Plea Agreement — United States v. Stephen Smith, No. 20-CR-196-2 (BHL) (Dkt. 73, E.D. Wis.)

Summary

Stephen Smith agreed to plead guilty to Count Two, bank fraud, of a fourteen-count indictment in United States v. Smith, No. 20-CR-196-2 (BHL) in the Eastern District of Wisconsin; the agreement was filed March 5, 2021. The indictment charged Smith with two counts of bank fraud and three counts of money laundering. The factual basis says the defendants submitted fraudulent PPP loan applications to Financial Institution 1, including one for CFA that falsely claimed an average monthly payroll of $97,000 and 38 employees, 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 14-level increase for a loss exceeding $550,000 and a 2-level increase for sophisticated means. The agreement also lists EIDL loan applications, all of which were declined.

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

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UNI1ED STALES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN

UNI 1ED STA 1ES OF AMERICA,

Plaintiff,

v. Case No. 20-CR-196-2 (BHL)

STEPHEN SMITH,

Defendant.

PLEA AGREEMENT

1. The United States of America, by its attorneys, Richard G. Frohling, Acting

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 and Leslie S. Garthwaite, Trial Attorneys, and the defendant, Stephen Smith,

individually and by attorney Craig S. Powell, 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 two counts of bank fraud, in violation of Title 18, United States

Code, Section 1344 and three counts 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 Two 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 Two 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 29 and 30 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 Two of the Indictment, the government must prove each of the following

propositions beyond a reasonable doubt:

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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

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 Two of the Indictment is seven (7) under

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

Specific Offense Characteristics

17. The parties further agree that a 14-level increase for a loss exceeding $550,000

under Sentencing Guidelines Manual § 2B1.1(b)(1)(H) is applicable to the offense level for the

offense charged in Count Two 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 Two of the Indictment.
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19. The parties further agree that a 2-level increase for the defendant's role as an

organizer, leader, manager, or supervisor under Sentencing Guidelines Manual § 3B1.1(c) is

applicable for the offense charged in Count Two of the Indictment.

Acceptance o f Re s pons ibility

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

States Probation Office will make its own recommendations to the sentencing court. The
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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

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

Defendant's Waiver of Rights

33. In entering this agreement, the defendant acknowledges and understands that he

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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

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
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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 perjury 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

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
9

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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

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
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may be different from those of the parties to this agreement.

Effect of Defendant's Breach ofPlea 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

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 ofthe implications of the sentencing guidelines. I have discussed all
aspects of this ease with my attorney and I am satisfied that my attorney has provided effective
assistance of counsel.

Date: 3i3P
fl
YPIAlt
STI
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:

Attorney for D

For the United States of America:

Date: March 5, 2021
LAURA CONNELLY
LESLIE S. GARTHWAITE
Trial Attorneys
U.S. Department of Justice
Cri2' al Division, Fraud Section

00.4
RICHARD G. FROH171;?......
lied States Attorney
A et astem District of Wrsconsi

STEPHEN GRAHAM
Assistant United States Attorney
12

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Ori_f kkk

UNITED qi-Eftk rCOURT
EASTERIEI I. . -' TVONSIN

UNITED STATES OF AMERICA, 1020 OCT 20 P 14: 25
plaintiff: CLERK Jr couwALED
20-titft196
v. 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 organi7er 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 SinalLnusiness 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 infornaation about the borrower, the total amount of the loan,

and the listed number of employees, was transmitted by the 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 1 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, HENLEY, 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 Logistic'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 pciiod. 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 Logi.stic'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

Case 2:20-cr-00196-BHL Filed 03/05/21 Page 19 of 32 Document 73
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 1 opened balk 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.

