Information — United States v. Sadie Mitchell, Eastern District of Virginia (Document 1)

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A criminal information against Sadie Mitchell in the United States District Court for the Eastern District of Virginia, Richmond Division, Case 3:22-cr-00044-MHL, filed April 19, 2022 as Document 1. Count One charges conspiracy to commit mail fraud under 18 U.S.C. § 1349 and Count Two charges wire fraud under 18 U.S.C. § 1343. It alleges that from on or about May 19, 2020 Mitchell and Co-Conspirator 1 filed false PUA/UI claims with the Virginia Employment Commission using the personal identifying information of inmates and other individuals, including information queried in a government database Mitchell could access through her employer. It states the claims led to over $300,000 and over $700,000 in benefits, and the forfeiture allegation seeks at least $1,023,325.24.

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Case 3:22-cr-00044-MHL Document1 Filed 04/19/22 Page 1 of 14 PagelD# 1

IN THE UNITED STATES DISTRICT COURT FOR THE APR | 9 2022
EASTERN DISTRICT OF VIRGINIA CLERK, U.S. DISTRICT COURT
RICHMOND, VA
RICHMOND DIVISION
UNITED STATES OF AMERICA Case No. 3:22-cr- 044
V. 18 U.S.C. § 1349
Conspiracy to Commit Mail Fraud
SADIE MITCHELL, (Count One)
Defendant. 18 U.S.C. § 1343
Wire Fraud
(Count Two)
Forfeiture Allegation

CRIMINAL INFORMATION

THE UNITED STATES ATTORNEY CHARGES THAT:

INTRODUCTORY ALLEGATIONS

At all times relevant to this Information, unless otherwise stated:

1. The defendant, SADIE MITCHELL, resided in Richmond, Virginia, within the
Eastern District of Virginia.

es The defendant was an employee of the Virginia Department of Motor Vehicles
from September 30, 2013, through April 24, 2019. The defendant was employed at the Virginia
Motor Vehicle Dealer Board from April 25, 2019, through April 3, 2021.

as Due to her employment with the Virginia Department of Motor Vehicles and the
Virginia Motor Vehicle Dealer Board, the defendant had access to a government database that

contained the personal identifying information of Virginia residents.
Case 3:22-cr-00044-MHL Document 1 Filed 04/19/22 Page 2 of 14 PagelD# 2

Small Business Administration

4. 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 disaster.

Virginia Unemployment Insurance Program

5. Following the emergence of the novel coronavirus (““COVID-19”), the United
States Government took steps to slow the spread of the virus and to mitigate its impact on the
public’s health and economic wellbeing.

6. On March 13, 2020, President Donald J. Trump declared the ongoing COVID-19
pandemic to be an emergency under Section 501(b) of the Robert T. Stafford Disaster Relief and
Emergency Assistance Act (“Stafford Act”).

7. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act
(“CARES ACT”) was signed into law. The CARES Act created the Pandemic Unemployment
Assistance (“PUA”) program, which provided unemployment benefits to individuals not eligible
for regular unemployment compensation or extended unemployment benefits.

8. The CARES Act also provided for an emergency increase in unemployment
compensation benefits, referred to as Federal Pandemic Unemployment Compensation
(“FPUC”). FPUC provided eligible individuals with $600 per week in addition to the weekly
benefit amount they received from certain other unemployment compensation programs, to

include PUA.
Case 3:22-cr-00044-MHL Document1 Filed 04/19/22 Page 3 of 14 PagelD# 3

9. As of April 18, 2020, the President declared that a major disaster existed in all
States and territories under Section 401 of the Stafford Act. On August 8, 2020, to further
offset the pandemic’s impact on American workers, the President authorized the Federal
Emergency Management Agency (“FEMA”) to expend up to $44 billion from the Disaster Relief
Fund for lost wage payments. The President authorized the FEMA Administrator to provide
grants to participating states, territories, and the District of Columbia to administer delivery of
lost wages assistance (“LWA”) to those receiving unemployment insurance.

10. The PUA, FPUC, and LWA programs are administered by the various states,
including the Commonwealth of Virginia, but the programs’ benefits are funded in part by the
federal government.

