Plea Agreement — United States v. Jonathan Henley, No. 20-CR-196-5 (BHL) (Dkt. 42, E.D. Wis.)
Summary
Jonathan Henley agreed to plead guilty to Count Six, bank fraud, of a fourteen-count indictment in United States v. Henley, No. 20-CR-196-5 (BHL) in the Eastern District of Wisconsin; the agreement was filed December 16, 2020. Henley, of Chicago, was the manager of Premier Logistic Solutions LLC, whose PPP loan application falsely claimed an average monthly payroll of $85,000 and 23 employees. The factual basis says the defendants submitted fraudulent PPP loan applications to Financial Institution 1 for businesses not in operation in February 2020, and that at least approximately $960,000 was provided in fraudulently obtained loan proceeds, with an additional $442,500 attempted. The parties agree to a 10-level increase for a loss exceeding $150,000. Henley told agents on or about July 7, 2020 that Premier Logistic had never had 23 employees.
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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
UNITED STATES OF AMERICA,
Plaintiff,
v. Case No. 20-CR-196-5 (BHL)
JONATHAN HENLEY,
Defendant.
PLEA AGREEMENT
1. The United States of America, by its attorneys, Matthew D. Krueger, United
States Attorney for the Eastern District of Wisconsin, Stephen Ingraham, Assistant United States
Attorney, Daniel Kahn, Acting Chief, Fraud Section, Department of Justice, Laura Connelly,
Trial Attorney, Leslie S. Garthwaite, Trial Attorneys, and the defendant, Jonathan Henley,
individually and by attorney Joan Hill McClain, pursuant to Rule 11 of the Federal Rules of
Criminal Procedure, enter into the following plea agreement:
Charges
2. The defendant has been charged in a fourteen-count Indictment, which alleges
that the defendant committed one count of bank fraud, in violation of Title 18, United States
Code, Section 1344.
3. The defendant has read and fully understands the charges contained in the
Indictment. He fully understands the nature and elements of the crimes with which he has been
charged, and the charges and the terms and conditions of the plea agreement have been fully
explained to him by his attorney.
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4. The defendant voluntarily agrees to plead guilty to Count Six of the Indictment,
attached hereto as Attachment A.
5. The defendant acknowledges, understands, and agrees that he is, in fact, guilty of
the charge in Count Six of the Indictment. The parties acknowledge and understand that if this
case were to proceed to trial, the government would be able to prove the facts in Attachment B
beyond a reasonable doubt. The defendant admits that these facts are true and correct, and
establish his guilt beyond a reasonable doubt.
6. This information is provided for the purpose of setting forth a factual basis for the
plea of guilty. It is not a full recitation of the defendant's knowledge of, or participation in this
offense.
Penalties
7. The parties understand and agree that the offense to which the defendant will
enter a plea of guilty carries the following maximum term of imprisonment and fine: thirty (30)
years and $1,000,000. The count also carries a mandatory special assessment of $100 and a
maximum of five (5) years of supervised release. The parties further recognize that a restitution
order may be entered by the court. The parties' acknowledgments, understandings, and
agreements with regard to restitution are set forth in paragraphs 28 and 29 of this agreement.
8. The defendant acknowledges, understands, and agrees that he has discussed the
relevant statutes as well as the applicable sentencing guidelines with his attorney.
Elements
9. The parties understand and agree that in order to sustain the charge of bank fraud
as set forth in Count Six of the Indictment, the government must prove each of the following
propositions beyond a reasonable doubt:
First, that there was a scheme to obtain moneys, funds, credits, assets, securities, or other
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property that was owned by or in the care, custody, or control of a bank or financial institution by
means of false or fraudulent pretenses, representations or promises, as charged in the indictment;
and
Second, that the defendant knowingly carried out and attempted to cany out the scheme;
and
Third, that the defendant acted with the intent to defraud; and
Fourth, that the scheme involved a materially false or fraudulent pretense, representation,
or promise, and
Fifth, at the time of the charged offense the deposits of the bank or other financial
institution were insured by the Federal Deposit Insurance Corporation.
Sentencing Provisions
10. The parties agree to waive the time limits in Fed. R. Crim. P. 32 relating to the
presentence report, including that the presentence report be disclosed not less than 35 days
before the sentencing hearing, in favor of a schedule for disclosure, and the filing of any
objections, to be established by the court at the change of plea hearing.
11. The parties acknowledge, understand, and agree that any sentence imposed by the
court will be pursuant to the Sentencing Reform Act, and that the court will give due regard to
the Sentencing Guidelines when sentencing the defendant.
12. The parties acknowledge and agree that they have discussed all of the sentencing
guidelines provisions, which they believe to be applicable to the offense set forth Attachment A.
The defendant acknowledges and agrees that his attorney in turn has discussed the applicable
sentencing guidelines provisions with him to the defendant's satisfaction.
13. The parties acknowledge and understand that prior to sentencing the United States
Probation Office will conduct its own investigation of the defendant's criminal history. The
parties further acknowledge and understand that, at the time the defendant enters a guilty plea,
the parties may not have full and complete information regarding the defendant's criminal
history. The parties acknowledge, understand, and agree that the defendant may not move to
withdraw the guilty plea solely as a result of the sentencing court's determination of the
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defendant's criminal history.
Sentencing Guidelines Calculations
14. The defendant acknowledges and understands that the sentencing guidelines
recommendations contained in this agreement do not create any right to be sentenced within any
particular sentence range, and that the court may impose a reasonable sentence above or below
the guideline range. The parties further understand and agree that if the defendant has provided
false, incomplete, or inaccurate information that affects the calculations, the government is not
bound to make the recommendations contained in this agreement.
Relevant Conduct
15. The parties acknowledge, understand, and agree that pursuant to Sentencing
Guidelines Manual § 1B1.3, the sentencing judge may consider relevant conduct in calculating
the sentencing guidelines range, even if the relevant conduct is not the subject of the offense to
which the defendant is pleading guilty.
Base Offense Level
16. The parties agree to recommend to the sentencing court that the applicable base
offense level for the offense charged in Count Six of the Indictment is seven (7) under
Sentencing Guidelines Manual § 2B1.1(a)(1).
