
I !'El Oto 5 days □ Petty
II D 6 to 10 days D Minor
III D 11 to 20 days D Misdemeanor
IV □ 21 to 60 days IE] Felony
V D 61 days and over

6. Has this case been previously filed in this District Court? (Yes or No) _N_o_ _
If yes, Judge _ _ _ _ _ _ _ _ _ _ Case No. _ _ _ _ _ _ _ _ _ _ _ _ _ __
7. Has a comp la int been filed in this matter? (Yes or No) No
---
Ifyes, Magistrate Case No. _ _ _ _ _ _ _ _ _ _ __
8. Does this case relate to a previously filed matter in this District Co urt? (Yes or No) _ __
If yes, Judge _ _ _ _ _ _ _ _ _ _ Case No. _ _ _ _ _ _ _ _ _ _ _ _ _ __
9. Defendant(s) in federal custody as of _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
I 0. Defendant(s) in state custody as of _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
11. Rule 20 from the _ _ _ _ District of - - - - - - -
12. Is this a potential death penalty case? (Yes or No) _N_o_ _
13. Does this case originate from a matter pending in the Northern Region of the U.S. Attorney ' s Office
prior to August 8, 20 14 (Mag. Judge Shaniek Maynard? (Yes or No )N __o_ _
14. Does this case originate from a matter pending in the Central Region of the U.S. Attorney's Office
prior to October 3, 20 19 (Mag. Judge Jared Strauss? (Yes or No) No
---
15. Did this matter involve the participation of or consultation w ith now Magistrate Judge Eduardo I. Sanchez
during his tenure at the U.S. Attorney's Office, w hich concl ud ed on January 22, 2023? .N__o_ _

Assistant United States Attorney
FL Bar No . 0537837
Case 9:23-cr-80068-AHS Document 3 Entered on FLSD Docket 04/11/2023 Page 10 of 10

UNITED ST ATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA

PENAL TY SHEET

Defendant's Name: - - - - - - ~KAREEM
~ = =MEMON
~=~~--------------
Case No: - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Count#: 1

Wire Fraud

Title 18, United States Code Section 1343
*Max.Term oflmprisonment: 20 years' imprisonment
* Mandatory Min. Term oflmprisonment (if applicable): N/A
* Max.Supervised Release: 3 years' supervised release
* Max. Fine: $250,000 fine or twice the gross loss or gross gain, which cou ld be as much of
$902,308; and $ I 00 special assess ment; plus restitution
*
Cou nts# 2-3:

Engaging in Monetary Transactions in Criminall y Derived Property

Title 18, United States Code, Section I 957(a)
* Max.Term oflmprisonment: 10 years' impri so nment
* Mandatory Min. Term oflmprisonment (if applicable): N/A
* Max. Supervised Release: 3 years' supervised re lease
*Max.Fine: $250,000 fine or twice the va lue of the criminally derived property involved in the
transaction; and$ I QQ special assessment
Cou nt #:

* Max. Term of Imprisonment:
* Mandatory Min. Term of Imprisonment (if applicable):
*Max.Supervised Release:
*Max.Fine:

*Refers only to possible term of incarceration, supervised release and fines. It does not include
restitution, special assessments, parole term s, or forfeitures that may be applicable.

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