Information — United States v. William Mandel Musgrow, Central District of California (Document 1)

Summary

A criminal information against William Mandel Musgrow in the United States District Court for the Central District of California, ED CR No. 5:24-cr-00162-KK, filed July 9, 2024 as Document 1. Count One charges wire fraud under 18 U.S.C. § 1343, alleging that from on or about March 30, 2020 Musgrow used entities incorporated in 2018 and 2019, including Edein LLC and Mystic Wolff LLC, to apply for eleven EIDL loans with false statements about employees and gross revenues. The charged wire is an EIDL application for Edein LLC submitted on or about July 3, 2020. Count Two charges aiding and assisting in the preparation of a false tax return under 26 U.S.C. § 7206(2), a 2018 Form 1040 reporting $112,000 in wages and $63,523 in withholdings.

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          Case 5:24-cr-00162-KK Document 1 Filed 07/09/24 Page 1 of 5 Page ID #:1



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                                                                07/09/2024
                                                                     AP
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 8                             UNITED STATES DISTRICT COURT

 9                       FOR THE CENTRAL DISTRICT OF CALIFORNIA

10   UNITED STATES OF AMERICA,                  ED CR No. 5:24-cr-00162-KK

11                Plaintiff,                    I N F O R M A T I O N

12                v.                            [18 U.S.C. § 1343: Wire Fraud; 26
                                                U.S.C. § 7206(2): Aiding and
13   WILLIAM MANDEL MUSGROW,                    Assisting in the Preparation of a
                                                False Tax Return]
14                Defendant.

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16          The United States Attorney charges:
17                                        COUNT ONE
18                                   [18 U.S.C. § 1343]
19   A.     INTRODUCTORY ALLEGATIONS
20          At times relevant to this Information:
21          1.    Defendant WILLIAM MANDEL MUSGROW was a resident of
22   Riverside County, California.
23          2.    The Coronavirus Aid, Relief, and Economic Security
24   (“CARES”) Act was a federal law enacted in or around March 2020 that
25   was designed to provide emergency financial assistance to Americans
26   suffering economic harm as a result of the COVID-19 pandemic.
27          3.    The Economic Injury Disaster Loan (“EIDL”) Program was a
28   United States Small Business Administration (“SBA”) program that
       Case 5:24-cr-00162-KK Document 1 Filed 07/09/24 Page 2 of 5 Page ID #:2



 1   provided low-interest financing to small businesses, renters, and

 2   homeowners in regions affected by declared disasters.

 3        4.   The CARES Act authorized the SBA to provide EIDLs up to $2

 4   million to eligible small businesses experiencing substantial

 5   financial disruption due to the COVID-19 pandemic.          In addition, the

 6   CARES Act authorized the SBA to issue advances of up to $10,000 to

 7   small businesses applying for an EIDL.

 8        5.   To obtain an EIDL and an advance, a qualifying business was

 9   required to submit an application to the SBA and provide information

10   about its operations, such as the number of employees, gross revenues

11   for the 12-month period preceding the disaster, and cost of goods

12   sold in the 12-month period preceding the disaster.          In the case of

13   EIDLs for COVID-19 relief, the 12-month period extended from January

14   1, 2019, to January 31, 2020.      Applicants certified that all the

15   information in the application was true and correct to the best of

16   their knowledge.

17        6.   EIDL applications were submitted directly to the SBA and

18   processed by the agency with support from a government contractor,

19   The amount of the loan was determined, in part, on the information

20   provided by the applicant about employment, revenue, and cost of

21   goods, as described above.      Any funds issued under an EIDL or advance

22   were issued directly by the SBA.

23        7.   EIDL funds could be used for payroll expenses, sick leave,

24   production costs, and business obligations, such as debts, rent, and

25   mortgage payments.    If the applicant also obtained a loan under the

26   Payroll Protection Program (“PPP”), the EIDL loan funds could not be

27   used for the same purpose as the PPP loan funds.

