Criminal Information — United States v. Mitchell Summerfield, Eastern District of North Carolina (Document 1)

Summary

A criminal information against Mitchell Summerfield, Case 5:25-cr-00022-BO, filed 01/28/25 as Document 1 in the U.S. District Court for the Eastern District of North Carolina, Western Division. Count One charges conspiracy to commit wire fraud and bank fraud, in violation of Title 18, United States Code, Section 1349. The information alleges that PPP and EIDL applications submitted by accountants and a financial-company owner for Summerfield's entities KHS Investments, LLC, Vision and Destiny, LLC and Winning Ways, Inc. contained false statements, and that Summerfield used KHS and Vision and Destiny proceeds for personal expenses. It seeks a forfeiture money judgment of at least $402,166.00. The signature block names United States Attorney Michael F. Easley, Jr. and Special Assistant U.S. Attorney Lisa K. Labresh.

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“Criminal Information — United States v. Mitchell Summerfield, Eastern District of North Carolina (Document 1).” Original at archive.org. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/information-no-5-25-cr-00022-dkt-1-e-d-n-c-36717c9745/, SHA-256 ace5f178bb655d88dbd798718ad29446a8cbdececbf35569c79c1f3830d2073c.

Full text

FILED
JAN 2 8 2025
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINAP~J'ff 1
WESTERN DIVISION BY--1----J~-H'F-

N0.5 =25-Qte-22-BQ
UNITED STATES OF AMERICA )
)
V. ) CRIMINAL INFORMATION
)
MITCHELL SUMMERFIELD )
)

The United States Attorney charges the following:

Introduction

The COVID-19 Pandemic Benefit Scheme

A. Regulatory and Program Background

Economic Injury Disaster Loans ("EIDL '?

1. The United States Small Business Administration ("SBA") is an agency

within the Executive Branch of the government of the United States that provides

support to entrepreneurs and small businesses. The mission of the SBA is to maintain

and stre ngthen the nation's economy by enabling the establishment and viability of

small businesses and by assisting in the economic recovery of communities after

disasters. 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.

2. In addition to traditional SBA funding programs, the Coronavirus Aid,

Relief, and Economic Security ("CARES") Act, which was signed into law in March

Case 5:25-cr-00022-BO Document 1 Filed 01/28/25 Page 1 of 11
2020, established several new temporary programs and provided for the expansion of

others to address the COVID-19 outbreak. Specifically, the CARES Act was enacted

to provide emergency financial assistance to the millions of Americans who were

suffering the economic effects caused by the COVID-19 pandemic.

3. The CARES Act enabled the SBA to expand the pre-existing EIDL

funding to business owners negatively affected by the COVID-19 pandemic. EIDL

funding provides loan assistance up to $2 million for small businesses and other

eligible entities. The funds are issued directly from the United States Treasury and

applicants used the SBA online portal to apply for monetary relief in the form of

disaster benefits. The online application required information regarding the size of

the affected business entity, the ownership , number of employees, and gross business

revenues realized in the 12-months prior to COVID-19's impact on the national

economy. The application also required the business owner to disclose any criminal

history. No supporting documentation was required.

4. In conjunction with the submission of an EIDL application, a business

could obtain a $10,000 cash advance grant based solely on the number of employees

claimed. The businesses were not required to repay the SBA even if the loan

application was ultimately denied or the applicant declined the EIDL loan once

approved. EIDL proceeds could be used by the afflicted business to pay fixed debts,

payroll, accounts payable, and other bills that could have been paid had the COVID-

19 disaster not occurred; however, such loan proceeds are not intended to replace lost

sales or profits or for expansion of a business.

Case 5:25-cr-00022-BO Document 1 Filed 01/28/25 Page 2 of 11
5. The application required the business representative to declare under

penalty of perjury that the information contained therein was true and correct, and

it warned that any false statement or misrepresentation to the SBA or any

misapplicationofloanproceedsmay result in sanctions, including criminal penalties.

6. EIDL applications are received in a cloud-based platform (Rapid

Finance) througha serverlocatedinDesMoines, Iowa. EIDLdisbursementpayments

are initiated by the SBA Denver Finance Center, located in Denver, CO , which

transmits the payment information through the Financial Management System

("FMS") to the Treasury. The primary server for FMS is in Sterling, VA. The EIDL

loan applications were primarily filed in North Carolina via wire, processed by the

SBA through their server in Des Moines, Iowa, and the payments were then

transmitted throu gh Virginia into the respective bank accounts discussed above .

The Paycheck Protection Program

7. In addition to EIDL funding, another source of relief provided by the

CARES Act was the authorization of up to $349 billion in 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.