11. | Unemployment insurance (“UI”) is a joint state-federal program intended to
provide temporary financial assistance to unemployed workers under certain circumstances.

The federal unemployment trust fund provides support and funding for state UI programs. For
instance, during periods of high unemployment, the federal government provides partial funding
to states for payment of extended benefits to UI recipients. States can also borrow from the
federal UI fund if their own funds are insufficient.

12. The Commonwealth of Virginia managed its unemployment insurance
compensation program through the Virginia Employment Commission (“VEC”). Under normal
circumstances, eligible Virginia UI recipients receive a minimum of $158 per week.

13. In the wake of the COVID-19 pandemic, the PUA and FPUC programs increased
weekly benefits for Virginia UI recipients to a minimum of $758 per week.

14. To be eligible for Virginia UI benefits, claimants must have had their hours

reduced by their employer or been separated from employment altogether. Once the VEC
Case 3:22-cr-00044-MHL Document1 Filed 04/19/22 Page 4 of 14 PagelD# 4

approves a claim, the claimant must re-certify unemployment status on a weekly basis.
Specifically, claimants must certify that they are ready, willing, and able to work each day during
the weeks they are claiming UI benefits.

15. Successful applicants may choose whether to have the VEC deposit their
unemployment benefits directly in a linked bank account or loaded onto a prepaid debit card
(called “Way 2 Go” cards), which is shipped to the applicant via the United States Postal Service
to the physical address listed on the application. For applicants who choose a debit card, a
personal identification number for the card is sent to the address listed on the application in a
separate mailing. Prepaid cards are automatically reloaded with newly disbursed funds via
electronic transfers using the Internet.

The Paycheck Protection Program

16. In addition to the PUA program, another source of relief provided by the CARES
Act in response to the COVID-19 pandemic was the authorization of billions of dollars in
forgivable loans to small businesses for job retention and certain other expenses through a
program referred to as the Paycheck Protection Program (“PPP”).

17. To obtain a PPP loan, a qualifying business had to submit a PPP loan application
signed by an authorized representative of the business. The applicant of a PPP loan was
required to acknowledge the program rules and make certain affirmative certifications in order to
be eligible to obtain the PPP loan. In the PPP loan application, the applicant had to state,
among other things, the business’s: (a) average monthly payroll expenses; and (b) number of
employees. In addition, businesses applying for a PPP loan had to provide documentation

showing their payroll expenses.
Case 3:22-cr-00044-MHL Document1 Filed 04/19/22 Page 5 of 14 PagelD# 5

18. A PPP loan application had to be processed by a participating financial institution
(the lender). Ifthe PPP loan application was approved, the lender funded the PPP loan using its
own monies, which were 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 the lender to the SBA in the course of processing the loan.

19. PPP loan proceeds could only be used by the business for certain permissible
expenses—payroll costs, interest on mortgages, rent, and utilities. The proceeds of a PPP loan
were not permitted to fund the borrower’s ordinary day-to-day living expenses unrelated to the
specified authorized expenses.

20. While this first draw PPP program ended on May 31, 2021, certain borrowers
were eligible to apply for second draw PPP loans. Eligible borrowers included businesses that:
had no more than 300 employees; which had previously received a PPP loan and would or had
already used the full amount only for authorized uses; and which could demonstrate at least a
25% reduction in gross receipts between comparable quarters in 2019 and 2020. Second draw
PPP loans were approved with the same general loan terms as the first draw PPP loans.

Economic Injury Disaster Loan

21. Another source of relief provided by the CARES Act was an expansion of an
existing disaster-related program: the Economic Injury Disaster Loan (“EIDL”). This program
provides loan assistance, including $10,000 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;
however, such loan proceeds are not intended to replace lost sales or profits or for expansion of a

business.
Case 3:22-cr-00044-MHL Document1 Filed 04/19/22 Page 6 of 14 PagelD# 6

22. 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 also uses certain outside
contractors for system support, collects information concerning the business and the business
owner, including, but not limited to, the following: (a) information as to the gross revenues for
the business prior to January 31, 2020; (b) the cost of goods sold; (c) the number of employees;
and (d) information regarding the criminal history of the business owner. Applicants
electronically certify that the information provided is accurate and are warned that any false
statement or misrepresentation to the SBA or any misapplication of loan proceeds may result in
sanctions, including criminal penalties.

