Indictment — United States v. Obinna Nwafor, Eastern District of Virginia (Document 3)

Summary

A sealed indictment against Obinna Nwafor, Case 4:23-cr-00021-RCY-LRL, filed March 13, 2023 as Document 3 in the U.S. District Court for the Eastern District of Virginia, Newport News Division. Count 1 charges conspiracy to commit wire and mail fraud under 18 U.S.C. § 1349, Counts 2 and 3 charge wire fraud under 18 U.S.C. §§ 1343 and 2, and Count 4 charges mail fraud under 18 U.S.C. §§ 1341 and 2. The indictment alleges that beginning in or about at least June 2020 and continuing through in or about November 2020 conspirators used stolen identities to obtain Economic Injury Disaster Loans for fictitious businesses, and that EIDL proceeds of $149,900 were deposited on August 6, 2020 and July 14, 2020 into HSBC and Citibank accounts associated with Nwafor. It alleges funds then moved to a joint Bank of America account of Nwafor and to a Nigerian entity in which Nwafor has an interest.

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Case 4:23-cr-00021-RCY-LRL Document 3 Filed 03/13/23 Page 1 of 13 PagelD# 4

FILED
IN OPEN COURT ©

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA MAR | 3i
Newport News Division
CLERK, U.S. DISTRICT COURT

UNITED STATES OF AMERICA FILED UNDER SEAL == EWSVA

v. CRIMINAL NO. 4:23-cr-a-4

OBINNA NWAFOR, 18 U.S.C. § 1349

Conspiracy to Commit Wire and Mail Fraud
Defendant. (Count 1)

18 U.S.C. §§ 1343 and 2
Wire Fraud

(Counts 2 and 3)

18 U.S.C. §§ 1341 and 2
Mail Fraud
(Count 4)

18 U.S.C. § 981 and
28 U.S.C. § 2461
Criminal Forfeiture

INDICTMENT

March 2023 Term — at Newport News, Virginia

GENERAL ALLEGATIONS

1. The United States Small Business Administration (SBA) is an executive-branch
agency of the United States government that provides support to entrepreneurs and small
businesses. The mission of the SBA is 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 enables and provides for loans through banks,
credit unions, and other lenders. These loans have government-backed guarantees. In addition

to traditional SBA funding programs, the CARES Act, which was signed into law in March
Case 4:23-cr-00021-RCY-LRL Document 3 Filed 03/13/23 Page 2 of 13 PagelD# 5

2020, established several new temporary programs and provided for the expansion of others to
address the COVID-19 pandemic.

3. Relevant here, the CARES Act expanded the SBA’s long-standing Economic
Injury Disaster Loan Program (EIDL) to provide for loan assistance (including $10,000.00
advances) for small businesses and other eligible entities for loans up to $2 million. The EIDL
proceeds can be used to pay fixed debts, payroll, accounts payable, and other bills that could
have been paid had the disaster not occurred. Such loan proceeds, however, are not intended to
replace lost sales or profits or for expansion of the business.

4. Unlike certain other types of SBA-guaranteed loans, EIDL funds are issued
directly from the United States Treasury and applicants apply through the SBA via an online
portal and application. The EIDL application process, which uses certain outside contractors for
system support, collects information concerning the business itself, such as gross revenues and
the cost of goods sold for the business prior to January 31, 2020. The application also collects
certain personally identifiable information (PII) of the business owner, including the business
owner’s full legal name, social security number, address, and telephone number. Prior to
submitting an EIDL application, the applicant must electronically certify that the information
provided is accurate and is warned that any false statement or misrepresentation to the SBA or
any misapplication of loan proceeds may result in sanctions, including criminal penalties.

5. Once the SBA authorizes a loan under the EIDL program, the applicant is
required to take certain steps before the loan proceeds are disbursed. Among other actions, the
applicant is required to confirm the information for the bank account into which the loan
proceeds are to be deposited, to include the bank name, routing number, account type, and

account number. In addition, the applicant is required to sign SBA-generated loan documents
Case 4:23-cr-00021-RCY-LRL Document 3 Filed 03/13/23 Page 3 of 13 PagelD# 6

that set forth the terms and conditions of the loan. These documents include a Loan
Authorization and Agreement, a Note, and a Security Agreement.

6. For EIDL loans greater than $25,000, the Loan Authorization and Agreement
requires the applicant (referred to as the “Borrower” in the loan documents) to grant the SBA a
continuing security interest in any and all “Collateral,” which is defined in the Loan
Authorization and Agreement as “all tangible and intangible personal property.” In other words,
loans in excess of $25,000 funded under the EIDL program are expressly conditioned upon the
loan being secured by the borrower’s personal property.