Specific Offense Characteristics
17. The parties further agree that a 10-level increase for a loss exceeding $150,000
under Sentencing Guidelines Manual § 2B1.1(b)(1)(F) is applicable to the offense level for the
offense charged in Count Six of the Indictment.
18. The parties further agree that a 2-level increase for an offense involving
sophisticated means under Sentencing Guidelines Manual § 2B1.1(b)(10) is applicable to the
offense level for the offense charged in Count Six of the Indictment.
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Acceptance of Responsibility
19. The government agrees to recommend a two-level decrease for acceptance of
responsibility as authorized by Sentencing Guidelines Manual § 3E1.1(a), but only if the
defendant exhibits conduct consistent with the acceptance of responsibility. In addition, if the
court determines at the time of sentencing that the defendant is entitled to the two-level reduction
under § 3E1.1(a), the government agrees to make a motion recommending an additional one-
level decrease as authorized by Sentencing Guidelines Manual § 3E1.1(b) because the defendant
timely notified authorities of his intention to enter a plea of guilty.
Sentencing Recommendations
20. Both parties reserve the right to provide the district court and the probation office
with any and all information which might be pertinent to the sentencing process, including but
not limited to any and all conduct related to the offense as well as any and all matters which
might constitute aggravating or mitigating sentencing factors.
21. Both parties reserve the right to make any recommendation regarding any other
matters not specifically addressed by this agreement.
22. The government agrees to recommend a sentence within the applicable sentencing
guideline range, as determined by the court.
Court's Determinations at Sentencing
23. The parties acknowledge, understand, and agree that neither the sentencing court
nor the United States Probation Office is a party to or bound by this agreement. The United
States Probation Office will make its own recommendations to the sentencing court. The
sentencing court will make its own determinations regarding any and all issues relating to the
imposition of sentence and may impose any sentence authorized by law up to the maximum
penalties set forth in paragraph 7 above. The parties further understand that the sentencing court
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will be guided by the sentencing guidelines but will not be bound by the sentencing guidelines
and may impose a reasonable sentence above or below the calculated guideline range.
24. The parties acknowledge, understand, and agree that the defendant may not move
to withdraw the guilty plea solely as a result of the sentence imposed by the court.
Financial Matters
25. The defendant acknowledges and understands that any and all financial
obligations imposed by the sentencing court are due and payable in full upon entry of the
judgment of conviction. The defendant further understands that any payment schedule imposed
by the sentencing court shall be the minimum the defendant is expected to pay and that the
government's collection of any and all court imposed financial obligations is not limited to the
payment schedule. The defendant agrees not to request any delay or stay in payment of any and
all financial obligations. If the defendant is incarcerated, the defendant agrees to participate in
the Bureau of Prisons' Inmate Financial Responsibility Program, regardless of whether the court
specifically directs participation or imposes a schedule of payments.
26. The defendant agrees to provide to the Financial Litigation Unit (FLU) of the
United States Attorney's Office, at least 45 days before sentencing, and also upon request of the
FLU during any period of probation or supervised release imposed by the court, a complete and
sworn financial statement on a form provided by FLU and any documentation required by the
form. The defendant further agrees, upon request of FLU, whether made before or after
sentencing, to promptly: cooperate in the identification of assets in which the defendant has an
interest and cooperate in the liquidation of any such assets.
Special Assessment
27. The defendant agrees to pay the special assessment in the amount of $100 prior to
or at the time of sentencing.
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Restitution
28. The parties acknowledge and understand that the government will recommend to
the sentencing court that restitution be ordered and that it be apportioned among co-schemers to
reflect the level of contribution to the victim's loss and economic circumstances of each
conspirator pursuant to Title 18, United States Code, Section 3664(h). The defendant
understands that because restitution for the offense is mandatory, the amount of restitution shall
be imposed by the court regardless of the defendant's financial resources.
29. The defendant agrees to pay restitution as ordered by the sentencing court. The
defendant agrees to cooperate in efforts to collect any restitution obligation. The defendant
understands that imposition or payment of restitution will not restrict or preclude the filing of
any civil suit or administrative action.
Forfeiture
30. The defendant understands that by pleading guilty, he will subject to forfeiture to
the United States all right, title, and interest that he has in any property constituting or derived
from proceeds obtained from the offense.
31. The defendant acknowledges that as part of his sentence, the Court will decide, by
a preponderance of the evidence, whether the government has established the requisite nexus
between the offense and any specific property alleged to be subject to forfeiture and the amount
of a personal money judgment he must pay.
Defendant's Cooperation
32. The defendant, by entering into this agreement, further agrees to fully and
completely cooperate with the government in its investigation of this and related matters, and to
testify truthfully and completely before the grand jury and at any subsequent trials or
proceedings, if asked to do so. The government agrees to advise the sentencing judge of the
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nature and extent of the defendant's cooperation. The parties acknowledge, understand and
agree that if the defendant provides substantial assistance to the government in the investigation
or prosecution of others, the government, in its discretion, may recommend a downward
departure from the applicable sentencing guideline range. The defendant acknowledges and
understands that the court will make its own determination regarding the appropriateness and
extent to which such cooperation should affect the sentence.
Defendant's Waiver of Rights
33. In entering this agreement, the defendant acknowledges and understands that he
surrenders any claims he may have raised in any pretrial motion, as well as certain rights which
include the following:
a. If the defendant persisted in a plea of not guilty to the charges against him,
he would be entitled to a speedy and public trial by a court or jury. The defendant has a right to a
jury trial. However, in order that the trial be conducted by the judge sitting without a jury, the
defendant, the government and the judge all must agree that the trial be conducted by the judge
without a jury.
b. If the trial is a jury trial, the jury would be composed of twelve citizens
selected at random. The defendant and his attorney would have a say in who the jurors would be
by removing prospective jurors for cause where actual bias or other disqualification is shown, or
without cause by exercising peremptory challenges. The jury would have to agree unanimously
before it could return a verdict of guilty. The court would instruct the jury that the defendant is
presumed innocent until such time, if ever, as the government establishes guilt by competent
evidence to the satisfaction of the jury beyond a reasonable doubt.
c. If the trial is held by the judge without a jury, the judge would find the
facts and determine, after hearing all of the evidence, whether or not he was persuaded of
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defendant's guilt beyond a reasonable doubt.
d. At such trial, whether by a judge or a jury, the government would be
required to present witnesses and other evidence against the defendant. The defendant would be
able to confront witnesses upon whose testimony the government is relying to obtain a
conviction and he would have the right to cross-examine those witnesses. In turn the defendant
could, but is not obligated to, present witnesses and other evidence on his own behalf. The
defendant would be entitled to compulsory process to call witnesses.
e. At such trial, defendant would have a privilege against self-incrimination
so that he could decline to testify and no inference of guilt could be drawn from his refusal to
testify. If defendant desired to do so, he could testify on his own behalf.
