Information — United States v. Bennie Earl Magee, Eastern District of Virginia (Document 5)

Summary

An information filed May 26, 2023 as Document 5 in United States v. Bennie Earl Magee, Criminal No. 1:23-CR-91-CMH, in the U.S. District Court for the Eastern District of Virginia. It charges that from at least in or around April 2020 through at least in or about September 2021 the defendant prepared loan applications that inflated employee counts, payroll and revenues, submitted fictitious IRS tax returns with first draw PPP applications, and falsified TD Bank statements for loan forgiveness. It states the defendant applied for or assisted with 26 PPP loans across 17 entities, for which the SBA paid $270,092.71 in processing fees to TD Bank. Count 1 charges wire fraud under Title 18, United States Code, Sections 1343 and 2, over an EIDL application for Infinity Solutions Group, LLC claiming 15 employees and $1,944,804 in 2019 revenue. The forfeiture notice seeks at least $5,292,944.

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  Case 1:23-cr-00091-CMH Document 5 Filed 05/26/23 Page 1 of 6 PageID# 8


                                                                                      IN OPEN COURT


                    IN THE UNITED STATES DISTRICT COURT FOR FHI

                               EASTERN DISTRICT OF VIRGINIA
                                                                            '             UlSrRICT COURT
                                                                                  ALEXANDRIA. VIRRiMiii
                                       Alexandria Division

UNITED STATES OF AMERICA
                                                       Criminal No. 1:23-CR-91-CMH
               V.

                                                     Count 1: 18U.S.C. § 1343
BENNIE EARL MAGEE,                                   (Wire Fraud)

               Defendant.
                                                     Forfeiture Notice



                                        INFORMATION

                                             Count I


                                          (Wire Fraud)

THE UNITED STATES ATTORNEY CHARGES THAT:


       At all times relevant to this Information:

       1.       Defendant BENNIE EARL MAGEE("the defendant" or "MAGEE")resided and

worked in Manassas, in the Eastem District of Virginia, where he maintained a home office as

well as a business location.


       2.      MAGEE controlled numerous companies that had been incorporated in Virginia,

including but not limited to, INFINITY SOLUTIONS GROUP,LLC.

       3.      As further described below, MAGEE submitted COVID-19 relief loan

applications for his own business entities and for entities belonging to Individuals M.G. and J.S.,

to a financial institution and to the Small Business Administration ("SBA").

       4.      MAGEE's entities and the entities of M.G. and J.S. had bank accounts at TD


Bank, a federally insured financial institution as defined in 18 U.S.C. § 20.
   Case 1:23-cr-00091-CMH Document 5 Filed 05/26/23 Page 2 of 6 PageID# 9




                                    EIDL and PPP Programs

       5.       In response to the economic crisis caused by the coronavirus pandemic, the SBA

made government-guaranteed loans available to qualified small businesses through the Economic

Injury Disaster Loan("EIDL")program. The purpose ofEIDLs was to enable small businesses to

meet financial obligations and operating expenses in light ofthe pandemic. To qualify for an EIDL,

an applicant had to meet certain criteria, including, among other things, that it was in operation

prior to the pandemic, and had regular operating expenses, which the applicant would have paid if

not for the pandemic. Moreover, the amount of the loan that could be approved under the EIDL

program typically was a function of the applicant's working capital. The proceeds of an EIDL

could be used for working capital and normal operating expenses.

       6.       Also, in response to the economic crisis caused by the novel coronavirus

pandemic, in or around March 2020, Congress made government-guaranteed loans available to

qualified small businesses through the Paycheck Protection Program ("PPP"). The purpose of

loans issued under the PPP was to enable small businesses suffering from the economic downturn

to continue to pay salary or wages to their employees. Eligible businesses seeking a loan under the

PPP could apply for such a loan through a federally insured depository institution. To qualify for

a loan under the PPP,an applicant had to meet certain criteria, including, among other things, that

it was in operation on February 15, 2020, and either had employees for whom it paid salaries and

payroll taxes or paid independent contractors, as reported on an IRS Form 1099-MISC. Moreover,

the amount of the loan that could be approved under the PPP and implementing regulations

typically was a function ofthe applicant's historical payroll costs.

       7.       The proceeds ofa PPP loan could be used only for certain specified items, such as

payroll costs, costs related to the continuation of group health care benefits, mortgage interest
  Case 1:23-cr-00091-CMH Document 5 Filed 05/26/23 Page 3 of 6 PageID# 10




payments(but not mortgage prepayments or principal payments), rent payments, utility payments,

interest payments on debt obligations that were incurred before February 15, 2020, or for

refinancing certain specified SBA loans.

          8.     Second round or "second draw" PPP loans were made available by 2021. Among

other things,second draw PPP loans required showing continued payment of payroll to employees.

For loans over $150,000, applicants were required to show a decline in quarterly revenue from

2019 to 2020 of at least 25%.