7. The Security Agreement, in turn, formalizes the security interest granted by the
borrower to the SBA. Among other things, the Security Agreement expressly contemplates that
the SBA will take steps to “perfect” its security interest. Specifically, the Security Agreement
provides that the Borrower consents to the “filing or recording or any documents necessary to
perfect . . . [the] security interest.”

8. The general rule in the Commonwealth of Virginia, subject to certain statutory
exceptions, is that a security interest is perfected by the filing of a Uniform Commercial Code
(UCC) financing statement. The State Corporation Commission’s Clerk’s Office, located in
Richmond, Virginia, is designated as the central filing office for UCC documents, and UCC
financing statements may be filed with that office online through the Clerk’s Information System
or by mail.

9. In or about September 2020, L.H., a resident of Norfolk, Virginia, learned that an
EIDL loan had been fraudulently obtained in her name when she received a statement from the

SBA at her home address, advising her that the first payment on an EIDL loan obtained in her
Case 4:23-cr-00021-RCY-LRL Document 3 Filed 03/13/23 Page 4 of 13 PagelD# 7

name was due in August 2021. L.H. had not applied for a loan under the EIDL program, nor did
she own a small business to be eligible for such a loan.

10. On August 4, 2020, an application for an EIDL loan in the amount of $150,000
was submitted to the SBA, using L.H.’s name, social security number, address, phone number,
and date of birth—all of did, in fact, belong to L-H.. A Loan Authorization and Agreement,
Note, and Security Agreement were electronically signed using L-H.’s name on August 4, 2020.
Thereafter, loan proceeds in the amount of $149,900 were disbursed to an HSBC bank account
ending in 6096 on August 6, 2020. L.H. did not use HSBC for banking needs and did not
receive any of the money from the loan.

11. On August 15, 2020, shortly after the LH. EIDL loan was funded, Corporation
Service Company, a third-party provider of UCC filing services, electronically filed a UCC
financing statement with the Virginia State Corporation Commission, which listed L.H. as the
“debtor,” and the SBA as the “secured party.” In addition, the financing statement included the
SBA loan number assigned to the loan that was obtained using L.H.’s information.

12. Further investigation revealed a number of related EIDL loans that had been
fraudulently obtained. An application for one such loan was submitted to the SBA on or about
July 8, 2020, using the business name “Kerrido G. Farms” and the personal information of K.G.,
a resident of Burke, Virginia, who was identified as the business owner. The application sought
an EIDL loan in the amount of $150,000.

13. The name, date of birth, social security number, and address used on the loan
application were correct and belonged to K.G., but K.G. did not apply for the loan, nor did K.G.
authorize anyone to obtain a loan on K.G.’s behalf. In addition, K.G. does not own or work at a

business named “‘Kerrido G. Farms.”
Case 4:23-cr-00021-RCY-LRL Document 3 Filed 03/13/23 Page 5 of 13 PagelD# 8

14. A Loan Authorization and Agreement, Note, and Security Agreement were
electronically signed using K.G.’s name on July 11, 2020, and EIDL loan proceeds in the amount
of $149,900 subsequently were deposited into a Citibank bank account ending in 9505 on July
14, 2020.

15. On July 21, 2020, Corporation Service Company electronically filed a UCC
financing statement with the Virginia State Corporation Commission, listing K.G. as the
“debtor,” and the SBA as the “secured party.” The financing statement includes the SBA loan
number assigned to the loan that was obtained using K.G.’s information. K.G. did not receive
any of the money from the loan and was unaware of the loan and the financing statement..

16. ‘The investigation further revealed that both the HSBC bank account ending in
6096 (the account in which the funds from the L.H. loan were deposited) and the Citibank bank
account ending in 9505 (the account in which the funds from the K.G. loan were deposited) are
accounts associated with OBINNA NWAFOR, the defendant herein.

17. Within just days after the EIDL loan proceeds were deposited into the HSBC
bank account ending in 6096, a number of large withdrawals and transfers were made from that
account. Notably, approximately $59,000 was transferred from the HSBC account to a Bank of
America held jointly by NWAFOR and his spouse. In addition, nearly $50,000 was transferred
to a bank account held in the name of a Nigerian entity in which NWAFOR holds an interest.

18. Similarly, within days after the EIDL loan proceeds were deposited into the
Citibank bank account ending in 9505, $45,600 was transferred to the same Bank of America
account referenced above, and nearly $40,000 was transferred to the same bank account of the

Nigerian entity referenced above.
Case 4:23-cr-00021-RCY-LRL Document 3 Filed 03/13/23 Page 6 of 13 PagelD# 9

COUNT ONE
(Conspiracy to Commit Wire and Mail Fraud)

THE GRAND JURY CHARGES THAT:

1. The factual allegations contained in the General Allegations Section are
incorporated herein by reference as if set out in full.