34. The defendant acknowledges and understands that by pleading guilty he is
waiving all the rights set forth above. The defendant further acknowledges the fact that his
attorney has explained these rights to him and the consequences of his waiver of these rights.
The defendant further acknowledges that as a part of the guilty plea hearing, the court may
question the defendant under oath, on the record, and in the presence of counsel about the
offense to which the defendant intends to plead guilty. The defendant further understands that
the defendant's answers may later be used against the defendant in a prosecution for petjury or
false statement.
35. The defendant acknowledges and understands that he will be adjudicated guilty of
the offense to which he will plead guilty and thereby may be deprived of certain rights, including
but not limited to the right to vote, to hold public office, to serve on a jury, to possess firearms,
and to be employed by a federally insured financial institution.
36. The defendant knowingly and voluntarily waives all claims he may have based
upon the statute of limitations, the Speedy Trial Act, and the speedy trial provisions of the Sixth
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Amendment. The defendant agrees that any delay between the filing of this agreement and the
entry of the defendant's guilty plea pursuant to this agreement constitutes excludable time under
the Speedy Trial Act.
37. The defendant knowingly and voluntarily waives any claim or objection he may
have based on statute of limitations.
38. The defendant knowingly and voluntarily waives his right to appeal his sentence
in this case and further waives his right to challenge his conviction or sentence in any post-
conviction proceeding, including but not limited to a motion pursuant to 28 U.S.C. Section
2255. This waiver does not extend to an appeal or post-conviction motion based on (1) any
punishment in excess of the statutory maximum, (2) the sentencing court's reliance on any
constitutionally impermissible factor, and (3) ineffective assistance of counsel.
Further Civil or Administrative Action
39. The defendant acknowledges, understands, and agrees that the defendant has
discussed with his attorney and understands that nothing contained in this agreement, including
any attachment, is meant to limit the rights and authority of the United States of America or any
other state or local government to take further civil, administrative, or regulatory action against
the defendant, including but not limited to any listing and debarment proceedings to restrict
rights and opportunities of the defendant to contract with or receive assistance, loans, and
benefits from United States government agencies.
General Matters
40. The parties acknowledge, understand, and agree that this agreement does not
require the government to take, or not to take, any particular position in any post-conviction
motion or appeal.
41. The parties acknowledge, understand, and agree that this plea agreement will be
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filed and become part of the public record in this case.
42. The parties acknowledge, understand, and agree that the United States Attorney's
office is free to notify any local, state, or federal agency of the defendant's conviction.
43. The defendant understands that pursuant to the Victim and Witness Protection
Act, the Justice for All Act, and regulations promulgated thereto by the Attorney General of the
United States, the victim of a crime may make a statement describing the impact of the offense
on the victim and further may make a recommendation regarding the sentence to be imposed.
The defendant acknowledges and understands that comments and recommendations by a victim
may be different from those of the parties to this agreement.
Effect of Defendant's Breach of Plea Agreement
44. The defendant acknowledges and understands if he violates any term of this
agreement at any time, engages in any further criminal activity prior to sentencing, or fails to
appear for sentencing, this agreement shall become null and void at the discretion of the
government. If this plea agreement is revoked or if the defendant's conviction ultimately is
overturned, then the government retains the right to file any and all charges which were not filed
because of this agreement. The defendant hereby knowingly and voluntarily waives any defense
based on the applicable statute of limitations for any charges filed against the defendant as a
result of his breach of this agreement. The defendant understands, however, that the government
may elect to proceed with the guilty plea and sentencing. If the defendant and his attorney have
signed a proffer letter in connection with this case, then the defendant further acknowledges and
understands that he continues to be subject to the terms of the proffer letter.
Voluntariness of Defendant's Plea
45. The defendant acknowledges, understands, and agrees that he will plead guilty
freely and voluntarily because he is in fact guilty. The defendant further acknowledges and
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agrees that no threats, promises, representations, or other inducements have been made, nor
agreements reached, other than those set forth in this agreement, to induce the defendant to plead
guilty.
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, ACKNOWLEDGMENTS
I am the defendant. I am entering into this plea agreement freely and voluntarily. I am not now
on or under the influence of any drug, medication, alcohol, or other intoxicant or depressant,
whether or not prescribed by a physician, which would impair my ability to understand the terms
and conditions of this agreement. My attorney has reviewed every part of this agreement with
me and has advised me of the implications of the sentencing guidelines. I have discussed all
aspects of this case with my attorney and I am satisfied that my attorney has provided effective
assistance of counsel.
Date: 1A/(iy/o JO THAN HENLEY
Defendant
I am the defendant's attorney. I carefully have reviewed every part of this agreement with the
defendant. To my knowledge, my client's decision to enter into this agreement is an informed
and voluntary one.
Date:
-LL
mey for Defendant
For the United States of America:
Date: 12/16/2021 Leslie S. Garthwaite
LAURA CONNELLY
LESLIE S. GARTHWAITE
Thal Attorneys
U.S. Department of Justice
Criminal Division, Fr u,d Section ,
I S _ MATTHEW UEGER
United States Attorney
East m istrict of Wi ra
i
TEPHEN IN RAHAM
Assistant United States Attorney
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Attachment A
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UNITED ' hoe COURT
EASTER ONSIN
F
161141 irk
UNITED STA1 ES OF AMERICA, 202 0 OCT 20 P 25
Plaintiff. CLERK OF UOUtg&ED
v.