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          Case 5:24-cr-00162-KK Document 1 Filed 07/09/24 Page 3 of 5 Page ID #:3



 1   B.     THE SCHEME TO DEFRAUD

 2          8.    Beginning on or about March 30, 2020, and continuing until
 3   at least August 14, 2020, in Riverside County, within the Central
 4   District of California, and elsewhere, defendant MUSGROW, knowingly
 5   and with intent to defraud, devised, executed, and participated in a
 6   scheme to defraud financial institutions and the SBA, and to obtain
 7   money and property by means of material false pretenses,
 8   representations, and promises, and the concealment of material facts.
 9   C.     MEANS TO ACCOMPLISH THE FRAUDULENT SCHEME
10          9.    The scheme was carried out, in substance, as follows:
11                a.    In 2018 and 2019, prior to the COVID-19 pandemic,
12   defendant MUSGROW incorporated numerous corporations with the
13   California Secretary of State, including Edein LLC, Heathrow
14   Enterprises, Mystic Wolff LLC, Musgrow Organization LLC, Will & Co
15   LLC, Hand & Hand Inc., Forward Pace Inc., and Millennial Investment
16   Group.
17                b.    During the pandemic, defendant MUSGROW utilized the
18   already established entities to apply for eleven EIDL loans, even
19   though the majority of these entities existed in name only and had no
20   employees, assets, or ongoing operations.
21                c.    Defendant MUSGROW made and caused to be made false
22   statements to the SBA in connection with obtaining EIDL loan funds on
23   behalf of the entities, including false representations regarding the
24   number of employees and gross revenues, and a false certification
25   that the information contained within the application was true and
26   correct.
27                d.    In reliance on defendant MUSGROW’s material false and
28   fraudulent statements and his concealment of material facts, the SBA
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          Case 5:24-cr-00162-KK Document 1 Filed 07/09/24 Page 4 of 5 Page ID #:4



 1   approved and funded the applied-for EIDL loans, by transferring money

 2   to an account that defendant MUSGROW controlled.

 3                e.    Defendant MUSGROW used the fraudulently obtained EIDL

 4   loan proceeds for his own personal benefit, rather than for

 5   permissible business purposes.

 6   D.     USE OF THE WIRES

 7          10.   On or about July 3, 2020, in Riverside County, within the
 8   Central District of California, and elsewhere, defendant MUSGROW, for
 9   the purpose of executing the above-described scheme to defraud,
10   transmitted and caused the transmission of a wire communication in
11   interstate commerce, namely, defendant MUSGROW caused the
12   transmission of a wire transfer from Palm Springs, California, to the
13   SBA’s server located in Colorado, by electronically submitting an
14   EIDL application on behalf of Edein LLC.
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       Case 5:24-cr-00162-KK Document 1 Filed 07/09/24 Page 5 of 5 Page ID #:5



 1                                     COUNT TWO

 2                              [26 U.S.C. § 7206(2)]

 3        On or about March 9, 2019, in Riverside County, within the

 4   Central District of California, and elsewhere, defendant WILLIAM

 5   MANDEL MUSGROW willfully aided and assisted in, and procured,

 6   counseled, and advised the preparation and presentation to the IRS of

 7   U.S. Individual Income Tax Return, Form 1040, in the name of R.V. for

 8   calendar year 2018, which was false and fraudulent as to a material

 9   matter, in that Line 1 of such Form 1040 reported that R.V. had been

10   paid wages of $112,000, and Line 16 of such Form 1040 reported that

11   R.V. had federal income tax withholdings of $63,523 when, in fact, as

12   defendant MUSGROW then knew and believed, R.V. was not employed by

13   Heathrow Inc. during calendar year 2018 and R.V. did not have any

14   income tax withholdings from such employment.

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16                                          E. MARTIN ESTRADA
                                            United States Attorney
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19                                          MACK E. JENKINS
                                            Assistant United States Attorney
20                                          Chief, Criminal Division
21                                          SEAN D. PETERSON
                                            Assistant United States Attorney
22                                          Chief, Riverside Branch Office
23                                          BENJAMIN J. WEIR
                                            Assistant United States Attorney
24                                          Riverside Branch Office
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