2. Beginning in or about at least June 2020 and continuing through in or about
November 2020, OBINNA NWAFOR, the defendant herein, and other conspirators, both known
and unknown to the Grand Jury, did knowingly and willfully combine, conspire, confederate,
and agree with each other and others known and unknown to the Grand Jury, to commit the
following offenses against the United States:

a. To knowingly devise and intend to devise a scheme and artifice to defraud
for obtaining money and property by means of materially false and fraudulent pretenses,
representations, and promises, for which the defendant and conspirators caused to be transmitted
by means of wire communication in interstate commerce certain writings, signs, and signals, for
the purpose of executing the scheme and artifice, in violation of Title 18, United States Code,
Section 1343; and

b. To devise and intend to devise a scheme and artifice to defraud for
obtaining and property by means of false and fraudulent pretenses, representations, and
promises, for which the defendant and conspirators knowingly caused to be delivered by mail
according to the direction thereon, in violation of Title 18, United States Code, Section 1341.

WAYS, MANNER, AND MEANS OF THE CONSPIRACY

The ways, manner, and means by which the foregoing objectives of the conspiracy to
commit wire and mail fraud were to be accomplished included, but were not limited to, the

following:
Case 4:23-cr-00021-RCY-LRL Document 3 Filed 03/13/23 Page 7 of 13 PagelD# 10

3. The primary purpose of the conspiracy and the scheme and artifice was for
NWAFOR and the conspirators to obtain funds through fraudulent means by procuring loans
from the SBA’s EIDL program using stolen identities and directing the SBA to disburse the
proceeds of those loans into accounts controlled by a conspirator, so that the conspirators could
convert the loan proceeds for their own use and benefit.

4. It was part of the conspiracy and the scheme and artifice that the conspirators
unlawfully obtained the personal information of multiple individuals, including but not limited to
full legal names, social security numbers, home addresses, and personal phone numbers.

5. It was further part of the conspiracy and the scheme and artifice that the
conspirators submitted fraudulent applications for EIDL loans to the SBA, and on each
application would identify one of the individuals whose personal information was unlawfully
obtained by the conspirators as the purported owner of a fictitious business.

6. It was further part of the conspiracy and the scheme and artifice that the
conspirators, given that the business did not exist, would provide false information regarding the
business, such as total revenues and costs of goods sold.

7. It was further part of the conspiracy and the scheme and artifice that the
conspirators would cause the SBA to authorize and fund fraudulent EIDL loans.

8. It was further part of the conspiracy and the scheme and artifice that the
conspirators, after the SBA authorized a fraudulent EIDL loan application, would identify a bank
account that was connected to one of the conspirators as the account into which the EIDL loan
proceeds were to be deposited.

9. It was further part of the conspiracy and the scheme and artifice that the

conspirators, after the SBA authorized a fraudulent EIDL loan application, would fraudulently
Case 4:23-cr-00021-RCY-LRL Document 3 Filed 03/13/23 Page 8 of 13 PagelD# 11

electronically sign the standard SBA-generated loan documents, to include the Loan
Authorization and Agreement, Note, and Security Agreement, using the electronic signature of
the purported borrower.

10. ‘It was further part of the conspiracy and the scheme and artifice that the
conspirators, in executing the loan documents, would cause a security interest to attach to the
purported borrower’s personal property.

11. ‘It was further part of the conspiracy and the scheme and artifice that the
conspirators would cause the SBA, or a third-party entity acting on its behalf, to electronically
transmit UCC financing statements to the Eastern District of Virginia, from a location outside the
Commonwealth of Virginia, in an effort to perfect the purported security interest.

12. __ It was further part of the conspiracy and the scheme and artifice that the
conspirators would cause the SBA to disburse EIDL loan proceeds to accounts controlled by a
conspirator.

13. It was further part of the conspiracy and the scheme and artifice that the
conspirators would use the EIDL loan proceeds for their own benefit.

14. It was further a part of the conspiracy and the scheme and artifice that the
conspirators caused the use of the United States mails.

(In violation of Title 18, United States Code, Sections 1349, 1341, and 1343.)
Case 4:23-cr-00021-RCY-LRL Document 3 Filed 03/13/23 Page 9 of 13 PagelD# 12

COUNTS TWO AND THREE
(Wire Fraud)

THE GRAND JURY FURTHER CHARGES THAT:

1. The Grand Jury realleges and incorporates by reference the allegations contained
in the General Allegations Section and in Paragraphs 2 through 13 of the Ways, Manner and
Means Section of Count One as if fully set forth herein.

2. From in or about at least June 2020, through in or about at least November 2020,
in the Eastern District of Virginia and elsewhere, OBINNA NWAFOR, the defendant herein,
aided and abetted by others and along with others known and unknown to the Grand Jury, with
the intent to defraud, willfully participated in, with knowledge of its fraudulent nature, the
above-described scheme and artifice to defraud and obtain money and property by means of
materially false, fraudulent and fictitious pretenses, representations, and promises.