20-014.196
Case No. 20-CR-
[18 U.S.C. §§ 1344, 1957, and 2]
THOMAS E. SMITH,
STEPHEN E. SMITH,
SAMUEL A. DAVIS,
ROBERT HAMILTON, and
JONATHAN E. HENLEY,
Defendants.
INDICTMENT
THE GRAND JURY CHARGES THAT:
BACKGROUND
At all times material to this Indictment:
The Defendants and Relevant Entities
1. THOMAS E. SMITH was a resident of Pewaukee, Wisconsin, and the registered
agent of T & T Holdings LLC ("T&T Holdings"), a Wisconsin limited liability company. T&T
Holdings was administratively dissolved on or about March 20, 2017.
2. STEPHEN E. SMITH was a resident of Milwaukee, Wisconsin, and the registered
agent of CFA Auto Transport LLC ("CFA"), a Wisconsin limited liability company, and Complete
Fundamentals, Inc. ("Complete Fundamentals"), a Wisconsin non-stock corporation. S. SMITH
was also the orgatri7er of New Beginnings Family Services LLC ("New Beginnings"), a Wisconsin
limited liability company.
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3. SAMUEL A. DAVIS was a resident of Chicago, Illinois, and the registered agent
and president of Davis Development Group Inc. ("Davis Development"), an Illinois corporation.
4. ROBERT HAMILTON was a resident of Milwaukee, Wisconsin, and the president
and registered agent of Glory Transportation Services, LLC ("Glory Transportation"), a Wisconsin
limited liability company.
5. JONATHAN E. HENLEY was a resident of Chicago, Illinois, and the manager and
one of the registered agents of Premier Logistic Solutions LLC ("Premier Logistic"), an Illinois
limited liability company.
6. Individual 1 was a resident of Milwaukee, Wisconsin, and the registered agent of
Rebels Paris, LLC ("Rebels"), a Wisconsin limited liability company.
7. Individual 2 was a resident of Milwaukee, Wisconsin, and the registered agent of
Comfort Care Transit LLC ("Comfort Care"), a Wisconsin limited liability company.
8. Individual 3 was a resident of Milwaukee, Wisconsin. On or about May 21, 2020,
Individual 3 filed paperwork with the State of Wisconsin establishing himself as the registered
agent of New Beginnings.
The Small Business Administration
9. 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 disasters.
10. As part of this effort, the SBA enabled and provided for loans through banks, credit
unions, and other lenders. These loans had government-backed guarantees.
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The Paycheck Protection Program
11. The Coronavirus Aid, Relief, and Economic Security ("CARES") Act was a federal
law enacted in or around March 2020 and designed to provide emergency financial assistance to
the millions of Americans who are suffering the economic effects caused by the COVID-19
pandemic.
12. One source of relief that the CARES Act provided was the authorization of up to
$349 billion in forgivable loans to small businesses for payroll, mortgage interest, rent/lease, and
utilities, through a program referred to as the Paycheck Protection Program ("PPP"). In April
2020, Congress authorized up to $310 billion in additional PPP funding.
13. The PPP allowed qualifying small businesses and other organizations to receive PPP
loans. Businesses were required to use PPP loan proceeds on 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 these expense items within a designated period
of time and used a certain percentage of the PPP loan proceeds on payroll expenses.
14. The amount of a PPP loan that a small business was entitled to receive was
determined by the number of employees employed by the business and the business's average
monthly payroll costs.
15. In order to obtain a PPP loan, a qualifying business was required 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 in order to be eligible to obtain the PPP
loan. In the PPP loan application, the small business (through its authorized representative) had
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
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eligible to receive under the PPP. In addition, businesses applying for a PPP loan had to provide
documentation showing their payroll expenses.
16. The SBA oversaw the PPP. However, individual PPP loans were issued by private,
approved lenders who received and processed PPP applications and supporting documentation,
and then made loans using the lenders' own funds, 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 thc lender to the SBA in the course of
processing the loan.
Relevant Financial Institutions
17. Financial Institution 1 was a federally insured financial institution and member of
the Federal Home Loan Bank System headquartered in Green Bay, Wisconsin. Financial
Institution I was an approved SBA lender and participated as a PPP lender to small businesses.
18. Financial Institution 2 was a Federal Deposit Insurance Corporation-insured bank
headquartered in Minneapolis, Minnesota.
19. Credit Union 1 was a nationally insured credit union headquartered in Racine,
Wisconsin.
COUNTS ONE THROUGH SIX
Bank Fraud — 18 U.S.C. § 1344 and § 2
20. The Grand Jury re-alleges and incorporates by reference the factual allegations
contained in paragraphs 1 through 19 of this Indictment as if fully set forth herein.
The Scheme to Defraud
21. From in or about April 2020 through in or about July 2020, in the State and Eastern
District of Wisconsin and elsewhere,
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THOMAS E. SMITH,
STEPHEN E. SMITH,
SAMUEL A. DAVIS,
ROBERT HAMILTON, and
JONATHAN E. HENLEY,
and others known and unknown to the Grand Jury, and aided and abetted by each other, did
knowingly execute and attempt to execute a scheme and artifice to defraud Financial Institution 1,
and -to obtain, by means of materially false and fraudulent pretenses, representations, and promises,
and by omission of material facts, certain moneys, funds, credits, assets, securities, and other
property owned by and under the custody and control of Financial Institution 1.
The Purpose of the Scheme and Artifice
22. It was the purpose of the scheme for defendants T. SMITH, S. SMITH, DAVIS,
HAMILTON, and HENLEY, and others known and unknown to the Grand Jury, to unlawfully
enrich themselves by: (a) submitting false and fraudulent PPP loan applications to financial
institutions falsely representing that the applicant entities were functional and operational
businesses and falsely promising to use the fund proceeds on covered business expenses, and
(b) concealing and causing the concealment of these false and fraudulent applications.
Manner and Means of the Scheme
23. It was part of the scheme that defendants T. SMITH, S. SMITH, DAVIS,
HAMILTON, I IENLEY, Individual 1, Individual 2, Individual 3, and others, submitted and caused
to be submitted fraudulent PPP loan applications to Financial Institution 1 for the purpose of
obtaining funds from Financial Institution 1.
