Information — United States of America v. Ka Ho Chan, Criminal No. 2:24-cr-00508 (Dkt. 1, D.S.C.)

Summary

An Information in United States of America v. Ka Ho Chan, Criminal No. 2:24-cr-00508, in the U.S. District Court for the District of South Carolina, Charleston Division, filed as Dkt. 1. The United States Attorney charges Chan with two counts of wire fraud under 18 U.S.C. § 1343 and 18 U.S.C. § 2 tied to EIDL funds. It alleges that from about April 2020 Chan created fraudulent businesses or falsified costs of goods sold and gross revenues to obtain an EIDL loan, falsely represented the number of employees for an EIDL grant, and used the proceeds on non-qualifying expenses. The counts are a $1,000.00 EIDL grant wired on June 23, 2020 and $149,900.00 in EIDL funds wired on June 26, 2020 to Chan's account at Bank of America. The forfeiture allegation seeks a sum of money of a minimum of $150,900.00. It is signed by Assistant U.S. Attorney Amy F. Bower.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Full text

Text recognized from a scanned document; may contain errors.

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA

CHARLESTON DIVISION
UNITED STATES OF AMERICA CRIMINAL NO. __2:24-cr-00508
18 U.S.C. § 2
V. 18 U.S.C. § 1343
18 U.S.C. § 981(a)(1)(C)
KA HO CHAN 18 U.S.C. § 982(a)(2)(A)

28 U.S.C. § 2461(c)

INFORMATION

BACKGROUND

1. The Defendant KA HO CHAN has a registered driver’s license with the State of
South Carolina.

2. The Defendant KA HO CHAN, along with his family, own and operate various
restaurant business in the District of South Carolina and elsewhere.

The Small Business Administration and CARES Act

3. The United States Small Business Administration (“SBA”) is an executive branch
agency of the United States government that provides support to entrepreneurs and small
businesses. The mission of the SBA is 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 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.

4. In March 2020, Congress enacted the Coronavirus Aid, Relief, and Economic
Security Act (CARES Act) to help businesses impacted by COVID-19 to continue paying their

employees.
PPP Loan

5. One 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.

6. The PPP program provided forgivable loans to small businesses for job retention
and certain other expenses. The PPP permitted participating third-party lenders to approve and
disburse SBA-backed PPP loans to cover payroll, fixed debts, utilities, rent/mortgage, accounts
payable and other bills incurred by qualifying businesses during, and resulting from, the COVID-
19 pandemic. PPP loans were fully guaranteed by the SBA.

7. To obtain a PPP loan, a qualifying business had to submit a PPP loan application,
which was 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 to be eligible to obtain the PPP loan, including that the
business was in operation and either had employees for whom it paid salaries and payroll taxes or
paid independent contractors. A business applying for a PPP loan was required to provide
documentation showing its payroll expenses, such as filed federal income tax documents.

8. PPP loan applications were electronically submitted or caused to be submitted by
the borrower and received through SBA servers located in Virginia and/or Oregon. Once approved,
the business received the PPP loan proceeds via an electronic funds transfer from the third-party
lender to a financial account under the control of the business.

9. The proceeds of a PPP loan could be used for certain specified items, such as payroll

costs, costs related to the continuation of group health care benefits, or mortgage interest payments.
The proceeds of a PPP loan were not permitted to be used by the borrowers to purchase consumer
goods, automobiles, personal residences, clothing, jewelry, to pay the borrower’s personal federal
income taxes, or to fund the borrower’s ordinary day-to-day living expenses unrelated to the
specified authorized expenses.

10. Bank of America was a third-party approved participating lender in the PPP
program and, as such, was authorized to lend funds to eligible borrowers under the terms of the
PPP.

EIDL Loans

11. The SBA was authorized to provide Emergency Injury Disaster Loans (“EIDL”’)
loans to eligible small businesses, private non-profits, agricultural businesses, and religious
institutions experiencing substantial financial disruptions due to the COVID-19 pandemic. The
CARES Act also authorized the SBA to issue emergency advances, also referred to as grants, of
up to $10,000.00 depending on the number of employees a small business employed.

12. These funds could only be used to pay legitimate business expenses, such as wages,
operating costs, rent or mortgage payments, and other business debt. An EIDL applicant seeking
relief due to the COVID-19 pandemic was required to submit an online application to the SBA
and provide information about the business, such as the number of employees, gross revenue for
the 12-month period preceding January 31, 2020, and operating costs or cost of goods sold during
that same period.

13. The information provided by the applicant was used by the SBA to determine the
amount of the EIDL principal and emergency advance. Although supporting documentation was
not required unless requested by SBA personnel during the EIDL evaluation process, the applicant

had to certify under penalty of perjury that all information in the application was true and correct.
Applicants were warned that providing false statements to the SBA may result in criminal
sanctions.

