Indictment — United States v. Reginald Dewayne Rhodes Jr., Northern District of Alabama (Document 1)
Summary
The indictment in United States v. Reginald Dewayne Rhodes Jr., No. 7:23-cr-00309-LSC-GMB, in the U.S. District Court for the Northern District of Alabama, Western Division, filed August 29, 2023 as Document 1. Count One charges wire fraud under 18 U.S.C. §§ 1343 and 2. The grand jury alleges that from no later than April 2021 through June 2021 the defendant claimed to own and operate a small business that was nonoperational and submitted a PPP application with fabricated tax records and bank statements. The charged wire is an $11,770 transfer from Lender 1, an SBA-approved lender headquartered in Florida, into the defendant's Alabama bank account on June 4, 2021. The forfeiture notice seeks a money judgment of at least $11,770.
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“Indictment — United States v. Reginald Dewayne Rhodes Jr., Northern District of Alabama (Document 1).”
Original at ecf.alnd.uscourts.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/indictment-usa-v-rhodes-dkt-1-6831c7d2ad/
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Case 7:23-cr-00309-LSC-GMB Document 1 Filed 08/29/23 Page 1 of 7 FILED
2023 Aug-31 AM 10:37
U.S. DISTRICT COURT
N.D. OF ALABAMA
PFE/JRH: September 2023
GJ # 33
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
WESTERN DIVISION
UNITED STATES OF AMERICA )
) Case No.:
v. )
)
REGINALD DEWAYNE RHODES JR. )
INDICTMENT
The Grand Jury charges that:
COUNT ONE
18 U.S.C. §§ 1343 and 2
Introduction
At all times relevant to this Indictment:
1. The defendant resided in Tuscaloosa County within the Northern
District of Alabama.
2. 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.
3. The SBA enabled and provided for loans through banks, credit unions,
and other lenders. These loans had government-backed guarantees. In addition to
traditional SBA funding programs, The Coronavirus Aid, Relief, and Economic
Case 7:23-cr-00309-LSC-GMB Document 1 Filed 08/29/23 Page 2 of 7
Security (“CARES”) Act established several new temporary programs and provided
for the expansion of others to address the COVID-19 pandemic, which was declared
a nationwide disaster by the President on March 13, 2020.
4. One of the new programs was the SBA Paycheck Protection Program
(“PPP”), which was a loan designed to provide a direct incentive for small businesses
to keep their workers on the payroll. Under this program, the SBA could forgive all
or part of loans if employees were kept on the payroll for eight weeks and borrowers
submitted documentation confirming the loan proceeds were used for certain
qualifying business expenses (i.e., payroll, rent, mortgage interest, or utilities).
5. Interested applicants applied through an existing SBA lender or any
other participating federally insured financial institution. The PPP application
process required applicants to submit a Borrower Application Form through an
SBA-approved financial entity. The application contained information as to the
purpose of the loan, average monthly payroll, number of employees, and background
of the business and its owner. Applicants were also required to submit
documentation supporting their representations about the business. Those applying
for PPP loans as sole proprietors or self-employed individuals would often include
2019 IRS Form 1040 Schedule C (“Profit or Loss From Business”) with their
application as evidence of the profits and losses from the year prior to the COVID-
2
Case 7:23-cr-00309-LSC-GMB Document 1 Filed 08/29/23 Page 3 of 7
19 pandemic and to demonstrate that the business was a going concern as of
February 15, 2020, a loan application requirement.
6. Applicants were also required to make certain good faith certifications
and representations, including that the business was in operation on February 15,
2020, economic uncertainty had necessitated their loan requests for continued
business operations, and that they intended to use the loan proceeds only for the
authorized purposes. Applicants were also required to certify that the information
provided in the application and all supporting documentation is true and correct in
all material respects and that knowingly making a false statement to obtain the loan
is punishable under federal law.
