Information — United States v. Joseph M. Freeman, Western District of Washington (Document 1)

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A felony information filed by the United States Attorney against Joseph M. Freeman, Case No. 2:23-cr-00008-JLR, in the U.S. District Court for the Western District of Washington, filed January 24, 2023 as Document 1. Count 1 charges conspiracy to commit theft of government funds under Title 18, United States Code, Section 371, alleging a conspiracy to steal $646,000 in violation of Section 641. The information alleges that Freeman submitted fraudulent PPP applications for Special Delivery LLC, seeking $500,000 and claiming 15 employees and $200,000 in monthly payroll, and for New Jack Trucking LLC, seeking $146,000, supported by fake IRS forms. It alleges that Freeman obtained more than $640,000 and used the proceeds for unauthorized personal purposes, and it includes forfeiture allegations.

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Case 2:23-cr-00008-JLR Document1 Filed 01/24/23 Page 1 of 7

UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF WASHINGTON

AT SEATTLE
‘UNITED STATES OF AMERICA, NO. CR23-008.JLR
Vv. INFORMATION
(Felony)

JOSEPH M. FREEMAN,
Defendant.

The United States Attorney charges that:

At all times relevant to this Information:

Relevant Individuals and Entities’

1. Defendant JOSEPH M. FREEMAN was a resident of King County,
Washington.

2. Special Delivery LLC was a limited liability company that was formed in
approximately April 2004. According to Washington Secretary of State records, the
business of Special Delivery LLC was services. JOSEPH M. FREEMAN was the sole
owner of Special Delivery LLC. .

3. New Jack Trucking LLC was a limited liability company that was formed
in approximately April 2019. According to Washington Secretary of State records, the
business of New Jack Trucking LLC was construction.. JOSEPH M. FREEMAN was the

Information - | UNITED STATES ATTORNEY
United States v. Freeman 700 STEWART STREET, STE 5220
. SEATTLE, WASHINGTON 98101

USAO No. 2020R01064 (206) 553-7970
Case 2:23-cr-00008-JLR Document1 Filed 01/24/23 Page 2 of 7

sole owner of New Jack Trucking LLC.
The Paycheck Protection Program

4, The Coronavirus Aid, Relief, and Economic Security (CARES) Act was a
federal law enacted on March 27, 2020, and designed to provide emergency financial
assistance to the millions of Americans who were suffering the economic effects caused
by the COVID-19 pandemic. One source of relief provided by the CARES Act was the
authorization of up to $349 billion in government funding for forgivable loans to small
businesses for job retention and certain other expenses, through a program referred to as
the Paycheck Protection Program (PPP). In or around April 2020, Congress authorized
over $300 billion in additional PPP funding.

5. In order to obtain a PPP loan, a qualifying business was required to submit
a PPP loan application 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 in order to be
eligible to obtain the PPP loan. The PPP loan application required the business
representative to state that the business was in operation on February 15, 2020, and that it
had employees for whom it paid salaries and payroll taxes. 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 small business was eligible
to receive under the PPP. In addition, businesses applying for a PPP loan were required
to provide documentation showing their payroll expenses.

6. PPP loan applications were processed by a participating lender. Ifa PPP
loan application was approved, the participating lender funded the PPP loan using its own
monies, which were 100% guaranteed by the U.S. Small Business Administration (SBA).

Data from the application, including information about the borrower, the total amount of

UNITED STATES ATTORNEY

Information - 2:
United States vy. Freeman 700 STEWART STREET, STE 5220
. SEATTLE, WASHINGTON 98101

USAO No. 2020R01064 (206) 553-7970
—

Case 2:23-cr-00008-JLR Document1 Filed 01/24/23 Page 3 of 7

the loan, and the listed number of employees, was transmitted by the lender to the SBA in
the course of processing the loan.

7. PPP loan proceeds were required to be used by the business on certain
permissible expenses—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 the allowable expenses within a designated period of time and
used a certain percentage of the PPP loan proceeds on payroll expenses.

8. Lender 1 was an online money transfer business headquartered in Redwood
City, California. Lender 1 served as a broker between borrowers and Financial
Institution 1 and Financial Institution 2, which were both PPP lenders. Financial
Institution 1 was a Federal Deposit Insurance Corporation-insured bank headquartered in
Salt Lake City, Utah. Financial Institution 2 was a Federal Deposit Insurance
Corporation-insured bank headquartered in Fort Lee, New Jersey. As a broker, Lender 1
collected and provided loan applications to Financial Institution 1 and Financial
Institution 2 for funding once approved.

COUNT 1

(Conspiracy to Commit Theft of Government Funds)
9. The allegations in Paragraphs 1-8 are re-alleged and incorporated by
reference as if set forth in full herein.

A. The Conspiracy

10. Beginning in or around May 2020, and continuing until in or around June
2020, in King County, within the Western District of Washington, and elsewhere,
defendant JOSEPH M. FREEMAN, together with others known and unknown, did
conspire, confederate and agree, together and with each other, to commit an offense

against the United States. Specifically, FREEMAN, together with others known and

Information - 3 UNITED STATES ATTORNEY
United States v. Freeman 700 STEWART STREET, STE 5220
SEATTLE, WASHINGTON 98101

USAO No. 2020R01064 (206) 553-7970
Case 2:23-cr-00008-JLR Document1 Filed 01/24/23 Page 4 of 7

unknown, knowingly and willfully did steal and purloin $646,000 belonging to the
United States, in violation of Title 18 United States Code, Section 641.