24, It was further part of the scheme that each of the PPP loan applications falsely
claimed that the PPP loan applicant company was in operation as of February 15, 2020, when in
fact it was not, and that it employed individuals for whom it paid salaries and payroll taxes, or paid
independent contractors (as reported on IRS Form 1099-MISC). In fact, CFA, Davis
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Development, New Beginnings, Comfort Care, and Premier Logistic were not in operation in
February 2020. Specifically:
a. CFA' s loan application falsely claimed that it was operational as of February 15,
2020, when in fact it was not and went into "delinquent" status with the Wisconsin Department of
Financial Institutions ("WDFI") on or about July 1, 2019. CFA' s application did not report that
S. SMITH restored the active status of CFA with WDFI on or about May 5, 2020.
b. Davis Development's loan application falsely claimed that it was operational as of
February 15, 2020, when in fact Davis Development had been administratively dissolved with the
Illinois Secretary of State ("ILSOS") as of on or about August 10, 2018. Davis Development's
application did not report that DAVIS reinstated the company on or about May 2, 2020.
c. New Beginnings' loan application falsely claimed that it was operational as of
February 15, 2020, when in fact New Beginnings had been administratively dissolved with WDFI
as of on or about April 13, 2020, New Beginnings' application did not report that S. SMITH
reinstated the company on or about May 1, 2020.
d. Comfort Care's loan application falsely claimed that it was operational as of
February 15, 2020, when in fact Comfort Care was administratively dissolved with WDFI on June
13, 2017. Comfort Care's application did not report that Individual 2 restored the active status of
Comfort Care with WDFI on or about May 12, 2020.
e. Premier Logistic's loan application falsely claimed that it was operational as of
February 15, 2020, when in fact Premier Logistic had been administratively dissolved with the
ILSOS as of on or about June 14, 2019. Premier Logisfic's application did not report that
HENLEY reinstated the company on or about May 14, 2020.
25. It was further part of the scheme that each of the PPP loan applications falsely
certified that the PPP loan applicant company employed individuals for whom it paid salaries and
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payroll taxes, or paid independent contractors (as reported on IRS Form 1099-MISC) and falsely
represented the number of employees each company employed. Each of the PPP loan applications
also included falsified Employer's Quarterly Federal Tax Returns (IRS Forms 941) for each
quarter of 2019 and the first quarter of 2020. In fact, none of the businesses had filed Forms 941
in any quarter of 2019 or the first quarter of 2020, meaning that the company had no employees
for which federal taxes were paid during that period. Specifically:
a. CFA's loan application falsely claimed that its average monthly payroll was
$97,000 and that it employed 38 people.
b. Comfort Care's loan application falsely claimed that its average monthly payroll
was $92,000 and that it employed 23 people.
c. Davis Development's loan application falsely claimed that its average monthly
payroll was $71,000 and that it employed 20 people.
d. New Beginnings' loan application falsely claimed that its average monthly payroll
was $92,000 and that it employed 28 people.
e. Premier Logistic's loan application falsely claimed that its average monthly payroll
was $85,000 and that it employed 23 people.
f. Rebels' loan application falsely claimed that Rebels' average monthly payroll was
$62,000 and that it employed 17 people.
g. Glory Transportation's loan application falsely claimed that Glory Transportation's
average monthly payroll was $62,000 and that it employed 14 people.
26. It was further part of the scheme that defendants T. SMITH, S. SMITH, DAVIS,
HAMILTON, HENLEY, Individual 1, Individual 2, Individual 3, and others falsely represented
the intended use of the funds, claiming that the funds would be used for legitimate business
expenses. Specifically, CFA, Comfort Care, Davis Development, New Beginnings, Premier
7
Case 2:20-cr-00196-BHL Filed 12/16/20 Page 21 of 33 Document 42
Logistic, and Rebels' loan applications each falsely claimed that it intended to spend loan proceeds
on payroll, lease or mortgage expenses, interest, and utilities. In fact, the loan funds were used
for, among other things, personal expenses and other non-business expenses.
27. It was further part of the scheme that defendants T. SMITH, S. SMITH, DAVIS,
HENLEY, Individual 1, Individual 2, Individual 3, and others opened or directed others to open
bank accounts at Financial Institution 1 to facilitate and expedite obtaining PPP loan funds,
including:
a. On or about May 5, 2020, S. SMITH opened bank account No. x8659 at Financial
Institution 1 in the name of CFA.
b. On or about May 5, 2020, DAVIS opened bank account No. x8733 at Financial
Institution 1 in the name of Davis Development.
c. On or about May 8, 2020, Individual I opened bank account No. x9383 at Financial
Institution 1 in the name of Rebels.
d. On or about May 13, 2020, Individual 2 opened bank account No. x2840 at
Financial Institution 1 in the name of Comfort Care,
e. On or about May 19, 2020, HENLEY opened bank account No. x7764 at Financial
Institution 1 in the name of Premier Logistic.
f. On or about May 22, 2020, Individual 3 opened bank account No. x6862 at
Financial Institution 1 in the name of New Beginnings.
28. It was further part of the scheme that after the PPP loans were deposited into the
applicant company's bank account at Financial Institution 1, defendants T. SMITH, S. SMITH,
DAVIS, HAMILTON, Individual 1, Individual 2, and Individual 3 transferred or directed the
transfer of the loan proceeds to each other, and to entities controlled by one of the defendants,
enabling them to enrich themselves from the loan proceeds.
8
Case 2:20-cr-00196-BHL Filed 12/16/20 Page 22 of 33 Document 42
29. It was further part of the scheme that when defendants T. SMITH, S. SMITFI,
DAVIS, HAMILTON, HENLEY, Individual 1, Individual 2, and Individual 3 learned that
Financial Institution 1 froze or inquired about their loan applications, that Defendants, Individual
1, Individual 2, and Individual 3 took steps to misrepresent, conceal, hide and cause to be
misrepresented, concealed, and hidden, the existence, purpose, and acts done in furtherance of the
scheme.
30. It was further part of the scheme that in total, at least approximately $960,000 was
provided to Defendants, Individual 1, Individual 2, and Individual 3 in fraudulently obtained loan
proceeds, and an additional $442,500 was attempted to be fraudulently obtained by Defendants,
Individual 1, Individual 2, and Individual 3.
