Plea Agreement — United States v. Samuel A. Davis, No. 20-CR-196-3 (BHL) (Dkt. 25, E.D. Wis.)

Summary

This plea agreement in United States v. Samuel A. Davis, Case No. 20-CR-196-3 (BHL) in the U.S. District Court for the Eastern District of Wisconsin, was filed November 5, 2020 as Document 25. Davis agrees to plead guilty to Count One of the Indictment, bank fraud under Title 18, United States Code, Section 1344, which carries a maximum of thirty (30) years and $1,000,000. The parties agree to recommend a base offense level of seven (7), a 10-level increase for a loss exceeding $150,000 and an increase for sophisticated means. Attachment B states that Davis signed a PPP loan application seeking $177,500 for Davis Development Group, Inc. and dropped it off at Bank 1, falsely stating average monthly payroll of $71,000 and 20 employees. It says a co-conspirator, CC-1, told Davis that $75,000 of what was obtained would go to CC-1.

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Full text

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN

UNITED STATES OF AMERICA,

Plaintiff,

v. Case No. 20-CR-196-3 (BHL)

SAMUEL A. DAVIS,

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, Samuel A. Davis,

individually and by attorney John Somerville, 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, and one count of money laundering, in violation of Title 18, United States

Code, Section 1957.

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

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explained to him by his attorney.

4. The defendant voluntarily agrees to plead guilty to Count One 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 One 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.

Dismissal of Remaining Counts

9. The government agrees to move to dismiss the remaining counts of the indictment

as to this defendant at the time of sentencing.

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Elements

10. The parties understand and agree that in order to sustain the charge of bank fraud

as set forth in Count One 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
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 carry 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

11. 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.

12. 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.

13. 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.

14. 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
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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

defendant’s criminal history.

Sentencing Guidelines Calculations

15. 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

16. 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

17. The parties agree to recommend to the sentencing court that the applicable base

offense level for the offense charged in Count One of the Indictment is seven (7) under

Sentencing Guidelines Manual § 2B1.1(a)(1).

Specific Offense Characteristics

18. 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
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offense charged in Count One of the Indictment.

19. 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 One of the Indictment.

Acceptance of Responsibility

20. 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

21. 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.

22. Both parties reserve the right to make any recommendation regarding any other

matters not specifically addressed by this agreement.

23. The government agrees to recommend a sentence within the applicable sentencing

guideline range, as determined by the court.

Court’s Determinations at Sentencing

24. 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
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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

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.

25. 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

26. 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.

27. 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
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interest and cooperate in the liquidation of any such assets.

Special Assessment

28. The defendant agrees to pay the special assessment in the amount of $100 prior to

or at the time of sentencing.

Restitution

29. 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.

30. 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

31. 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.

32. 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.

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Defendant’s Cooperation

33. 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

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

34. 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
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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

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.

35. 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 perjury or

false statement.

36. The defendant acknowledges and understands that he will be adjudicated guilty of
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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.

37. 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

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.

38. The defendant knowingly and voluntarily waives any claim or objection he may

have based on statute of limitations.

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

filed and become part of the public record in this case.
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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

agrees that no threats, promises, representations, or other inducements have been made, nor

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agreements reached, other than those set forth in this agreement, to induce the defendant to plead

guilty.

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11/5/2020 Leslie S. Garthwaite

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Attachment A

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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.

5. 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
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Insurance Corporation.

Participants in the Scheme

7. The defendant was a citizen of the United States and resident of Chicago, Illinois.

8. The defendant was the owner and registered agent of Davis Development Group,
Inc. (“Davis Development”), an Illinois corporation based in Chicago, Illinois. Davis
Development’s Employer Identification Number issued by the U.S. Internal Revenue Service
ended in 3467. Davis Development has been registered with the Illinois Secretary of State as a
domestic corporation since on or about March 23, 2017. Davis Development had been
administratively dissolved with the Illinois Secretary of State as of on or about August 10, 2018.
The defendant reinstated the company on or about May 2, 2020. As of February 15, 2020, Davis
Development did not have any employees for whom it paid salaries or payroll taxes, or
independent contractors as reported on an IRS Form 1099-MISC.