11. The object of the conspiracy was for FREEMAN and his co-conspirators to
receive, conceal, and retain COVID-19 relief-related loan proceeds obtained under false
and misleading pretenses with intent to convert them to their use or gain, knowing them
to have been stolen or purloined.

12. To carry out the conspiracy, FREEMAN, together with his co-conspirators,
submitted and caused to be submitted two fraudulent PPP loan applications on behalf of

Special Delivery LLC and New Jack Trucking LLC for the following funds:

Entity Name Lender Loan Amount

Special Delivery LLC Lender 1/Financial Institution 1 $500,000

New Jack Trucking LLC Lender 1/Financial Institution 2 $146,000 -

13. FREEMAN, together with his co-conspirators, made materially false and
misleading statements in the PPP loan applications he submitted and caused to be
submitted. FREEMAN, together with his co-conspirators, made and caused to be made
the following false statemenits in Special Delivery LLC and New Jack Trucking LLC PPP
loan applications:

a. Special Delivery LLC had 15 employees for which it paid $200,000
in payroll each month. In fact, Special Delivery LLC had no employees other than
FREEMAN and no payroll obligations. | . ,

b. Fake IRS Forms 940 and 941, to make it appear that Special Delivery
LLC had employees as of February 15, 2020.

om New Jack Trucking LLC had been in operation as of February 15,
2020 and had employees for which it paid salaries and payroll taxes.

d. New Jack Trucking LLC had 10 employees for which it paid $58,400

Information - 4 UNITED STATES ATTORNEY
United States y. Freeman 700 STEWART STREET, STE 5220
. SEATTLE, WASHINGTON 98101

USAO No. 2020R01064 (206) 553-7970
Case 2:23-cr-00008-JLR Document1 Filed 01/24/23 Page 5 of 7

in payroll each month. In fact, New Jack Trucking LLC had no employees and no payroll
obligations.

e. Fake IRS Form 941 and a falsified bank statement, to make it appear
that New Jack Trucking LLC had employees as of February 15, 2020.

14. In total, FREEMAN stole and purloined more than $640,000 in government
funds through PPP loan proceeds. FREEMAN used the proceeds of the wrongfully
obtained PPP loans for unauthorized personal purposes. FREEMAN did not use PPP loan
proceeds for payroll.

B. Overt Acts

15. In furtherance of the conspiracy and to effect its object, in King County,
within the Western District of Washington and elsewhere, JOSEPH M. FREEMAN,
together with other individuals, committed and caused to be committed, among others,
the following overt acts, which are representative of the various overt acts undertaken in
furtherance of the conspiracy:

a. On or about May 19, 2020, FREEMAN caused and consented to the
submission of a fraudulent PPP loan application package to Lender 1 in support of a PPP
loan for Special Delivery LLC, seeking $500,000 belonging to the United States.

b. On or about June 15, 2020, FREEMAN caused and consented to the
submission of a fraudulent PPP loan application package to Lender | in support of a PPP
loan for New Jack Trucking LLC, seeking $146,000 belonging to the United States.

All in violation of Title 18, United States Code, Section 371.

| FORFEITURE ALLEGATIONS

The allegations contained in Count 1 of this Information are hereby realleged and
incorporated by reference for the purpose of alleging forfeiture. Upon conviction of the
offense alleged in Count 1, the defendant JOSEPH M. FREEMAN shall forfeit to the
United States, pursuant to Title 18, United States Code, Section 981(a)(1)(C), by way of

Information - 5 UNITED STATES ATTORNEY
United States v. Freeman 700 STEWART STREET, STE 5220
SEATTLE, WASHINGTON 98101

USAO No. 2020R01064 (206) 553-7970
Case 2:23-cr-00008-JLR Document1 Filed 01/24/23 Page 6 of 7

Title 28, United States Code, Section 2461(c), any property that constitutes or is traceable

to proceeds of the offense. This property includes, but is not limited to: -

1.

A sum of money reflecting the proceeds the defendant obtained from the

offense.

(Substitute Assets)

If any of the above-described forfeitable property, as a result of any act or

omission of the defendant,

a.
b.
d.

cannot be located upon the exercise of due diligence;

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

has been placed beyond the jurisdiction of the Court; .

has been substantially diminished in value; or

has been commingled with other property which cannot be divided without

difficulty;

it is the intent of the United States to seek the forfeiture of any other property of the

Information -6 — UNITED STATES ATTORNEY
United States v. Freeman 700 STEWART STREET, STE 5220
SEATTLE, WASHINGTON 98101

USAO No. 2020R01064 (206) 553-7970
Case 2:23-cr-00008-JLR Document1 Filed 01/24/23 Page 7 of 7

defendant, up to the value of the above-described forfeitable property, pursuant to Title

21, United States Code, Section 853(p).

DATED this u4 day of January, 2023.

Sarat. 6, Vogel, for
NICHOLAS W. BROWN
United States Attorney

ANDREW C. FRIEDMAN
Assistant United States Attorney

CINDY CHANG
Assistant United States Att

Information - 7
United States vy. Freeman
USAO No. 2020R01064

UNITED STATES ATTORNEY
700 STEWART STREET, STE 5220
SEATTLE, WASHINGTON 98101
(206) 553-7970


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