Case 2:20-cr-00196-BHL Filed 03/05/21 Page 20 of 32 Document 73
29. It was further part. of the scheme that when defendants T. SMITH, S. SMITH,

DAVIS, HAMILTON, HENLEY, Individual 1, Individual 2, and Individual 3 teamed 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 thc 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:
-;tir , .-:14,.. : • ,.,
-g. -- ' lrizik "''' S
- ' ' :42 . '''4,- . $.) ' 4 C ". S' iN ''' AZ S "--''

i'' V.
( min .111 p_ . 1 • 1 C
,

,..:' '.t- A.:. b ..,,,,, -44 •

Submission of fraudulent PPP loan
T. smn-H Apri,
l2
1 206 application for Davis Development to $177,500
DAVIS 20
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
T. SMITH
3 May 1,2020 application for Glory Transportation to $155,000
HAMILTON
Financial Institution 1

Case 2:20-cr-00196-BHL Filed 03/05/21 Page 21 of 32 Document 73
t ,:•.• -, , / !•,. ,
4 i .: 'i :„ ':.-.. ;. ' 1 rt ..- 'II c.' ''''' t'• 4 -'"?'
Comit 0 ant0 1 :• ,, r!, 2 . • .04,
•_ ,, ' =s- _ ,:a ti„..: •.'
Submission of fraudulent PPP loan
T. SMITH
4 May 8,2020 application for Rebels to Financial $155,000
S. SMITH
Institution 1
Submission of fraudulent PPP loan
5 T. SMITT-I May 15,2020 application for Comfort Care to Financial $230,000
Institution 1
Submission of fraudulent PPP loan
T. SMITH
6 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.

Case 2:20-cr-00196-BHL Filed 03/05/21 Page 22 of 32 Document 73
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:

-— L• -- : ' - • ,• A. rtitimate • - • • ... -...- -
C041-tf: .. 'W01410 10 - : * •-'1111?- si•Deie4tiaii-e , iilkiiitiiiW*.
• 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. sham May 18, 2020 account No. x9383, deposited into Financial
Institution 1 account ending in 1719, held in thc
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.
1.
0 S SMITH May 18, 2020
x4088, held in the name of S. SMITH d/b/a Complete
Fundamentals.

Case 2:20-cr-00196-BHL Filed 03/05/21 Page 23 of 32 Document 73
Approxintate
o . eigildi01 ' , Des"Orytton.ollrransaction .

Cashier's check for approximately $40,000
withdrawn from Comfort Care's Financial Institution
11 T. 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.

Case 2:20-cr-00196-BHL Filed 03/05/21 Page 24 of 32 Document 73
FORFEITURE ALLEGATIONS

The allegations contained in Counts 144 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 144 of this Indictment are hereby realleged and

incorporated by reference for the purpose of alleging forfeiture. Upon conviction of an offense

alleged in Counts 144, 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

Case 2:20-cr-00196-BHL Filed 03/05/21 Page 25 of 32 Document 73
Defendants, up to the value of the above-described forfeitable property.

A TRUE BILL:

FOREPERSON /

Dated: /C.-2... 2 t0
%frt/t/
4---IVINITHEW D. KR
United States Attorney

/t.-DANIEL KAHN
Acting Chief, U.S. Department of Justice, Fraud Section

Case 2:20-cr-00196-BHL Filed 03/05/21 Page 26 of 32 Document 73
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
14

Case 2:20-cr-00196-BHL Filed 03/05/21 Page 27 of 32 Document 73
Insurance Corporation.

7. As described in more detail below, the defendant caused the submission of eight
fraudulent PPP loans seeking approximately $627,500 in total.

The Economic Injury Disaster Relief Program

8. 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.

9. 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.

10. 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.

11. 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
not be used for the same purpose as the PPP funds.

Participants in the Schemes

12. The defendant was the registered agent of CFA Auto Transport LLC ("CFA") and
Complete Fundamentals, LLC ("Complete Fundamentals"), Wisconsin limited liability
companies. The defendant was also the organizer of New Beginnings Family Services LLC
("New Beginnings"), a Wisconsin limited liability company.

13. Thomas Smith was a resident of Pewaukee, Wisconsin, and the registered agent of
T & T Holdings LLC ("T&T Holdings"), a Wisconsin limited liability company.

