United States v. David Kurt Schneider — Plea Agreement, Eastern District of Washington (ECF No. 59)

Summary

A plea agreement in United States v. David Kurt Schneider, Case No. 4:24-CR-06004-SAB-2, in the U.S. District Court for the Eastern District of Washington, filed May 8, 2024 as ECF No. 59. Schneider agrees to plead guilty to Count 1 of the Indictment, conspiracy to commit wire fraud and bank fraud under 18 U.S.C. §§ 1349, 1343, and 1344(1)-(2), a Class B felony. The agreement lists maximum penalties of not more than 30 years, up to 5 years of supervised release, a fine of no more than $1,000,000, restitution and a $100 special penalty assessment. Its statement of facts describes a conspiracy from March 2020 through at least December 2021 with co-defendants Kelly Jo Driver and Leif Gerald Larsen to defraud the Small Business Administration and PPP lenders. It is made through United States Attorney Vanessa R. Waldref and defense counsel Deric J. Orr and runs 30 pages.

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Cite this document

“United States v. David Kurt Schneider — Plea Agreement, Eastern District of Washington (ECF No. 59).” Original at ecf.waed.uscourts.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/plea-agreement-usa-v-driver-et-al-dkt-59-e-d-wash-36d064cded/, SHA-256 fe560b729f48567175a40681babc7bd411805bbe43a3ae2fd951c6fa8bcafa99.

Full text

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C0 ON WD Wn FP W NO

Case 4:24-cr-06004-SAB

Vanessa R. Waldref
United States Attorney
Eastern District of Washington

ECF No.

59 ___—sfiled 05/08/24
30

T
TRICT COUR
LED IN THE US. Oe WASHINGTON

:-ASTERN DISTRICT 0

MAY 08 2024

Freida K. Zimmerman

Jeremy J. Kelley

Assistant United States Attorney
Post Office Box 1494

Spokane, WA 99210-1494
Telephone: (509) 353-2767

CLERK
SEAN F. MCAVOY DEPUTY

UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF WASHINGTON

UNITED STATES OF AMERICA,
Case No.: 4:24-CR-06004-SAB-2
Plaintiff,
Plea Agreement

DAVID KURT SCHNEIDER,

Defendant.

Plaintiff, United States of America, by and through Vanessa R. Waldref,
United States Attorney the Eastern District of Washington, and Frieda K.
Zimmerman and Jeremy J. Kelley, Assistant United States Attorneys for the Eastern
District of Washington, and Defendant DAVID KURT SCHNEIDER
(“Defendant”), both individually and by and through Defendant’s counsel, Deric J.
Orr, agree to the following Plea Agreement.

1. Guilty Plea and Maximum Statutory Penalties

Defendant agrees to enter a plea of guilty to Count 1 of the Indictment filed
on August 15, 2023, which charges Defendant with Conspiracy to Commit Wire
Fraud and Bank Fraud, in violation of 18 U.S.C. §§ 1349, 1343, and 1344(1)}+(2), a
Class B felony.

Defendant understands that the following potential penalties apply:

PLEA AGREEMENT - 1
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a term of imprisonment of not more than 30 years;

a term of supervised release of up to 5 years;

a fine of no more than $1,000,000;

a. 9

restitution; and
e. a $100 special penalty assessment.

2. Supervised Release

Defendant understands that if Defendant violates any condition of
Defendant’s supervised release, the Court may revoke Defendant’s term of
supervised release, and require Defendant to serve in prison all or part of the term of
supervised release authorized by statute for the offense that resulted in such term of
supervised release without credit for time previously served on post-release
supervision, up to the following terms:

a. 5 years in prison if the offense that resulted in the term of Supervised
Release is a class A felony;
b. 3 years in prison if the offense that resulted in the term of Supervised
Release is a class B felony; and/or
c. 2 years in prions if the offense that resulted in the term of Supervised
Release is a class C or D felony.
Accordingly, Defendant understands that if Defendant commits one or more
violations of supervised release, Defendant could serve a total term of incarceration
greater than the maximum sentence authorized by statute for Defendant’s offense or
offenses of conviction.