8. 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

Case 5:25-cr-00022-BO Document 1 Filed 01/28/25 Page 3 of 11
certifications in order to be eligible to obtain the PPP loan. In the PPP loan

application, the small business (through its authorized representative) was required

to state its average monthly payroll expenses and its number of employees, among

other things. 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.

9. A PPP loan application was processed by a participating financial

institution ("lender"). If a PPP loan application was approved, the participating

lender would fund the loan using its own monies, which were guaranteed by the SBA.

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

amount of the loan, and the listed number of emp loyees, was transmitted by the

lender to the SBA in the course of processing the loan.

10. PPP loan proceeds were required to be used by the business on certain

permissible expenses, including payroll costs, mortgage interest, rent, and utilities.

Under the applicable PPP rules and guidance, the interest and principal on the PPP

loan was eligible for forgiveness if the business was eligible for the PPP loan it

received, spent the loan proceeds on these permissible expense items within a

designated period of time , and used a certain portion of the loan proceeds for payroll

expenses.

11. UnitedBank and CustomersBank werefinancialinstitutionswithin the

meaning of Title 18, United States Code, Section 20, whose accounts and deposits of

which were insured by the Federal Deposit Insurance Corporation. Customers Bank

Case 5:25-cr-00022-BO Document 1 Filed 01/28/25 Page 4 of 11
is headquartered in Charleston, West Virginia, and United Bank is headquartered in

Phoenixville, Pennsylvania. These financial institutions participated in the SBA's

PPP program and, as such, were authorized to lend funds to eligible borrowers.

B. The Fraud Scheme

12. Mitchell SUMMERFIELD is a resident of Apex, North Carolina, in the

Eastern District of North Carolina. SUMMERFIELD is the sole owner of several

entities, including KHS Investments, LLC ("KHS"), Vision and Destiny, LLC ("Vision

and Destiny") and Winning Ways, Inc. ("Winning Ways"). KHS, Vision and Destiny,

and Winning Ways are all run by SUMMERFIELD out of his Apex residence.

KHS Investments, LLC

13. KHS is a real estate investment company owned solely by

SUMMERFIELD. However, KHS is a non-operational entity; it does not engage in

any business activity and has historically generated no income. Instead, it was

primarily used as a pass-through for SUMMERFIELD to transfer money between

other personal and business accounts.

14. On April 4, 2021, S.A., SUMMERFIELD's accountant, electronically

submitted a PPP application with Customers Bank for KHS Investments, LLC

("KHS"). The PPP application contained false statements, including the amount of

gross revenues. In support of the application, S.A. also submitted a fraudulent IRS

Form 1040.

15. KHS's PPP loan was approved , and on April 29, 2021, Customers Bank

deposited $20,833 into KHS's Suntrust Bank account ending in x7375. Prior to this

Case 5:25-cr-00022-BO Document 1 Filed 01/28/25 Page 5 of 11
deposit, the bank account had a balance of approximately $300.00. SUMMERFIELD

used the PPP loan proceeds to purchase personal items, including designer clothing

and family planning.

16. On July 13, 2020, E.L., SUMMERFIELD's accountant, electronically

submitted an EIDL application on behalf of KHS investments. The EIDL application

contained several false statements, including the amount of gross revenues. In

support of the application, E.L. also submitted a fraudulent IRS Form 1040. The PPP

application was approved and on January 25, 2021, the SBA deposited $75,100 into

KHS's Suntrust Bank account ending in x7375. Prior to this deposit, the bank account

had a balance of $135.00.

17. On April 27, 2021, SUMMERFIELD requested additional EIDL funds

for KHS. On July 8, 2021, SUMMERFIELD electronically signed a new loan

agreement. On July 13, 2021, the SBA deposited $125,500 into KHS' s Suntrust Bank

account ending in x7375. Prior to this depo sit, the bank account had a balance of

$961.00. SUMMERFIELD used the fraud proceeds to pay for personal expenses,

including shopping, airline flights, among other things.

18. In August 2021, SUMMERFIELD requested a third round of EIDL

funding for KHS. However, the SBA flagged the loan as fraudulent and denied his

request.

Vision and Destiny, LLC

19. Vision and Destiny 1s a public speaking business owned solely by

SUMMERFIELD. On March 11, 2021, S.A., SUMMERFIELD's accountant,

Case 5:25-cr-00022-BO Document 1 Filed 01/28/25 Page 6 of 11
submitted a fraudulent PPP application for Vision and Destiny with United Bank.

The application listed a Washington, D.C. address for the business; however,

SUMMERFIELD never lived at this address and as noted above , the business was

operated out of SUMMERFIELD's Apex, North Carolina, residence.