14. Marvin Fitzgerald ("Fitzgerald") was a resident of Milwaukee, Wisconsin. On or
about May 21, 2020, Fitzgerald filed paperwork with the State of Wisconsin establishing himself
as the registered agent of New Beginnings.
15

Case 2:20-cr-00196-BHL Filed 03/05/21 Page 28 of 32 Document 73
15. Deon Petty ("Petty") was the registered agent of Rebels Paris, LLC ("Rebels"), a
Wisconsin limited liability company.

16. As of February 15, 2020, none of the above listed companies had any employees
for whom they paid salaries or payroll taxes, or independent contractors as reported on an IRS
Form 1099-MISC.

17. The defendant's scheme involved his facilitating the submission of fraudulent
loan applications for himself, Fitzgerald, and Petty for each of their companies, with the
defendant receiving proceeds of each.

The Fraudulent CFA PPP Loan Application to Bank 1

18. In or around April 2020, after learning that Thomas Smith had applied for and
received PPP loans for his own companies, the defendant approached Thomas Smith to help him
obtain a PPP loan for CFA. Thomas Smith agreed to help the defendant apply for a PPP loan for
CFA by providing the defendant with PPP loan application forms.

19. The defendant created a fraudulent PPP loan application package for CFA that
requested a $242,500 PPP loan. 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 CFA 's payroll data from January 2019 to March
2020 The CFA PPP application submitted to Bank 1 falsely stated that CFA's average monthly
payroll was $97,000 and that the company had 38 employees. The defendant knew that none of
this information was accurate when he created the application.

20. The SBA Form 2483 that the defendant created falsely certified that CFA 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 included with the PPP loan application that the defendant
created falsely represented, among other things, that CFA had 38 employees. The purported
Form 941 for the first quarter of 2020, falsely represented that CFA had paid $290,106.46 in
wages, tips, and other compensation and had 38 employees. In fact, CFA made no quarterly tax
filings in 2019 or in the first quarter of 2020.

22. On or about May 1, 2020, the defendant physically dropped off the CFA PPP
application at a Bank 1 branch. On or about May 6, 2020, Bank 1 approved the PPP loan and
wired approximately $242,500 to the CFA business checking account at Bank 1.

23. After receiving the PPP funds, the defendant obtained three cashier's checks
16

Case 2:20-cr-00196-BHL Filed 03/05/21 Page 29 of 32 Document 73
totaling $65,000 payable to Thomas Smith and two of his entities. The defendant also obtained
four cashier's checks totaling $61,000 payable to himself and his entities, including Complete
Fundamentals and New Beginnings.

The Fraudulent Rebels PPP Loan Application to Bank 1

24. In or around May 2020, the defendant, Thomas Smith and Petty agreed to obtain a
fraudulent loan for Rebels from Bank 1. Petty provided the defendant with certain information
about Rebels, including the company's address and tax identification number.

25. The defendant created a fraudulent PPP loan application package for Rebels that
requested a $155,000 PPP loan. 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 Rebels' payroll data from January 2019 to March
2020. The Rebels PPP application submitted to Associated Bank stated that Rebels' average
monthly payroll was $62,000 and that the company had 17 employees. The defendant knew that
none of this information was accurate when he created the application.

26. The SBA Form 2483 that the defendant created falsely certified that Rebels 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.

27. The IRS Forms 941 that were included with the PPP loan application that the
defendant created falsely represented, among other things, that Rebels had 17 employees. The
purported Form 941 for the first quarter of 2020, falsely represented that Rebels had paid
$190,486.16 in wages, tips, and other compensation to its 17 employees. In fact, Rebels made no
quarterly tax filings in 2019 or in the first quarter of 2020.

28. On or about May 8, 2020, Petty dropped off the Rebels PPP application at a Bank
1 branch. On or about May 18, 2020, Bank 1 approved the PPP loan and wired approximately
$155,000 to the Rebels business checking account at Bank 1.