Count One
(Conspiracy to Commit Mail Fraud)

THE UNITED STATES ATTORNEY FURTHER CHARGES THAT:

23. From on or about May 19, 2020, and continuing through on or about August 9,
2021, in the Eastern District of Virginia, the defendant, SADIE MITCHELL, knowingly and
intentionally combined, conspired, confederated, and agreed with Co-Conspirator 1 to devise and
intend 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, and for the purpose of
executing the scheme and artifice and attempting to do so, causing any matter and thing to be
sent and delivered by the United States Postal Service in violation of Title 18, United States
Code, Section 1341.

24. The purpose of this conspiracy was for the defendant and Co-Conspirator 1 to
unjustly enrich themselves by fraudulently obtaining money which they were not entitled to by

filing false claims for PUA/UI benefits with the VEC.
Case 3:22-cr-00044-MHL Document1 Filed 04/19/22 Page 7 of 14 PagelD# 7

The Ways, Manner, and Means of the Conspiracy

The ways, manner, and means by which the conspirators sought to accomplish the
conspiracy included, but were not limited to, the following:

25. It was part of the conspiracy that Co-Conspirator 1 would obtain the names, dates
of birth, and social security numbers of inmates serving sentences at correctional centers for use
in filing fraudulent PUA/UI claims. Once obtained, Co-Conspirator 1 would share this
information with the defendant.

26. After receiving the inmates’ personal identifying information, the defendant used
this information to file fraudulent PUA/UI claims with the VEC online. These applications
contained false information, including, but not limited to, the following:

a. A false physical address rather than the correctional facility at which the inmates
were actually confined;

b. A false “last employer,” as the inmates were incarcerated and not employed; and

c. A false certification that the inmates were ready, willing, and able to work in the
event employment became available.

27. It was further part of the conspiracy that, following the filing of the false and
misleading PUA/UI claims, “Way 2 Go” debit cards were routinely mailed to addresses in the
Eastern District of Virginia selected by the defendant. The defendant and Co-Conspirator 1
would share the Way 2 Go cards with each other, and they would use the funds contained on the
cards for their own personal benefit. For some applications, however, instead of Way 2 Go
cards, the defendant and Co-Conspirator 1 requested that the PUA/UI benefit payments be

directly deposited into financial accounts the conspirators controlled.
Case 3:22-cr-00044-MHL Document1 Filed 04/19/22 Page 8 of 14 PagelD# 8

28. Onaweekly basis, the defendant and Co-Conspirator 1 would submit
recertifications of unemployment status for these fraudulent claims, resulting in the disbursal of
additional funds by the VEC.

29. In total, the defendant and Co-Conspirator 1 filed at least 20 knowingly false and
misleading PUA/UI applications using the personal identifying information of inmates, resulting
in the VEC disbursing over $300,000 in PUA/UI benefits as a result of those fraudulent claims.

30. It was further part of the conspiracy that the defendant and Co-Conspirator 1 filed
fraudulent PUA/UI claims using the personal identifying information of other individuals. The
vast majority of these individuals had no knowledge that their personal identifying information
had been compromised and used by the conspirators to file fraudulent PUA/UI applications.

On some occasions, however, the conspirators filed fraudulent PUA/UI applications using the
personal identifying information of individuals who were aware of the fraudulent applications
filed by the defendant on their behalf, and who shared in the fraudulently-obtained PUA/UI
benefits generated by those applications.

31. For instance, Co-Conspirator 1 would generally provide the defendant with names
of individuals—who were not inmates—for the defendant to query in a government database the
defendant had access to through her employer, the Virginia Motor Vehicle Dealer Board. By
querying this government database, the defendant would obtain the dates of birth and social
security numbers of these individuals.

32. Subsequently, the defendant and Co-Conspirator 1 would electronically submit
fraudulent PUA/UI applications to the VEC using the personal identifying information of these

individuals. The defendant and Co-Conspirator 1 provided false and misleading information on
Case 3:22-cr-00044-MHL Document1 Filed 04/19/22 Page 9 of 14 PagelD# 9

these applications, such as the physical addresses of the applicants and the applicants’ purported
last employer.