3. The Court is Not a Party to this Plea Agreement

The Court is not a party to this Plea Agreement and may accept or reject it.
Defendant acknowledges that no promises of any type have been made to Defendant
with respect to the sentence the Court will impose in this matter.

Defendant understands the following:

a. sentencing is a matter solely within the discretion of the Court;

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following:

the Court is under no obligation to accept any recommendations
made by the United States or Defendant;

the Court will obtain an independent report and sentencing
recommendation from the United States Probation Office;

the Court may exercise its discretion to impose any sentence it
deems appropriate, up to the statutory maximum penalties;

the Court is required to consider the applicable range set forth in
the United States Sentencing Guidelines, but may depart upward
or downward under certain circumstances; and

the Court may reject recommendations made by the United
States or Defendant, and that will not be a basis for Defendant to

withdraw from this Plea Agreement or Defendant’s guilty plea.

Potential Immigration Consequences of Guilty Plea

If Defendant is not a citizen of the United States, Defendant understands the

pleading guilty in this case may have immigration consequences;
a broad range of federal crimes may result in Defendant’s
removal from the United States, including the offense to which
Defendant is pleading guilty;

removal from the United States and other immigration
consequences are the subject of separate proceedings; and

no one, including Defendant’s attorney or the Court, can predict
with absolute certainty the effect of a federal conviction on

Defendant’s immigration status.

Defendant affirms that Defendant is knowingly, intelligently, and voluntarily
pleading guilty as set forth in this Plea Agreement, regardless of any immigration

consequences that Defendant’s guilty plea may entail.

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5. Waiver of Constitutional Rights

Defendant understands that by entering this guilty plea, Defendant is

knowingly and voluntarily waiving certain constitutional rights, including the

following:
a. the right to a jury trial;
b. _ the right to see, hear and question the witnesses;
C. the right to remain silent at trial;

d. the right to testify at trial; and
e. the right to compel witnesses to testify.

While Defendant is waiving certain constitutional rights, Defendant
understands that Defendant retains the right to be assisted by an attorney through the
sentencing proceedings in this case and any direct appeal of Defendant’s conviction
and sentence, and that an attorney will be appointed at no cost if Defendant cannot
afford to hire an attorney. Defendant understands and agrees that any defense
motions currently pending before the Court are mooted by this Plea Agreement, and
Defendant expressly waives Defendant’s right to bring any additional pretrial
motions.

6. Waiver of Inadmissibility of Statements:

Pursuant to Federal Rule of Criminal Procedure 11(f), Defendant waives the
inadmissibility of any statements made by Defendant in the course of plea
discussions with the United States. This waiver shall apply if Defendant withdraws
Defendant’s guilty plea or breaches this Plea Agreement.

Defendant acknowledges that any statements made by Defendant in the course
of plea discussions in this case will be admissible against Defendant in the United
States’ case-in-chief if Defendant withdraws from, or breaches, this Plea Agreement,

in any manner.

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7. Elements of the Offense

The United States and Defendant agree that in order to convict Defendant of
Conspiracy to Commit Wire Fraud and Bank Fraud, in violation of 18 U.S.C.
§§ 1349, 1343, and 1344(1)-(2), the United States would have to prove the following
beyond a reasonable doubt.

a. First, beginning no later than March 2020 and continuing through at
least December 2021, in the Eastern District of Washington and
elsewhere, Defendant DAVID KURT SCHNEIDER and others, agreed
to commit wire fraud or bank fraud as charged in the Indictment; and

b. Second, Defendant DAVID KURT SCHNEIDER became a member of
the conspiracy knowing of at least one of its objects and intending to
help accomplish it.