          9.     The SBA paid lenders a processing fee of 1-5% on all PPP loans, with the

percentage based on the size ofthe loan, as compensation. Once TD Bank approved and disbursed

a PPP loan to MAGEE,the SBA paid the lender a processing fee of 1-5% based on the amount of

the loan.In total, MAGEE applied for or assisted in the application process for 26 PPP loans across

17 entities. The SBA paid $270,092.71 in processing fees to TD Bank for these 26 loans.

          10.    Recipients of PPP loans could then apply for loan forgiveness, which would

forgive the entire loan balance upon a showing by the borrower of appropriate use of the PPP

funds. Loans not forgiven were subject to repayment. The SBA guaranteed 100% of the

outstanding loan balance, and that guarantee was backed by the full faith and credit ofthe United

States.


                        The Scheme to Defraud and Its Manner and Means

          11.   From at least in or around April 2020 through at least in or about September 2021,

in the Eastern District of Virginia and elsewhere, the defendant did knowingly in connection

with COVID-19 relief loan applications, apply for in the name of various business entities, devise

and participate in a scheme and artifice to defraud a financial institution and the SBA,and to
  Case 1:23-cr-00091-CMH Document 5 Filed 05/26/23 Page 4 of 6 PageID# 11




obtain money and property from them by means of materially false pretenses, representations,

and promises, through the use ofthe interstate wires.

       12.     In furtherance ofthe scheme, MAGEE would prepare first draw and second draw

PPP loan applications that he would submit online to a financial institution and the SBA from his

home office in Manassas, Virginia.

       13.     On loan applications, MAGEE would materially inflate the numbers of employees

each entity had, falsify quarterly and annual payroll expenses, and falsify annual revenues for

each company.

       14.     MAGEE would create and submit to the lender fictitious IRS tax returns and

payroll documents in support ofthe first draw PPP loan applications. The falsified tax returns

would be backdated, bear signatures of MAGEE and Individuals M.G. and J.S., as needed, and

contain fabricated and falsified information concerning numbers ofemployees paid, withholding

taxes withheld and paid, and total payroll.

       15.     MAGEE would seek loan forgiveness for the entities by falsely certifying that the

PPP money had been used either solely for payroll or solely for other authorized purposes such

as payroll, rent and utilities. MAGEE would inflate the number of employees supposedly

receiving payroll for each entity on the loan forgiveness applications. In some instances,

MAGEE would fabricate false documentation to show that funds were used as required by the

program. MAGEE falsified TD Bank statements to show that PPP loan funds were used for rent

or utilities and supplied updated false payroll summary documents.

        16.    It was an object of the scheme to obtain EIDL and PPP loans for the purpose of

investing in crypto currency ventures and to spend the money on purposes not authorized by the

PPP and EIDL programs, respectively.
  Case 1:23-cr-00091-CMH Document 5 Filed 05/26/23 Page 5 of 6 PageID# 12




                                     Execution ofthe Scheme

       17.     For the purpose of executing the aforementioned scheme and artifice to defraud

and attempting to execute such scheme,the defendant,

                                   BENNIE EARL MAGEE,

did knowingly transmit and cause to be transmitted writings, signs, signals, and sounds by means

of wire communications in interstate and foreign commerce,to wit: the defendant, using a

computer in the Eastern District Virginia, applied online to the SBA's portal via a server located

outside the Commonwealth of Virginia, for an EIDL on behalf ofINFITITY SOLUTIONS

GROUP,LLC.,falsely representing the material facts that the entity had 15 employees in 2019

and $1,944,804 in gross 2019 revenue, when in truth and in fact, as the defendant well knew

then, the entity had few if any employees and actual revenues were far below what he

represented.

       (All in violation of Title 18, United States Code, Sections 1343 and 2.)
  Case 1:23-cr-00091-CMH Document 5 Filed 05/26/23 Page 6 of 6 PageID# 13




                                     FORFEITURE NOTICE


       Pursuant to Federal Rule of Criminal Procedure 32.2(a), Defendant BENNIE EARL

MAGEE is hereby notified that, ifconvicted ofwire fraud as alleged in Count 1 ofthis Information,

the Defendant shall forfeit to the United States, pursuant to 18 U.S.C.§ 982(a)(2)(A), any property

constituting, or derived from, proceeds obtained directly or indirectly, as a result of the violation

in Count One. If any property that is subject to forfeiture is not available, it is the intention ofthe

United States to seek an order forfeiting substitute assets pursuant to 21 U.S.C. § 853(p) and Fed.

R. Crim. P. 32.2(e). The property subject to forfeiture includes but is not limited to the following:

a sum of money equal to at least $5,292,944 in United States currency,representing the amount of

proceeds obtained as a result ofthe offense in Count One.

(In accordance with Title 18, United States Code, Section 982(a)(2)(A); and Rule 32.2(a), Federal

Rules of Criminal Procedure.)




                                                   Jessica D. Aber
                                                   United States Attorney



                                                   Russell L. Carlberg
                                                   Assistant United States Attorney


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