33. | Once those PUA/UI applications were approved, the VEC would regularly mail
Way 2 Go debit cards containing the corresponding PUA/UI benefits to addresses in the Eastern
District of Virginia selected by the defendant and Co-Conspirator 1. The defendant and Co-
Conspirator 1 would thereafter submit weekly recertifications of unemployment status for these
fraudulent claims to the VEC, resulting in additional PUA/UI funds being loaded onto the debit
cards. On some occasions, the defendant and Co-Conspirator 1 requested that the VEC directly
deposit the benefit payments into financial accounts they controlled. The defendant and Co-
Conspirator 1 used these fraudulently-obtained funds for their own personal benefit.

34. In total, the defendant and Co-Conspirator 1 filed at least 30 knowingly false and
misleading PUA/UI applications in the names of other individuals, resulting in the VEC
disbursing over $700,000 in PUA/UI benefits as a result of those fraudulent claims.

35. It was further part of the conspiracy for the defendant and Co-Conspirator 1 to file
false and misleading PUA/UI applications for themselves. Specifically, on or about May 19,
2020, the defendant filed a PUA/UI application in her name and using her personal identifying
information. On this application, the defendant falsely represented that her employment had
been terminated on April 25, 2019, when, in fact, the defendant was employed and was working
at the Virginia Motor Vehicle Dealer Board at the time she filed her application. The defendant
concealed this information in order to deceive the VEC as to her eligibility for PUA/UI benefits,
and to unjustly receive benefit payments.

36. | Onor about May 19, 2020, with the knowledge and consent of Co-Conspirator 1,

the defendant filed a false and misleading PUA/U]I application in the name of Co-Conspirator 1,
Case 3:22-cr-00044-MHL Document 1 Filed 04/19/22 Page 10 of 14 PagelD# 10

using Co-Conspirator 1’s personal identifying information. On this application, the defendant
made false statements and representations to deceive the VEC, such as providing a false last
employer for Conspirator 1, a false address for Conspirator 1’s purported last employer, and a
false employment termination date.

37. Ultimately, the VEC approved the false and misleading applications the
conspirators submitted in their own names. As a result of these fraudulent applications, the
defendant and Co-Conspirator 1 received over $20,000 in PUA/UI funds.

Mailings in Furtherance of the Conspiracy

38. In furtherance of this conspiracy, the defendant and Co-Conspirator 1 routinely
caused to be placed in a post office and authorized depository for mail matter, to be delivered by
the United States Postal Service to addresses in the Eastern District of Virginia, the following
matter: Way 2 Go debit cards containing fraudulently-obtained PUA/UI benefits.

(In violation of Title 18, United States Code, Section 1349.)

Count Two
(Wire Fraud)

THE UNITED STATES ATTORNEY FURTHER CHARGES THAT:

39. From on or about June 26, 2020, and continuing through on or about June 14,
2021, in the Eastern District of Virginia, SADIE MITCHELL, the defendant herein, knowingly
devised and intended to devise a scheme and artifice to defraud and for obtaining money by
means of materially false and fraudulent pretenses, representations, and promises, which scheme

and artifice, and the execution thereof, operated in substance as follows:

10
Case 3:22-cr-00044-MHL Document 1 Filed 04/19/22 Page 11 of 14 PagelD# 11

The Scheme and Artifice

40. The object of the defendant’s scheme and artifice was to enrich herself and others
by obtaining EIDL and PPP loan proceeds under false and misleading pretenses.

41. It was part of the scheme and artifice for the defendant to submit false and
misleading PPP loan applications to financial institutions. In total, the defendant submitted
three such PPP applications for businesses that she claimed to own and operate, and two more
PPP applications for businesses the defendant claimed were owned and operated by other
individuals.

42. On each of these applications, the defendant made knowingly false statements
and knowingly false certifications to mislead the financial institutions, including, but not limited
to, the following misrepresentations:

a. Providing false and fabricated gross income figures for the businesses;

b. Falsely certifying that the businesses were in operation on February 15, 2020; and

c. Falsely certifying that the loan proceeds would be used exclusively for eligible
business expenses.

43. All five of the PPP loan applications submitted by the defendant were approved
and funded, resulting in the disbursal of $97,462 in proceeds by the financial institutions.