8. Factual Basis and Statement of Facts

The United States and Defendant stipulate and agree that the following facts
are accurate; that the United States could prove these facts beyond a reasonable
doubt at trial; and that these facts constitute an adequate factual basis for Defendant’s
guilty plea. The United States and Defendant agree that this statement of facts does
not preclude either party from presenting and arguing, for sentencing purposes,
additional facts that are relevant to the Sentencing Guidelines computation or
sentencing, unless otherwise prohibited in this Plea Agreement.

Paycheck Protection Program and Economic Injury Disaster Loans
The Coronavirus Aid, Relief, and Economic Security Act (““CARES” Act)

was a federal law enacted on March 27, 2020, designed to provide emergency
financial assistance to the millions of Americans who were suffering the economic
effects caused by the COVID-19 pandemic. One source of relief provided by the
CARES Act was the authorization of forgivable loans to small businesses for job
retention and other certain expenses, through a program referred to as the Paycheck

Protection Program (“PPP”).

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In order to obtain a PPP, a qualifying business was required to submit a PPP
application signed by an authorized representative of the business. The PPP
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 funding. In the PPP application, the applicant
(through its authorized representative) was required to state, among other things: (a)
its average monthly payroll expenses; and (b) its number of employees. If the
applicant had no employees other than the owner, the applicant was required to
provide the gross income amount from a 2019 or 2020 IRS Form 1040, Schedule C.
These figures were used to calculate the amount of money the small business was
eligible to receive under the PPP. Additionally, the applicant was required to certify
that they were in operation as of February 15, 2020. The applicant was also required
to certify that the information in the application was true and correct to the best of
the applicant’s knowledge.

A business’s PPP application was received and processed, in the first instance,
by a participating lender. Ifa PPP application was approved, the participating lender
funded the PPP using its own monies. Data from the application, including
information about the borrower, the total amount of the loan, the listed number of
employees, and the gross income amount, was transmitted by the lender to the Small
Business Administration (“SBA”), an agency of the United States, in the course of
processing the loan.

PPPs were forgivable if the borrower met all the requirements of the program.
These requirements included that at least 60% of the PPP funds were used for
payroll, while the remaining 40% could be used for payroll, mortgage interest, rent,
and utilities. The funds were not to be used for personal expenses. In seeking
forgiveness, the borrower was required to certify that they used the funds as required.
PPP forgiveness applications were received through a cloud-based platform

(Summit) through the AWS GOV cloud server in Oregon. SBA transmitted the

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forgiveness payments to the PPP lender through the FMS servers in Sterling,
Virginia.

In addition to the PPP, the CARES act also authorized COVID-19 related
funding for the Economic Injury Disaster Loan (EIDL) program. EIDL is an SBA
program that provides low-interest funding to small businesses, renters, and
homeowners affected by declared disasters. The EIDL program also offered
Targeted EIDL Advance and Supplemental Targeted Advance grants for certain
qualifying businesses that did not have to be repaid.

In order to obtain an EIDL and advance, a qualifying business was required
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 the year
preceding January 31, 2020. The applicant was also required to certify that all the
information in the application was true and correct to the best of the applicant’s
knowledge.

The amount of an EIDL, if the application was approved, was determined
based, in part, on the information provided in the application about employment,
revenue, and cost of goods, as set forth above. Any funds issued under an EIDL or
Advance were issued directly by the SBA. EIDL funds could be used as working
capital for a business, such as for payroll expenses, employee sick leave, production
costs, and business obligations and expenses, such as business debts, office rent, and
office mortgage payments. If the applicant also obtained a loan under the Paycheck
Protection Program, the EIDL funds could not be used for the same purpose as the
Paycheck Protection Program funds.