3. On or about the dates set forth below, for the purpose of executing the aforesaid
scheme and artifice to defraud and to obtain money and property by means of materially false
and fraudulent pretenses, representations, and promises, in the Eastern District of Virginia and
elsewhere, OBINNA NWAFOR, the defendant herein, aided and abetted by others and along
with others known and unknown to the Grand Jury, did knowingly and willfully cause to be
transmitted by means of wire communication in interstate commerce, certain writings, signs, and
signals, as set forth in the table below, to or through computers and terminals in the Eastern
District of Virginia from or through computers and terminals located outside the Commonwealth

of Virginia.
Case 4:23-cr-00021-RCY-LRL Document 3 Filed 03/13/23 Page 10 of 13 PagelD# 13

Date of Wire Transmission Description of
(on or about) Wire Transmission
The Corporation Service Company, from Springfield,
Illinois, on behalf of the SBA, electronically
2 August 15, 2020 transmitted a UCC financing statement to the
Virginia State Corporation Commission’s Office of
the Clerk, located in Richmond, Virginia.
The Corporation Service Company, from Springfield,
Illinois, on behalf of the SBA, electronically
3 July 21, 2020 transmitted a UCC financing statement to the
Virginia State Corporation Commission’s Office of
the Clerk, located in Richmond, Virginia.

Count

(In violation of Title 18, United States Code, Sections 1343 and 2.)

10
Case 4:23-cr-00021-RCY-LRL Document 3 Filed 03/13/23 Page 11 of 13 PagelD# 14

COUNT FOUR
(Mail Fraud)

THE GRAND JURY FURTHER CHARGES THAT:

1. The Grand Jury realleges and incorporates by reference the General Allegations
Section and the allegations contained in Paragraphs 2 through 13 of the Ways, Manner and
Means Section of Count One as if fully set forth herein.

2. From in or about at least June 2020, through in or about at least November 2020,
in the Eastern District of Virginia and elsewhere, OBINNA NWAFOR, the defendant herein,
aided and abetted by others and along with others known and unknown to the Grand Jury, with
the intent to defraud, willfully participated in, with knowledge of its fraudulent nature, the
above-described scheme and artifice to defraud and obtain money and property by means of
materially false, fraudulent and fictitious pretenses, representations, and promises.

3. On or about September 21, 2020, in the Eastern District of Virginia, for the
purpose of executing the above-described scheme and artifice to defraud and deprive, the
defendant knowingly caused to be delivered by U.S. mail according to the direction thereon, the
following matter or thing: A statement dated September 16, 2020, regarding the fraudulent
EIDL loan obtained using L.H.’s personal information, addressed to L.H. and delivered at the
mailing address of **** Norway Place, Norfolk, Virginia 23509.

(In violation of Title 18, United States Code, Sections 1341 and 2).

11
Case 4:23-cr-00021-RCY-LRL Document 3 Filed 03/13/23 Page 12 of 13 PagelD# 15

FORFEITURE

THE GRAND JURY FURTHER FINDS PROBABLE CAUSE THAT:

1. The defendant, if convicted of any of the violations alleged in this Indictment, shall
forfeit to the United States, as part of sentencing pursuant to Federal Rule of Criminal ‘Procedure
32.2, any property, real or personal, which constitutes or is derived from proceeds traceable to the
violation.

2. If any property that is subject to forfeiture above is not available, it is the intention
of the United States to seek an order forfeiting substitute assets pursuant to Title 21, United States
Code, Section 853(p) and Federal Rule of Criminal Procedure 32.2(e).

(In accordance with Title 18, United States Code, Sections 981(a)(1)(C) and Title 28,
United States Code, Section 2461.)

12
Case 4:23-cr-00021-RCY-LRL Document 3 Filed 03/13/23 Page 13 of 13 PagelD# 16

Pursuant to the E-Government Act,
the original of this page has been filed
under seal in the Clerk's Office.

UNITED STATES v. OBINNA NWAFOR
4:23-cr-_21

A TRUE BILL:

REDACTED COPY

FOREPERSON

Jessica D. Aber
United States Attorney

William J. H6nier

Assistant United States Attorney
Attorney for the United States

721 Lakefront Commons, Suite 300
Newport News, VA 23606

Phone: (757) 591-4000

Fax: (757) 591-0866

Email: william.homer@usdoj.gov

Brian J. Samuels

Assistant United States Attorney
Virginia State Bar # 65898
Fountain Plaza Three, Suite 300
721 Lakefront Commons
Newport News, Virginia 23606
Tel. (757) 591-4000

Fax: (757) 591-0866

13


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