9. Co-Conspirator 1 (“CC-1”) was a citizen of the United States and resident of
Milwaukee, Wisconsin. CC-1was the registered agent of Company A, a Wisconsin limited
liability company (“Company A”).

10. Co-Conspirator 2 (“CC-2”) was a citizen of the United States and resident of
Milwaukee, Wisconsin.

11. Co-Conspirator 5 (“CC-5”) 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.

The Fraudulent PPP Loan Application

12. In or around April 2020, CC-1approached the defendant about fraudulently
obtaining money through a PPP loan for the defendant’s company, Davis Development. As part
of these discussions, CC-1told the defendant that he would need to pay $75,000 of what he
obtained to CC-1. The defendant understood that the $75,000 would be shared between CC-1
and CC-2, who the defendant had known since college and understood to be CC-1’s brother.
The defendant agreed to this plan.

13. At this time, Davis Development was not operational and was not in good
standing with the State of Illinois. CC-1sent the defendant $400 to be used towards the fee
required to reinstate Davis Development with the State of Illinois. The defendant paid the
remaining portion of the fee.

14. CC-1 completed the PPP loan application in Davis Development’s name and
provided it to the defendant. The defendant signed the loan application form and physically
dropped it off at a branch of Bank 1 in Wisconsin on or about May 6, 2020.

15. In connection with the effort to obtain the loan, CC-1 directed the defendant to
open a business checking account for Davis Development at Bank 1. The defendant did so on or
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about May 5, 2020. The defendant was the sole authorized signatory on the account. On or about
May 5, 2020, the defendant signed a depository declaration on behalf of Davis Development
with Bank 1.

16. The PPP loan application package for Davis Development submitted to Bank 1,
requested a $177,500 PPP loan for Davis Development. 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 Davis Development’s
payroll data from January 2019 to March 2020 The Davis Development PPP application
submitted to Bank 1 falsely stated that Davis Development’s average monthly payroll was
$71,000 and that the company had 20 employees. The defendant knew that none of this
information was accurate when he dropped off the loan application.

17. The SBA Form 2483 falsely certified that Davis Development 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.

18. The IRS Forms 941 that were included with the PPP loan application falsely
represented, among other things, that Davis Development had 20 employees. The purported
Form 941 for the first quarter of 2020, falsely represented that Davis Development had paid
$214,785.74 in wages, tips, and other compensation to its 20 employees. In fact, Davis
Development made no quarterly tax filings in 2019 or in the first quarter of 2020.

19. On or about May 8, 2020, Bank 1 approved the PPP loan and wired
approximately $177,500 to the Davis Development business checking account at Bank 1.
Around that time, CC-1contacted the defendant to find out if the loan money was deposited. CC-
1 told the defendant that he expected the deposit to have been made because others with whom
he was involved had received their PPP loan funds by that time. The defendant understood this
to mean that CC-1 was working with other people, situated similarly to the defendant, who he
was using to obtain additional PPP loan funds. The defendant contacted Bank 1 and confirmed
that the funds were deposited.

20. After receiving the PPP funds, on or about May 14, 2020, the defendant obtained
a cashier’s check from Davis Development’s business checking account for $75,000 payable to
Company A. He made the cashier’s check payable to that company at CC-1’s direction. A few
days later, CC-1 and CC-2 drove to the defendant’s home in Chicago and picked up the check.

21. In addition, the defendant transferred $100,000 of PPP funds from the Davis
Development business checking account at Bank 1 to the Davis Development business savings
account at Bank 1. The defendant then transferred $75,000 of PPP funds from the Davis
Development business savings account at Bank 1 to an investment account at Broker 1 held in
his name.
17

Case 2:20-cr-00196-BHL Filed 11/05/20 Page 31 of 33 Document 25
22. In addition to obtaining the PPP loan for Davis Development, the defendant
introduced CC-5 to CC-1 to enable CC-5 to obtain a fraudulent PPP loan for Premier Logistic.
After introducing CC-5 to CC-1, the defendant drove with CC-5 to Wisconsin to meet with CC-1
to obtain paperwork for CC-5’s company’s PPP loan. CC-1 provided CC-5 with completed loan
paperwork. As part of his discussions with CC-5, the defendant understood that CC-1 agreed to
get CC-5 a loan for around $200,000.