EIDL applications were received in cloud-based platforms. The location of
the server through which the EIDL application was submitted was based on the date
the application was processed by SBA and the application number. EIDL Targeted

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Advance and Supplemental Advance applications were submitted through Rapid
Finance systems that utilizes Microsoft cloud-based servers located in Des Moines,
Iowa. EDIL disbursements were initiated by the SBA Denver Finance Center
located in Denver, Colorado, which transmitted the payment information through
the FMS system to the Department of Treasury server located in the State of
Virginia.
The Conspiracy
During all relevant times, Defendant DAVID KURT SCHNEIDER was a

resident of Kennewick, Washington. Beginning no later than in or about March
2020, and continuing through at least December 2021, in the Eastern District of
Washington and elsewhere, Defendant, together with co-defendants KELLY JO
DRIVER and LEIF GERALD LARSEN, engaged in a scheme and conspiracy to
defraud the Small Business Administration (SBA) and participating PPP lenders, by
applying for EIDL and PPP funds to which they were not entitled by making
materially false and fraudulent representations, statements, and promises concerning
the Defendant’s businesses, Solar Mobility LLC, RealNZ Water LLC, and Tempest
Tactical Solutions LLC as well as LARSEN’s business Larsen Firearms.
Specifically, Defendant and DRIVER made false and fraudulent statements to
the SBA and participating PPP lender banks about the gross revenues, cost of goods,
number of employees, and payroll costs for Defendant’s businesses. To support
these false assertions, Defendant and DRIVER created false and fraudulent payroll
records and IRS Form 941s purporting to show payroll paid to employees. These
false and fraudulent documents were submitted to participating PPP lenders to
induce them to approve the PPP applications submitted by Defendant and DRIVER.
As part of the conspiracy, Defendant and DRIVER transmitted and caused to be
transmitted, by means of wire communications in interstate commerce, writings,

signals, and sounds, to and from the Eastern District of Washington. Defendant paid

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DRIVER approximately 10% of the funds he received for her participation in the
conspiracy.

In approximately September 2020, Defendant discussed obtaining CARES
Act funding with co-defendant LEIF GERALD LARSEN. Defendant told LARSEN
that LARSEN could obtain funds using false and inflated numbers of employees and
payroll costs. Defendant also told LARSEN that DRIVER could help him create
payroll records and that DRIVER’s cost for doing so was 10% of the funds received.
Defendant then introduced LARSEN to DRIVER. Defendant also spoke with
LARSEN on occasion about the status of LARSEN’s PPP and EIDL applications.
LARSEN ultimately obtained $149,167 in PPP funds and attempted to obtain
$10,000 in EIDL Targeted Advance grant funding using false and fraudulent
representations about employees and payroll for LARSEN’s business, Larsen
Firearms.

Solar Mobility LLC

On or about March 31, 2020, Defendant created EIDL Application No.

3600237451 in the name of Solar Mobility LLC. At that time, Defendant

represented that Solar Mobility LLC had zero employee as well as $0 in gross
revenue and $0 in costs of goods sold in the twelve months preceding January 31,
2020. Based upon these representations, the SBA disbursed $1,000 to Defendant on
June 19, 2020.

On or about July 19, 2020, Defendant and DRIVER created a second EIDL
application, Application No. 3311313620 in the name of Solar Mobility LLC, which
was submitted to the SBA servers in Des Moines, Iowa, via interstate wires from
DRIVER in South Carolina. In the application, Defendant and DRIVER falsely and
fraudulently represented that Solar Mobility LLC had $45,000 in gross revenues and
$13,000 in cost of goods for the twelve-month period preceding January 31, 2020,
and that Solar Mobility LLC had five employees. In fact, as Defendant represented
in March 2020, Solar Mobility LLC had no gross revenue in the twelve months

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preceding 2020 and no employees other than Defendant. Defendant and DRIVER
certified in the application that this information was true and correct. These
representations and certification were materially false and fraudulent and were made
to induce the SBA to disburse EIDL funds to which Defendant and Solar Mobility
LLC were not eligible. The SBA declined to fund this EIDL application.