Counts 1 and 2
(Wire Fraud)

THE UNITED STATES ATTORNEY CHARGES:
14. The factual allegations of paragraphs 1 through 13 of this Information are re-alleged
as though fully set forth herein.

The Scheme to Defraud

15. From on or about April 2020 to the present, in the District of South Carolina and
elsewhere, the Defendant, KA HO CHAN, as a principal and/or aider and abettor, knowingly
devised and intended to devise a scheme to defraud the Small Business Administration and its
approved third-party lenders, and to obtain money and property by means of materially false and
fraudulent pretenses, representations, promises, and the concealment of material facts, and during
such period, knowingly transmitted and caused to be transmitted in interstate commerce, by means
of wire communications, certain electronic signals, for the purpose of executing the scheme and
artifice to defraud relating to the fraudulent application for, and receipt of, EIDL and PPP loan
funds, in violation of Title 18, United States Code, Section 1343.

Manner and Means of the Scheme to Defraud

16. It was a part of the scheme that KA HO CHAN, and others both known and
unknown to the United States Attorney, did:
a. Defraud financial institutions and the Small Business Administration using
interstate wires to fraudulently submit information and documents to obtain
an EIDL loan and EIDL grant.

b. Create fraudulent businesses and/or falsify information relating to
businesses costs of goods sold and/or gross revenues in support of EIDL

loan application.

Falsely represent the number of employees businesses had in support of an

EIDL grant request.

Once the EIDL loan proceeds were deposited, Defendant KA HO CHAN

used the proceeds on non-qualifying expenses.

17. On or about the dates specified below, in the District of South Carolina, and

elsewhere, Defendant KA HO CHAN, as a principal and/or aider and abettor, for the purpose of

executing the scheme and artifice described above, did transmit and cause to be transmitted in

interstate commerce, by means of wire communications, the writings, signs, and signals, further

described below, on or about the dates specified:

Count Date

Amount

Description of Wire Communication

1 6/23/2020

$1,000.00

Wire from the U.S. Treasury or SBA of EIDL grant to
Defendant KA HO CHAN bank account ending in 2404
at Bank of America.

2 6/26/2020

$149,900.00

Wire from the U.S. Treasury or SBA of EIDL funds to
Defendant KA HO CHAN bank account ending in 2404
at Bank of America.

All in violation of Title 18, United States Code, Sections 1343 and 2.
FORFEITURE

WIRE FRAUD:

Upon conviction to violate Title 18, United States Code, Section 1343 as charged in this

Information, the Defendant, KA HO CHAN, shall forfeit to the United States, any property, real

or personal, which constitutes, is traceable, or is derived from proceeds traceable to such offenses.

PROPERTY:

Pursuant to Title 18, United States Code, Sections 981(a)(1)(C) and 982(a)(2)(A), and

Title 28, United States Code, Section 2461(c), the which is subject to forfeiture upon conviction

of the Defendant for the offenses charged in this Information includes, but is not limited to, the

following:

Forfeiture Judgment/Proceeds:

A sum of money equal to all proceeds the Defendant obtained directly or
indirectly as the result of the offenses charged in this Information, that is, a
minimum of $150,900.00 and all interest and proceeds traceable thereto,
and/or such sum that equals all property traceable to his violation of 18
U.S.C. § 1343.

SUBSTITUTE ASSETS:

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

Defendant:

a. cannot be located upon the exercise of due diligence;

b. has been transferred or sold to, or deposited with, a third party;
c. has been placed beyond the jurisdiction of the court;

d. has been substantially diminished in value; or

e. has been commingled with other property which cannot be divided without
difficulty;
it is the intention of the United States, pursuant to Title 18, United States Code, Section 982(b)(1),
incorporating Title 21, United States Code, Section 853(p), to seek forfeiture of any other property
of the Defendant up to the value of the forfeitable property;

Pursuant to Title 18, United States Code, Sections 981(a)(1)(C) and 982(a)(2)(A), and Title

28, United States Code, Section 2461(c).

ADAIR F. BOROUGHS
UNITED STATES ATTORNEY

By: /s/Amy Bower
Amy F. Bower (#11784)
Assistant U.S. Attorney

151 Meeting Street, Suite 200
Charleston, South Carolina 29401
Tel.: (843) 727-4381

Email: Amy.Bower@usdo}].gov

File and source

File: gov.uscourts.scd.293125.1.0.pdf
Size: 382,785 bytes
SHA-256: 8220cf55894189ba22e7242110d111f7036a8857d6c29143e1e925efc1da5a94
Our copy: gov.uscourts.scd.293125.1.0.pdf
Original: archive.org