SUMMERFIELD and S.A. discussed submitting fraudulent documentation to

support the application, including IRS Form 1040, which was entirely fabricated. The

PPP application was approved, and on or about March 18, 2020, $20,833 was

deposited into SUMMERFIELD's United Bank account ending in x3298.

SUMMERFIELD used the PPP funds for personal expenses.

Winning Ways, Inc.

20. In July 2020, SUMMERFIELD contacted V.M. who owned a financial

company, about submitting an EIDL application for Winning Ways. Winning Ways

was created to be a home for teen mothers, but the business was never operational.

V.M. agreed to assist SUMMERFIELD with the application but told

SUMMERFIELD that he would need to provide the supporting documentation.

21. On July 1, 2020, V.M. submitted the EIDL application on behalf of

Winning Ways. The application contained several false statements, including the

listed gross revenues, cost of goods sold, and the number of employees. An initial

$10,000 cash advance was approved, and on July 6, 2020, the SBA deposited $10,000

into Winning Ways's BB&T Bank account ending in x0065. The full EIDL application

was ultimately approved, and on July 21, 2020, the SBA deposited $149,900 into

Case 5:25-cr-00022-BO Document 1 Filed 01/28/25 Page 7 of 11
Winning Ways's BB&T Bank account ending in x0065. Prior to this depo sit, the bank

account had a balance of $60.00.

22. On July 6, 2021, SUMMERFIELD contacted the SBA to request

additional funding. That request was denie d.

23. SUMMERFIELD used t he EIDL funds to repay an unrelate d lo an and

for consulting services unrelate d to t he business.

COUNT ONE

24. The preceding paragraphs of this Criminal Information are incorporated

herein by reference as factual allegations.

25. From on or about July 13, 2020, until on or about July 6, 2021, in the

E astern District of North Carolina and elsewhere, the defendant, MITCHELL

SUMMERFIELD and others, known and unknown to the United States Attorney, did

knowingly combine, conspire, confe der ate, agree, and have a tacit understanding

with each other to commit offenses against the United States, to wit: Wire Fraud, in

violation of Title 18, United States Code, Section 1343; and Bank Fraud, in violation

of Title 18, United States Code , Section 1344.

Objects of the Conspiracy

26. Wire Fraud: It was a p art and an object of the conspiracy that

SUMMERFIELD and others, known and unknown to the United States Attorney,

having devise d the above describe d schemes and artifices to defraud and to knowingly

execute the schemes and artifices to defraud , and to obtain money and property by

means of materially false and fraudulent prete nses, representations and promises,

Case 5:25-cr-00022-BO Document 1 Filed 01/28/25 Page 8 of 11
and attempting to do so, did transmit and cause to transmitted by means of wire

communication in interstate commerce , any writing, sign, signal, picture, and sound

for the purposes of executing said schemes and artifices, in violation of Title 18,

United States Code, Section 1343.

27. Bank Fraud: It was a part and an object of the conspiracy that

SUMMERFIELD and others, known and unknown to the United States Attorney, did

execute and attempt to execute, the above-described schemes and artifices to defraud

and to obtaining moneys owned by, or in the custody or control of financial

institutions, by means of materially false and fraudulent pretenses, representations,

and promises, in violation of Title 18, United States Code, Section 1344.

All in violation of Title 18, United States Code, Section 1349.

(Remainder of page intentionally left blank.)

Case 5:25-cr-00022-BO Document 1 Filed 01/28/25 Page 9 of 11
FORFEITURE NOTICE

Notice is hereby given that all right, title and interest in the property described

herein is subject to forfeiture.

Upon conviction of any violation of, or conspiracy to violate, Section(s) 215,656,

657, 1006, 1007, 1014, 1341, 1343, or 1344 of Title 18 of the United States Code

affecting a financial institution, 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 said violation.

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

Forfeiture Money Judgment:

a) A sum of money representing the gross proceeds of the offense(s) charged

herein against MITCHELL SUMJVIERFIELD , in the amount of at least

$402,166.00.

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

omission of a defendant: 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

Case 5:25-cr-00022-BO Document 1 Filed 01/28/25 Page 10 of 11
intent of the United States, pursuant to Title 21, United States Code, Section 853(p),

to seek forfeiture of any other property of said defendant up to the value of the

forfeitable property described above .

MICHAEL F. EASLEY, JR.
United States Attorney

B~Lisa K. Labresh
Special Assistant U.S. Attorney

Case 5:25-cr-00022-BO Document 1 Filed 01/28/25 Page 11 of 11

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