On or about August 6, 2020, Defendant and DRIVER submitted a PPP
application to Community First Bank in the name of Solar Mobility LLC.
Community First Bank is a federally-insured financial institution headquartered in
Kennewick, Washington. The application was submitted to Community First Bank
via interstate wires from DRIVER in South Carolina. In the application, Defendant
and DRIVER falsely and fraudulently represented that Solar Mobility had five
employees and an average monthly payroll of $23,747. In support of the application,
Defendant and DRIVER submitted false and fraudulent payroll records, which
purported to show wages paid to employees. In the application, Defendant and
DRIVER certified that the information in the application and supporting documents
were true and accurate. However, the certification and representations in the
application and supporting documents were materially false and fraudulent and made
to induce Community First Bank to disburse PPP funds to which Defendant and
Solar Mobility LLC were not eligible. Based upon the false and fraudulent
information, Community First Bank approved the PPP application, which was
assigned PPP No. 49653282-04 by the SBA. On August 17, 2020, Community First
Bank disbursed $59,300 to Defendant. Defendant then paid DRIVER $5,000 via an
interstate wire transfer of funds to her Pinnacle Bank account in South Carolina.
Defendant used the remaining funds for personal expenses, not payroll as agreed to
in the PPP application.

On or about March 2, 2021, Defendant and DRIVER submitted a PPP
forgiveness application to Community First Bank, requesting forgiveness of the

entire $59,300 disbursed. In the forgiveness application, Defendant and DRIVER

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falsely and fraudulently represented that at the time of the initial PPP application
Solar Mobility LLC had five employees, at the time of the forgiveness application
Solar Mobility LLC had ten employees, and that Solar Mobility LLC had spent
$218,500 in payroll costs between August 17, 2020, and December 31, 2020. This
application was ultimately denied by Community First Bank. Defendant did not
make any payments on PPP No. 49653282-04, which went into default. Community
First Bank charged off the PPP No. 49653282-04, which was guaranteed by the
SBA, shifting all losses to the SBA.

On or about January 15, 2021, Defendant and DRIVER submitted a Second
Draw PPP Application to Community First Bank in the name of Solar Mobility LLC.
In the application, Defendant and DRIVER falsely and fraudulently represented that
Solar Mobility LLC had ten employees, its average monthly payroll was $49,320,
its 2020 fourth quarter gross receipts were $11,250, and its 2020 first quarter gross
receipts were $28,000. In support of the application, Defendant and DRIVER
submitted false and fraudulent payroll reports and IRS From 941s purporting to show
wages paid to Solar Mobility LLC employees. In the application, Defendant and
DRIVER sought payment of $123,300 in PPP funds.

When Community First Bank asked for bank records to confirm the payroll
amounts listed, Defendant and DRIVER sent them account statements from
Defendant’s Bank of America account in the name of Solar Mobility LLC. Those
records show the only significant deposit into the account was from the first PPP
funds received in August 2020, and reflected spending on personal purchases and
large cash withdrawals. Defendant falsely told Community First Bank in an email,
“Due to the uncertainty of the Pandemic and banks being closed because of exposure
to Covid my employees wanted to be paid in cash, so we paid in cash and still filed
our 941s accordingly.” Community First Bank ultimately declined to fund the
Second Draw PPP Application.

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On March 12, 2021, Defendant and DRIVER submitted another Second Draw
PPP Application in the name of Solar Mobility LLC, this one to Bank of the West.
Bank of the West is a federally-insured financial institution headquartered in San
Francisco, California. In the application, Defendant and DRIVER falsely and
fraudulently represented that Solar Mobility LLC had ten employees, a monthly
payroll of $42,943, 2020 fourth quarter gross receipts of $21,251, and 2019 fourth
quarter gross receipts of $49,731. In support of the application, Defendant and
DRIVER submitted false and fraudulent payroll reports and IRS Form 941s
purporting to show wages paid by Solar Mobility LLC. Bank of the West declined
to fund this application.