44. It was further part of the scheme and artifice for the defendant to submit false and
misleading EIDL applications to the SBA. In total, the defendant submitted six EIDL
applications for businesses she claimed to own and operate, and another two applications for
businesses purportedly owned and operated by Co-Conspirator 1. None of these businesses, in
truth and fact, and as the defendant well knew, had any customers, employees, or business

activity.

11
Case 3:22-cr-00044-MHL Document1 Filed 04/19/22 Page 12 of 14 PagelD# 12

45. Although the specific misrepresentations the defendant employed varied from
application to application, the defendant’s false statements and misrepresentations on these EIDL

applications included, but were not limited to, the following:

a. Providing false gross revenue and costs of goods sold figures for the businesses;
b. Inflating or fabricating the employee count of the businesses; and
c. Falsely certifying that the information in the applications was true and accurate.

46. Ultimately, none of the defendant’s fraudulent EIDL applications were approved
by the SBA, but in response to one of the false and misleading applications the defendant
submitted, the SBA disbursed a $10,000 advance to a bank account designated by the defendant.
Ultimately, these funds were not spent on eligible expenses under the EIDL program.

Execution of the Scheme and Artifice to Defraud

47. For the purpose of executing the aforesaid scheme and artifice to defraud, the
defendant routinely caused wire transmissions in interstate commerce, including wire
transmissions of PPP loan proceeds from financial institutions located outside of the
Commonwealth of Virginia to bank accounts controlled by the defendant and located within the
Eastern District of Virginia.

48. For example, on or about April 26, 2021, for the purpose of executing and
attempting to execute the scheme and artifice described above, the defendant caused to be
transmitted by means of wire communication in interstate commerce the signs, signals, and
writings described herein: following the approval of one of the fraudulent PPP loan applications
described above, a financial institution initiated a wire transmission of $20,833, constituting
fraudulently-obtained PPP loan proceeds, from the financial institution’s bank account in

Pasadena, California, to the defendant’s bank account in the Eastern District of Virginia.

12
Case 3:22-cr-00044-MHL Document1 Filed 04/19/22 Page 13 of 14 PagelD# 13

(in violation of Title 18, United States Code, Section 1343.)
FORFEITURE ALLEGATION

49. Pursuant to Rule 32.2(a) Fed. R. Crim. P., defendant, SADIE MITCHELL, is
hereby notified that upon conviction of the offense alleged in Count One of this Criminal
Information, she shall forfeit to the United States any property, real or personal, which
constitutes, or is derived from, proceeds traceable to such violation.

The defendant is further advised that if convicted of the offense alleged in Count Two of
this Criminal Information, she shall forfeit to the United States any property constituting, or
derived from, proceeds obtained directly or indirectly, as a result of such violation.

The property subject to forfeiture includes, but is not limited to, the following:

A sum of money of at least $1,023,325.24, which represents the proceeds of the offenses
charged and which shall be reduced to a money judgment against the defendant in favor of the
United States; however, such judgment shall be partially offset by the forfeiture of the following:

e Navy Federal Credit Union (NFCU) cashier’s check no. 0452956392 in the
amount of $34,853.27, turned over by the defendant to the United States Postal

Inspection Service (USPIS) on October 27, 2021;

e NFCU cashier’s check no. 0452957999 in the amount of $368.97, turned over by
the defendant to USPIS on October 27, 2021; and

e NFCU cashier’s check no. 0453651672 in the amount of $27,240.70, turned over
by the defendant to USPIS on February 14, 2022.

If property subject to forfeiture cannot be located, the United States will seek an order

forfeiting substitute assets, pursuant to 21 U.S.C. § 853(p).

13
Case 3:22-cr-00044-MHL Document 1 Filed 04/19/22 Page 14 of 14 PagelD# 14

(All in accordance with Title 18, United States Code, Section 981(a)(1)(C), as
incorporated by Title 28, United States Code, Section 2461, Title 18, United States Code,
Section 982(a)(2), and Title 21, United States Code, Section 853(p).)

Respectfully submitted,

Jessica D. Aber
United States Attorney

Date: April 19, 2022 By: ML (o—

Kashan K. Pathan
Assistant United States Attome:

By:

14


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