Executions
31. On or about the following dates, in the State and Eastern District of Wisconsin and
elsewhere, Defendants T. SMITH, S. SMITH, DAVIS, HAMILTON, and HENLEY, aided and
abetted by each other and by others known and unknown to the Grand Jury, did knowingly execute
and attempt to execute the above-described scheme to defraud by committing and willfully causing
others to commit the following acts, each of which constituted an execution of the fraudulent
scheme:
, , , „
''' k : , ,,-,,,,,, - ' -" - ,--, • a •
€ o
• ( oipt
Submission of fraudulent PPP loan
'I'. SMITH April 26,
1 application for Davis Development to $177,500
DAVIS 2020
Financial Institution 1
Submission of fraudulent PPP loan
T. SMITH
2 May 1, 2020 application for CFA to Financial Institution $242,500
S.SMITH
1
Submission of fraudulent PPP loan
'LIT
SM H
3 May 1, 2020 application for Glory Transportation to $155,000
HAMILTON
Financial Institution I
9
Case 2:20-cr-00196-BHL Filed 12/16/20 Page 23 of 33 Document 42
_
.1#,,c.POIllate.•
iA1 •-•
Olin t, itaillitit s ,J4311P4- 4Att
. . . Loan
Submission of fraudulent PPP loan
T. SMITH
May 8, 2020 application for Rebels to Financial $155,000
S. SMITH
Institution 1
Submission of fraudulent PPP loan
T. SMITH May 15, 2020 application for Comfort Care to Financial $230,000
Institution 1
Submission of fraudulent PPP loan
T. SMITH
May 20, 2020 application for Premier Logistic to Financial $212,500
HENLEY
Institution 1
Each in violation of Title 18, United States Code, Sections 1344(2) and 2.
10
Case 2:20-cr-00196-BHL Filed 12/16/20 Page 24 of 33 Document 42
COUNTS SEVEN THROUGH FOURTEEN
Money Laundering— 18 U.S.C. § 1957
32. The Grand Jury re-alleges and incorporates by reference the factual allegations
contained in paragraphs 1 through 31 of this Indictment as if fully set forth herein.
33. On the dates specified below, in the State and Eastern District of Wisconsin and
elsewhere, Defendants T. SMITH, S.SMITH, DAVIS, and HAMILTON, aided and abetted by
each other and by others known and unknown to the Grand Jury, knowingly engaged in, attempted
to engage in, and caused others to engage in a monetary transaction by, through, and to a financial
institution, affecting interstate and foreign commerce, knowing that such transaction involved
criminally derived property of a value greater than $10,000, such property having been derived
from a specified unlawful activity, that is, bank fraud, in violation of Title 18, United States Code,
Section 1344:
Approximate
Ciatirkt:- Defendant(s)s. - - - Description
.,. ef Transaction
, .._ - ,. .
Date
Cashier's check for approximately $30,000
withdrawn from Glory Transportation's Financial
7 HAMILTON May 6, 2020
Institution 1 account No. x2240, written to T.
SMITH.
Cashier's check for approximately $50,000
withdrawn from Glory Transportation's Financial
8 HAMILTON May 8, 2020 Institution 1 account No. x2240, deposited into Credit
Union 1 account No. x2707, held in the name of
HAMILTON.
Cashier's check for approximately $20,000
withdrawn from Rebels' Financial Institution 1
9 T. SMITH May 18, 2020 account No. x9383, deposited into Financial
Institution 1 account ending in 1719, held in the
name of T&T Holdings.
Cashier's check for approximately $20,000
withdrawn from Rebels' account No. x9383,
deposited into Financial Institution 2 account No.
10 S. SMITH May 18, 2020
x4088, held in the name of S. SMITH d/b/a Complete
Fundamentals.
11
Case 2:20-cr-00196-BHL Filed 12/16/20 Page 25 of 33 Document 42
- , Approxipia0
Count Pcie0d040 ' .ji-à t -:1. - , Pe$Optioxt pf-TrAw4ction
Cashier's check for approximately $40,000
withdrawn from Comfort Care's Financial Institution
11 F. SMITH May 20, 2020 1 account No. x2840, deposited into Financial
Institution 1 account No. x4241, held in the name of
T. SMITH.
Cashier's check for approximately $75,000
withdrawn from Davis Development's Financial
T. SMITH
12 May 21, 2020 Institution 1 account No_ x8733, deposited into
DAVIS
Financial Institution 1 account No. x1719, held in the
name of T&T Holdings.
Cashier's check for approximately $25,000
withdrawn from CFA's Financial Institution 1
T SMITH
13 May 22, 2020 account No. x8659, deposited into Financial
S. SMITH_
Institution 1 account No. x1719, held in the name of
T&T Holdings.
Cashier's check for approximately $25,000
withdrawn from CFA's Financial Institution 1
14 S. SMITH May 22, 2020 account No. x8659, deposited into Financial
Institution 2 account No. x4088, held in the name of
S. SMITH d/b/a Complete Fundamentals.
Each in violation of Title 18, United States Code, Section 1957 and Section 2.
12
Case 2:20-cr-00196-BHL Filed 12/16/20 Page 26 of 33 Document 42
FORFEITURE ALLEGATIONS
The allegations contained in Counts 1-14 of this Indictment are hereby realleged and
incorporated by reference for the purpose of alleging forfeiture. Upon conviction of an offense
alleged in Counts 1-14, Defendants shall forfeit to the United States, pursuant to Title 18, United
States Code, Section 981(a)(1)(C), by way of 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, a sum of money reflecting the proceeds Defendants obtained from the offense.
The allegations contained in Counts 1-14 of this Indictment are hereby realleged and
incorporated by reference for the purpose of alleging forfeiture. Upon conviction of an offense
alleged in Counts 1-14, Defendants shall forfeit to the United States, pursuant to Title 18, United
States Code, Section 982(a)(1), any property involved in the offense, or any property traceable to
such property. This property includes, but is not limited to, a sum of money reflecting the proceeds
Defendants obtained from the offense.