Tempest Tactical Solutions LLC

On or about October 21, 2020, Defendant and DRIVER created EIDL

Application No. 3315031326 in the name of Tempest Tactical Solutions LLC, which

was submitted to the SBA servers in Des Moines, Iowa, via interstate wires from
DRIVER in South Carolina. In the application, Defendant and DRIVER falsely and
fraudulently represented that Tempest Tactical Solutions LLC had four employees
as well as $12,500 in gross revenues and $2,800 in cost of goods in the twelve
months preceding January 31, 2020. In the application, Defendant and DRIVER
also falsely and fraudulently represented that Tempest Tactical Solutions LLC had
been opened on January 12, 2020. In fact, Defendant only registered Tempest
Tactical Solutions LLC with the Washington State Secretary of State on September
1, 2020, Tempest Tactical Solutions LLC had no functioning business operations,
and Defendant only registered the company to apply for CARES Act funding.
Defendant and DRIVER certified in the application that the information provided
was true and correct. These representations and certification were materially false
and fraudulent and were made to induce the SBA to disburse EIDL funds for which
Defendant and Tempest Tactical Solutions LLC were not eligible. The SBA

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declined to fund the requested EIDL because it determined Tempest Tactical
Solutions LLC had only been formed in September 2020.

On January 15, 2021, Defendant and DRIVER submitted a PPP application to
Community First Bank in the name of Tempest Tactical Solutions LLC via interstate
wires from DRIVER in South Carolina. In the application, Defendant and DRIVER
falsely and fraudulently represented that Tempest Tactical Solutions had been in
operation since February 15, 2020, had seven employees, and had monthly payroll
expenses of $32,940. In support of the application, Defendant and DRIVER
submitted false and fraudulent payroll reports and IRS Form 941s purporting to show
wages paid to employees by Tempest Tactical Solutions LLC. In the application,
Defendant and DRIVER certified that the information in the application and
supporting documents were true and accurate. However, the certification and
representations in the application and supporting documents were materially false
and fraudulent and made to induce Community First Bank to disburse PPP funds to
which Defendant and Tempest Tactical Solutions LLC were not eligible. The
application sought payment of $82,250 in PPP funds. Community First Bank
identified that Tempest Tactical Solutions LLC had only been formed in September
2020 and declined to fund the loan.

ReaINZ Water LLC

On or about March 31, 2020, Defendant submitted EIDL Application No.
3600240545 to the SBA in the name of ReaINZ Water LLC. At that time, he
represented that RealNZ Water LLC had three employees as well as $100,000 in

gross revenues and $50,000 in cost of goods sold in the twelve month-period
preceding January 31, 2020. Based on these representations, SBA disbursed $3,000
in an EIDL advance grant and a further $22,000 in EIDL funds. On or about
February 22, 2021, Defendant and DRIVER submitted an application requesting a
modification to this EIDL, as well as a Targeted Advance grant. The application

was submitted to SBA servers in Des Moines, Iowa, via interstate wires from

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DRIVER in South Carolina. In the Targeted Advance application, Defendant and
DRIVER falsely and fraudulently represented that RealNZ Water LLC had ten
employees at the time of the application. Defendant and DRIVER certified in the
application that the information provided was true and correct. These
representations and certification were materially false and fraudulent and were made
to induce the SBA to disburse EIDL funding for which Defendant and RealNZ Water
were not eligible. The SBA declined to modify the original EIDL or to provide
further Targeted Advance funds.

On or about May 28, 2020, Defendant and DRIVER submitted a PPP
application to Bank of America in the name of RealNZ Water LLC. Bank of
America is a federally-insured financial institution. In the application, Defendant
and DRIVER falsely and fraudulently represented that ReaINZ Water had three
employees and an average monthly payroll of $23,000. In support of the application,
Defendant and DRIVER submitted false and fraudulent IRS Form 941s purporting
to show wages paid to employees by ReaINZ Water. In the application, Defendant
and DRIVER certified that the information in the application and supporting
documents were true and accurate. However, the certification as well as
representations in the application and supporting documents were materially false
and fraudulent and made to induce Bank of America to disburse PPP funds for which
Defendant and RealNZ Water were not eligible. The application sought payment of
$65,000 in PPP funds. Based upon the false representations, Bank of America
approved the application, which was assigned PPP No. 7812607800, and disbursed
$59,366 to Defendant on June 4, 2020. On or about June 7, 2020, Defendant wrote
and mailed to DRIVER a check in the amount of $5,000 as payment for her
assistance in obtaining the funds.