23. In or around May 2020, CC-1 also asked the defendant to contact an unidentified
woman to facilitate her obtaining a PPP loan for her company (in the same way that CC-1 had
obtained the loan for the defendant). The defendant declined to do so.

False Statements to Bank 1

24. In or around June 2020, CC-2 contacted the defendant notifying him that Bank 1
froze CC-2’s bank accounts and CC-1’s bank accounts. The defendant’s accounts were not yet
frozen. In this phone call, CC-2 suggested that the defendant needed to try to protect CC-1 from
any consequences for submitting fraudulent loan documents. Soon after that call, CC-1
contacted the defendant about the loan application they obtained for Davis Development. CC-1
provided the defendant with a joint venture agreement by email and told the defendant that he
should sign it to make it look like the $75,000 payment was for an investment Davis
Development was making with Company A into a nursing home. CC-1 told the defendant that
he needed the signed agreement to share with the bank. The defendant signed the joint venture
agreement on behalf of Davis Development even though he knew it was false and designed to
conceal the true purpose of his payment to Company A.

25. On or about June 7, 2020, Bank 1 froze the funds in the Davis Development
accounts. On or about June 9, 2020, a Bank 1 representative called the defendant to discuss the
Davis Development PPP loan. During the conversation, the defendant falsely stated that he
started Davis Development in 2011 using “seed money” from his parents. The defendant
described the business as a tutoring program which also offered youth sports and summer
basketball camps. Though the defendant claimed the business was in Chicago, the defendant
falsely represented that he had recently invested in an assisted living facility “somewhere in
Milwaukee.” He claimed to have learned about the investment opportunity from a friend who
knew CC-1, who the defendant understood to already own several group homes. The defendant
identified CC-1’s company, Company A as the entity with which he was investing. The
defendant falsely claimed that Davis Development had between 15-30 employees depending on
different projects. He claimed to pay stipends to coaches, but said that everything was “shut
down” due to COVID. The defendant also confirmed that he prepared and submitted the
application to Bank 1. He had not previously banked with Bank 1 before seeking the PPP loan
and opening the account there, but claimed it was because a friend referred him because Bank 1
was “more helpful and accommodating.” The defendant knew these statements were not true
when he made them.

Case 2:20-cr-00196-BHL Filed 11/05/20 Page 32 of 33 Document 25
False Statement to Law Enforcement

26. On or about July 7, 2020, the defendant was interviewed by agents of the Federal
Bureau of Investigation. In furtherance of the scheme and to conceal the existence of and his
participation in the scheme, the defendant falsely represented to agents that Davis Development
has approximately 10-30 employees and that he pays these employees in cash.

27. The defendant further told agents that he opened an account with Bank 1 and
applied for the PPP loan at Bank 1 because he heard that Bank 1 catered to smaller businesses.
He confirmed that he personally dropped off the application at a Milwaukee branch of Bank 1.
He told agents that he knew the PPP loans could be used to pay employees, rent, and purchase
business related items, and falsely claimed that he applied for the loan to be able to pay his
employees and grow his business. During the interview, the defendant confirmed that he
received $177,500 in PPP loan funds. He confirmed that he made out a cashier’s check to
Company A for approximately $75,000 purportedly for an investment with CC-1. The defendant
also confirmed that CC-1 came to Chicago to collect the cashier’s check from the defendant.

28. Though later in the interview, the defendant admitted that he overstated Davis
Development’s employees and pay in the PPP application, he continued to falsely claim that CC-
1 had nothing to do with the idea to apply for a PPP loan. The defendant also falsely claimed
that the last time he spoke to CC-1 was one or two months prior to the interview.

Case 2:20-cr-00196-BHL Filed 11/05/20 Page 33 of 33 Document 25

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