If any of the above-described forfeitable property, as a result of any act or omission of the
Defendants,
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 intent of the United States, pursuant to Title 21, United States Code, Section 853(p), and
Title 28, United States Code, Section 2461(c), to seek the forfeiture of any other property of the
13
Case 2:20-cr-00196-BHL Filed 12/16/20 Page 27 of 33 Document 42
Defendants, up to the value of the above-described forfeitable property.
A TRUE BILL:
FO RERSON
Dated: / / cr) 9 - 0
"Z--- MATTHEW D. KR
United States Attorney
"--Z,...—DANEEE KAHN
Acting Chief, U.S. Depar men( of Justice, Fraud Section
14
Case 2:20-cr-00196-BHL Filed 12/16/20 Page 28 of 33 Document 42
Attachment B
The defendant admits that these facts are true and correct and establish his guilt beyond a
reasonable doubt:
The Paycheck Protection Program
1. The Coronavirus Aid, Relief, and Economic Security ("CARES") Act is a federal
law enacted in or around March 2020 and designed to provide emergency financial assistance to
the millions of Americans who are 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 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.
2. In order to obtain a PPP loan, a qualifying business must submit a PPP loan
application, which is signed by an authorized representative of the business. The PPP loan
application requires the business (through its authorized representative) to acknowledge the
program rules and make certain affirmative certifications, including that the business was in
operation on February 15, 2020, in order to be eligible to obtain the PPP loan. In the PPP loan
application, the small business (through its authorized representative) must state, among other
things, its: (a) average monthly payroll expenses; and (b) number of employees. These figures
are used to calculate the amount of money the small business is eligible to receive under the PPP.
In addition, businesses applying for a PPP loan must provide documentation showing their
payroll expenses.
3. A PPP loan application must be processed by a participating financial institution
(the lender). If a PPP loan application is approved, the participating financial institution funds
the PPP loan using its own monies, which are 100% guaranteed by Small Business
Administration (SBA). Data from the application, including information about the borrower, the
total amount of the loan, and the listed number of employees, is transmitted by the lender to the
SBA in the course of processing the loan.
4. PPP loan proceeds must be used by the business on certain permissible
expenses payroll costs, interest on mortgages, rent, and utilities. The PPP allows the interest
and principal on the PPP loan to be entirely forgiven if the business spends the loan proceeds on
these expense items within a designated period of time after receiving the proceeds and uses a
certain amount of the PPP loan proceeds on payroll expenses.
S. The PPP is overseen by the SBA, which is headquartered at 409 3rd Street SW,
Washington, D.C. 20416, and has authority over all loans. Individual PPP loans, however, are
issued by private approved lenders (most commonly, banks and credit unions), which receive
and process PPP applications and supporting documentation, and then make loans using the
lenders' own funds.
6. Bank 1 is an SBA-approved lender headquartered in Green Bay, Wisconsin. At
the time of the charged offense, the deposits of Bank 1 were insured by the Federal Deposit
15
Case 2:20-cr-00196-BHL Filed 12/16/20 Page 29 of 33 Document 42
Insurance Corporation.
7. Bank 2 is an SBA-approved lender headquartered in Chicago, Illinois. At the time
of the charged offense, the deposits of Bank 2 were insured by the Federal Deposit Insurance
Corporation.
Participants in the Schemes
8. The defendant was a citizen of the United States and resident of Chicago, Illinois.
9. The defendant was the manager and one of the registered agents of Premier
Logistic Solutions LLC ("Premier Logistic"), a trucking company based in Chicago. Premier
Logistic was an Illinois limited liability company, which was formed on or about January 17,
2018. Premier Logistic was administratively dissolved on or about June 14, 2019. On or about
May 14, 2020, Premier Logistic filed an Application for Reinstatement Following
Administrative Dissolution or Revocation. As of February 15, 2020, Premier Logistic did not
have any employees for whom it paid salaries or payroll taxes, or independent contractors as
reported on an IRS Form 1099-MISC.
10. Co-Conspirator 1 ("CC-1") was a citizen of the United States and resident of
Milwaukee, Wisconsin.
11. Co-Conspirator 6 ("CC-6") was the owner and registered agent of Davis
Development Group, Inc. ("Davis Development"), an Illinois corporation based in Chicago,
Illinois.
12. Individual 1 was a resident of Chicago, Illinois.
13. Individual 2 was a resident of The Bronx, New York.
14. Individual 3 was a resident of Chicago, Illinois.
The Fraudulent PPP Loan Application to Bank 1
15. In or around May 2020, CC-6 introduced the defendant to CC-1 to facilitate
getting a PPP loan for Premier Logistic. The defendant provided CC-1 with certain information
about Premier Logistic, including the company's address and tax identification number. In or
around May 2020, defendant and CC-6 drove to Wisconsin to meet with CC-1 and obtained a
completed Premier Logistic PPP loan application. The defendant knew that the application
contained false information about Premier Logistic, including the false statement about its
operational status and employees. CC-1 directed the defendant to sign it, which he did. CC-1
also told the defendant where to drop off the application.
16. In connection with the effort to obtain the loan, CC-1 directed the defendant to
open a business checking account for Premier Logistic at Bank 1. The defendant did so on or
about May 19, 2020, funding the account with a $100 deposit. The defendant was the sole
authorized signatory on the account. On or about May 19, 2020, the defendant signed a
16
Case 2:20-cr-00196-BHL Filed 12/16/20 Page 30 of 33 Document 42
depository declaration on behalf of Premier Logistic with Bank 1.
17. On or about May 20, 2020, the defendant physically dropped off the fraudulent
PPP loan application for Premier Logistic at a branch of Bank 1 in Wisconsin.
18. When the defendant first agreed to apply for a fraudulent loan with CC-1, they
agreed to seek a $100,000 loan for Premier Logistic. From that, the defendant agreed to pay CC-
1 $20,000 of the loan funds. When the defendant and CC-1 met in person and CC-1 gave the
defendant the loan paperwork, the amount of the loan was increased to $212,500. The defendant
agreed to pay CC-1 $112,500 from this new loan amount.