29. Petty agreed to pay the defendant and Thomas Smith part of the PPP loan
proceeds. On or about May 18, 2020, Petty distributed $30,000 to the defendant and Complete
Fundamentals through cashier's checks.

The Fraudulent New Beginnings PPP Loan Application to Bank 1

30. In or around May 2020, the defendant, Thomas Smith, and Fitzgerald agreed to
obtain a fraudulent PPP loan for New Beginnings from Bank 1.

31. Before obtaining the loan, the defendant directed Fitzgerald to file paperwork
17

Case 2:20-cr-00196-BHL Filed 03/05/21 Page 30 of 32 Document 73
with the State of Wisconsin establishing Fitzgerald as the registered agent of New Beginnings
and to open a bank account at Bank 1 for New Beginnings. The defendant did this in order to
conceal his involvement in New Beginnings.

32. The defendant created a fraudulent PPP loan application package for New
Beginnings that requested a $230,000 PPP loan. 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 New Beginnings' payroll
data from January 2019 to March 2020. Fitzgerald submitted the loan application to Bank 1.
The New Beginnings PPP application submitted to Bank 1 falsely stated that New Beginnings'
average monthly payroll was $92,000 and that the company had 28 employees. The New
Beginnings loan application was denied.

False Statements to Bank 1

33. On or around June 7, 2020, Bank 1 froze the accounts for CFA, New Beginnings
and Rebels. Upon learning that the accounts were frozen, the defendant, Thomas Smith, Petty,
and Fitzgerald discussed providing a false story to Bank 1 and law enforcement about the
accounts and loan applications.

34. On or about June 8, 2020, a representative of Bank 1 called the defendant to ask
about the money he received from the PPP loans. The defendant made the following false
statements to the Bank 1 representative:

a. CFA had roughly 35 or 36 employees;
b. The cashier's checks made payable to himself was to pay CFA employees in cash;
c. The $65,000 he paid to Thomas Smith was payment for equipment and a trailer he
bought from Thomas Smith; and
d. The $5,000 he paid to New Beginnings was a loan to his friend Marvin who is the
owner of New Beginnings.

None of these statements were true, and the defendant knew that they were false when he made
them. The defendant made the statements to conceal the true purpose of the payments and the
false PPP applications he was involved in submitting.

False Statements to Law Enforcement

35. On or about July 8, 2020, the defendant was interviewed by phone by law
enforcement officers from the Federal Bureau of Investigation. The agents identified themselves
as federal law enforcement agents and represented to the defendant that they were conducting an
investigation into fraudulent PPP loan applications. The defendant made the following false
statements to the law enforcement agents:

a. The defendant used the PPP money on payroll, operating expenses, and to buy
equipment for CFA;
b. The defendant learned about the PPP program from Google, and no one helped
him fill out the application;
18

Case 2:20-cr-00196-BHL Filed 03/05/21 Page 31 of 32 Document 73
c. The defendant did not help Petty fill out the Rebels PPP application, aside from
answering one question; and
d. The defendant had not lied on any bank forms or tax documents.

Fraudulent EIDL Applications

36. From in or around April 2020 through in or around July 2020, the defendant
submitted seven fraudulent EIDL applications containing false statements about purported
businesses of the defendant. The applications contained false information about the number of
employees and gross revenues of these businesses, as detailed below:

# Employees
Approx. Gross Revenue
Name of Business Applicant (As of Jan.
Date (Jan. 31,2019 — Jan. 31,2020)
31,2020)

4/2/2020 $85,000 9
Complete Fundamentals
6/24/2020 $150,000 10
Lyft / Stephen Smith 6/24/2020 $3,599 1
Uber / Stephen Smith 6/24/2020 $4,000 2
6/23/2020 $25,000 10
New Beginnings
6/24/2020 $35,000 10
CFA 7/3/2020 $25,000 9

37. All of the EIDL loan applications were declined.

38. At all times, the defendant acted knowingly and intentionally.

Case 2:20-cr-00196-BHL Filed 03/05/21 Page 32 of 32 Document 73

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