On or about February 18, 2021, Defendant and DRIVER submitted a PPP
Forgiveness Application to Bank of America, seeking to have the $59,366 disbursed
for PPP No. 7812607800 forgiven. In the application, Defendant and DRIVER

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falsely and fraudulently represented that ReaINZ Water LLC had five employees at
the time of the initial PPP application and had ten employees at the time of the loan
forgiveness application. Defendant and DRIVER also falsely and fraudulently
represented that RealINZ Water LLC had spent $59,366 on payroll costs between
June 4, 2020, and November 18, 2020. In support of the forgiveness application,
Defendant and DRIVER submitted false and fraudulent IRS Form 941s purporting
to show wages paid to employees by ReaINZ Water LLC. This loan forgiveness
application was not approved.

On or about June 14, 2021, Defendant and DRIVER submitted a second PPP
forgiveness application. In this application, Defendant and DRIVER falsely and
fraudulently represented that ReaINZ Water LLC had five employees at the time of
the initial PPP application, ten employees at the time of the PPP forgiveness
application, and that it had spent $149,500 on payroll costs between June 5, 2020,
and September 30, 2020. This second loan forgiveness application was also not
approved. Defendant did not make any payments on PPP No. 7812607800, which
went into default. The SBA, as guarantor of the loan, provided Bank of America
$60,231.28, consisting of the initial $59,366 loan amount plus $865.28 in
outstanding interest, and shifting the loss to the SBA.

On or about January 23, 2021, Defendant and DRIVER submitted a PPP
application to Bank of America in the name of RealNZ Water LLC, which was
assigned Bank of America Application Reference Number 4116781126. The
application was submitted to Bank of America via interstate wires from DRIVER in
South Carolina. This application did not identify the first draw PPP fund disbursed
to RealINZ Water LLC in June 2020. In the application, Defendant and DRIVER
falsely and fraudulently represented that ReaINZ Water LLC had ten employees, an
average monthly payroll of $49,320, an annual revenue of $194,672, and a profit
before tax of $68,431. The application sought payment of $123,300 in PPP funds.
Bank of America did not approve this application.

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Also on or about January 23, 2021, approximately ten minutes after the
submission of Application Reference Number 4116781126, Defendant and
DRIVER submitted a second PPP application to Bank of America, which was
assigned Application Reference Number 4116781286. This application was also
submitted to Bank of America via interstate wires from DRIVER in South Carolina.
This application identified the previous PPP funds disbursed to RealINZ Water LLC.
In the application, Defendant and DRIVER falsely and fraudulently represented that
ReaINZ Water LLC had ten employees, an average monthly payroll of $49,320,
$194,731 of annual revenue, and an annual profit before tax of $64,972. The
application sought payment of $123,300 in PPP funds. Bank of America did not
approve this application.

On or about February 18, 2021, Defendant and DRIVER submitted a final
PPP application to Bank of America, which was assigned Application Reference
Number 4117836832. This application was submitted to Bank of America via
interstate wires from DRIVER in South Carolina. In this application, Defendant and
DRIVER falsely and fraudulently represented that RealNZ Water LLC had ten
employees, an average monthly payroll of $49,833, an annual revenue of $248,970,
and an annual profit before tax of $67,498. The application sought payment of
$124,582 in PPP funds. In the application, Defendants DAVID KURT
SCHNEIDER and KELLY JO DRIVER certified, and caused to be certified, that the
information provided in the application was true and accurate in all material respects.
The application was submitted to Bank of America from IP address 204.116.238.60,
which was assigned to Defendant KELLY JO DRIVER in South Carolina. Bank of
America did not approve this application.