19. The PPP loan application package for Premier Logistic that the defendant
submitted to Bank 1 requested a $212,500 PPP loan for Premier Logistic. Included with the loan
application package were (1) an SBA Form 2483 PPP Borrower Application Form; and (2) five
IRS Forms 941 (Employer's Quarterly Federal Tax Returns) purportedly reflecting Premier
Logistic's payroll data from January 2019 to March 2020 The Premier Logistic PPP application
submitted to Bank 1 falsely stated that Premier Logistic's average monthly payroll was $85,000
and that the company had 23 employees.
20. The SBA Form 2483 falsely certified that Premier Logistic was "in operation on
February 15, 2020, and had employees for whom it paid salaries and payroll taxes or paid
independent contractors as reported on Form(s) 1099-MISC." The form further falsely certified
that the PPP loan funds would be "used to retain workers and maintain payroll or make mortgage
interest payments, lease payments, and utility payments, as specified under the Paycheck
Protection Program Rule." The form also acknowledged that failure to use the PPP funds in
accordance with the requirements of the PPP program, and making false statements in support of
the loan application, could result in criminal penalties.
21. The IRS Forms 941 that were included with the PPP loan application falsely
represented, among other things, that Premier Logistic had 23 employees. The purported Form
941 for the first quarter of 2020, falsely represented that Premier Logistic had paid $255,789.45
in wages, tips, and other compensation to its 23 employees. In fact, Premier Logistic made no
quarterly tax filings in 2019 or in the first quarter of 2020.
22. Ultimately, Bank 1 did not approve the Premier Logistic PPP loan.
The Fraudulent PPP Loan Application to Bank 2
23. In or around June 2020, the defendant told Individual 1 that Bank 1 denied his
PPP loan application for Premier Logistic. Individual 1 offered to connect the defendant with
someone who would help him submit another PPP loan application to Bank 2. The defendant
provided Individual 1 with the Premier Logistic business information, including the address and
EIN.
24. Individual 1 told the defendant that tax records were required as part of the loan
application. Individual 1 agreed to arrange to have someone prepare false tax records for the
defendant. Specifically, Individual 1 introduced the defendant to Individual 2, who represented
17
Case 2:20-cr-00196-BHL Filed 12/16/20 Page 31 of 33 Document 42
him/herself to be an accountant. Individual 2 then created a fake IRS Form 1040 (U.S.
Individual Income Tax Return) for the year 2019 in the defendant's name and an IRS Schedule
C (Form 1040 or 1040-SR) documenting Profit or Loss from Business (Sole Proprietorship) for
the year 2019 in the name of Premier Logistic. The defendant knew these were false tax records
as he had not submitted the IRS Form 1040 or the Schedule C to the IRS, and the information
about his income and the income and expenses of Premier Logistic contained on the form was
false. The defendant knew that the fake tax documents would be submitted to Bank 2 in order to
obtain a PPP loan.
25. The defendant then caused a second SBA Form 2483 for Premier Logistic l to be
submitted to Bank 2 seeking $17,500 in PPP funds This PPP application falsely stated that
Premier Logistic's average monthly payroll was $7,000 and that the company had two
employees.
26. The defendant agreed to pay a third party $1,000 after the loan was funded as a
"cut" for helping the defendant to obtain the loan. Bank 2 did not approve the loan request and
did not fund the loan.
The Fraudulent Economic Injmy Disaster Relief Program Loan Applications
27. The Economic Injury Disaster Loan ("EIDL") program was an SBA program that
provided low-interest financing to small businesses, renters, and homeowners in regions affected
by declared disasters.
28. The CARES Act authorized the SBA to provide EIDLs of up to $2 million to
eligible small businesses experiencing substantial financial disruption due to the COVID-19
pandemic. In addition, the CARES Act authorized the SBA to issue advances of up to $10,000
to small businesses within three days of applying for an EIDL. The amount of the advance was
determined by the number of employees the applicant certified having. The advances did not
have to be repaid.
29. In order to obtain an EIDL and advance, a qualifying business had to submit an
application to the SBA and provide information about its operations, such as the number of
employees, gross revenues for the 12-month period preceding the disaster, and cost of goods sold
in the 12-month period preceding the disaster. In the case of EIDLs for COVID-19 relief, the
12-month period was that preceding January 31, 2020. The applicant also had to certify that all
of the information in the application was true and correct to the best of the applicant's
knowledge.
30. EIDL applications were submitted directly to the SBA. The amount of the loan, if
the application was approved, was determined based, in part, on the information provided by the
applicant about employment, revenue, and cost of goods, as described above. Any funds issued
under an EIDL or advance were issued directly by the SBA. EIDL funds could be used for
payroll expenses, sick leave, production costs, and business obligations, such as debts, rent, and
mortgage payments. If the applicant also obtained a loan under the PPP, the EIDL funds could
The application was mistakenly submitted in the name "Premier Logistics Solutions."
18
Case 2:20-cr-00196-BHL Filed 12/16/20 Page 32 of 33 Document 42
not be used for the same purpose as the PPP funds.
31. The defendant was involved in the submission of two EIDL applications that
contained information he knew to be false:
a. On or about April 7, 2020, the defendant submitted an EIDL application in the
name of Premier Logistic. The application falsely claimed that Premier
Logistic had $360,000 in gross revenues from January 31, 2019 through
January 31, 2020. It also falsely claimed that Premier Logistic had four
employees. On or about May 4, 2020, the defendant received a $4,000 SBA
EIDL advance.
b. On or about June 22, 2020, Individual 3, using information provided by the
defendant, submitted an EIDL application falsely claiming that the defendant
owned and operated a sole proprietorship in the name of "Johnathan Henley."
The application falsely claimed that the sole proprietorship had $99,200 in
gross revenues from January 31, 2019 through January 31, 2020. It also
falsely claimed that the sole proprietorship had 10 employees. The SBA
denied the application as duplicative of the EIDL application for Premier
Logistic.
Statement to Law Enforcement
32. The defendant was interviewed by federal law enforcement agents on or about
July 7, 2020 and told the agents that Premier Logistic did not and had never had 23 employees,
as was stated in the PPP application. He falsely stated that he and CC-1 did not have an
agreement about how much the defendant would pay CC-1 once the Bank 1 PPP loan was
funded.
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Case 2:20-cr-00196-BHL Filed 12/16/20 Page 33 of 33 Document 42
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