7. Upon receipt and processing of a PPP loan application by an SBA-
approved lender, the SBA created a loan number which was, in turn, transmitted
from SBA servers in Sterling, VA to the SBA-approved lender.
8. “Lender 1” was an SBA-approved PPP lender headquartered in Florida.
The Scheme and Artifice
9. Beginning on an unknown date, but no later than in or around April
2021 and continuing through in or around June 2021, in the Northern District of
Alabama and elsewhere, the defendant,
3
Case 7:23-cr-00309-LSC-GMB Document 1 Filed 08/29/23 Page 4 of 7
REGINALD DEWAYNE RHODES JR.,
knowingly devised and intended to devise a scheme and artifice to defraud, and to
obtain money and property by means of materially false and fraudulent pretenses,
representations, and promises.
Manner and Means of the Scheme and Artifice
10. The manner and means by which the defendant sought to accomplish
the scheme to defraud included, among others, the following:
a. It was a part of the scheme and artifice that the defendant would
and did purport to own and operate a small business when in fact the business was
nonoperational.
b. It was further a part of the scheme and artifice that, to induce the
SBA and financial institutions to fund PPP loans for the nonoperational business,
the defendant would and did prepare and submit, and cause to be prepared and
submitted, in interstate commerce, false and fraudulent applications to financial
institutions and the SBA that included materially false and fraudulent representations
and pretenses, such as:
i. including fraudulent supporting documentation, such as
fabricated and misleading tax records and bank statements;
ii. making false certifications regarding his eligibility to
apply for a PPP loan and the operation of the business; and
4
Case 7:23-cr-00309-LSC-GMB Document 1 Filed 08/29/23 Page 5 of 7
iii. affirming the truth of the statements and supporting
documentation in the application.
c. It was further a part of the scheme and artifice that the defendant
would and did cause federally insured financial institutions to send PPP loan
proceeds via interstate wire transfers.
d. It was further a part of the scheme and artifice that the defendant
would and did perform acts and make statements to promote and achieve the object
for the scheme and artifice to misrepresent, hide, and conceal, and cause to be
misrepresented, hidden, and concealed, the purpose of the scheme and artifice and
the acts committed in furtherance thereof.
The Wire Communications
11. On or about June 4, 2021, in the Northern District of Alabama and
elsewhere, the defendant, REGINALD DEWAYNE RHODES JR., for the
purpose of executing the above-described scheme and artifice and attempting to do
so, did cause to be transmitted in interstate commerce, by means of a wire
communication, certain signs and signals, specifically an $11,770 wire from Lender
1 into the defendant’s bank account in Alabama.
All in violation of 18 U.S.C. §§ 1343 and 2.
5
Case 7:23-cr-00309-LSC-GMB Document 1 Filed 08/29/23 Page 6 of 7
NOTICE OF FORFEITURE
12. The allegations contained in Count One are incorporated by reference
for the purpose of alleging forfeiture pursuant to 18 U.S.C. § 981(a)(1)(C) and 28
U.S.C. § 2461(c).
13. Upon conviction of a violation of 18 U.S.C. § 1343, the defendant shall
forfeit to the United States, pursuant to 18 U.S.C. § 981(a)(1)(C) and 28 U.S.C.
§ 2461(c), any property, real or personal, which constitutes or is derived from
proceeds traceable to the violation.
14. The property to be forfeited includes, but is not limited to, a money
judgment of at least $11,770, representing the proceeds obtained from the offense.
15. If any of the property described above, because 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;
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,
6
Case 7:23-cr-00309-LSC-GMB Document 1 Filed 08/29/23 Page 7 of 7
the United States shall be entitled to forfeiture of substitute property pursuant to 21
U.S.C. § 853(p), as incorporated by 28 U.S.C. § 2461(c).
A TRUE BILL
/s/ Electronic Signature
FOREPERSON OF THE GRAND JURY
PRIM F. ESCALONA
United States Attorney
/s/ Electronic Signature
JONATHAN “JACK” HARRINGTON
Assistant United States Attorney
7
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