David K. Schneider dba RealINZ Water

On or about December 20, 2021, Defendant submitted EIDL Application No.

3325810626 to the SBA servers in Des Moines, Iowa, from the Eastern District of

Washington. In the application Defendant falsely and fraudulently represented that

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his business was a sole proprietorship, had actual 2019 gross revenues of $183,915,
had actual 2019 cost of goods sold of $86,649, had actual 2020 gross revenues of
$621,432, and had actual 2020 cost of goods sold of $0.00. Defendant certified that
this information was true and correct. However, the certification as well as
representations in the application were materially false and fraudulent and made to
induce SBA to disburse EIDL funds to which Defendant was not eligible. Defendant
requested a loan amount of $233,500. The SBA declined to fund this EIDL.

Between March 2020, and December 2021, Defendant and DRIVER, acting
with intent to defraud, obtained $118,666 in PPP funds by submitting false and
fraudulent information about Defendant’s businesses to PPP lender banks. During
the same period, Defendant and DRIVER, acting with intent to defraud, submitted
additional PPP and EJDL applications in the name of Defendant’s businesses
seeking additional payments of $563,632, all of which were declined by the PPP
lender bank or the SBA. Additionally, on March 2, 2021, LARSEN received
$149,167 in PPP funds and on February 22, 2021, attempted to obtain $10,000 in
EIDL Targeted Advance funds based upon false and fraudulent information about
LARSEN’s business, as was known and reasonably foreseeable to Defendant
through his conversations with LARSEN and DRIVER. Finally, the United States
also incurred a loss of $5,933.30 in lender fees for the disbursed PPP funds. In total,
the actual and intended loss through the material false and fraudulent pretenses,
promises, and representations of Defendant and his co-conspirators, DRIVER and
LARSEN, was at least $847,398.30.

9. The United States’ Agreements
The United States Attorney’s Office for the Eastern District of Washington

agrees that at the time of sentencing, the United States will move to dismiss
Defendant DAVID KURT SCHNEIDER from Counts 2—5, 7-10, 12-22, and 25 of
the Indictment filed on March 6, 2024, which charge Defendant with four counts of

Wire Fraud in violation of 18 U.S.C. § 1343, four counts of False, Fictitious, or

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Fraudulent Claims in violation of 18 U.S.C. §§ 287, 2, eleven counts of Bank Fraud
in violation of 18 U.S.C. § 1344(1)-(2), and one count of Money Laundering in
violation of 18 U.S.C. § 1957.

The United States Attorney’s Office for the Eastern District of Washington
agrees not to bring additional charges against Defendant based upon the information
it its possession at the time of this Plea Agreement and arising out of Defendant’s
conduct involving illegal activity charged in the Indictment, unless Defendant
breaches this Plea Agreement before sentencing. Nothing in this agreement is
intended to release any liability arising under Title 26, United States Code (Internal
Revenue Code).

10. United States Sentencing Guidelines Calculations

Defendant understands and acknowledges that the United States Sentencing
Guidelines (“U.S.S.G.” or “Guidelines”) apply and that the Court will determine
Defendant’s advisory range at the time of sentencing, pursuant to the Guidelines.
The United States and Defendant agree to the following Guidelines calculations.

a. Base Offense Level

The United States and the Defendant agree that the base offense level for
Conspiracy to Commit Wire Fraud and Bank Fraud is 7. U.S.S.G. § 2B1.1(a)(1).

b. Special Offense Characteristics

The United States and the Defendant agree that Defendant’s base offense level
is increased by 14 levels because the loss amount was more than $550,000, but less
than $1,500,000. See U.S.S.G. § 2B1.1(b)(1)(H). The parties are not aware of any
other specific offense characteristics that apply.

Cc. Acceptance of Responsibility

If Defendant pleads guilty and demonstrates a recognition and an affirmative
acceptance of personal responsibility for the criminal conduct; provides complete
and accurate information during the sentencing process does not commit any

obstructive conduct; accepts this Plea Agreement and enters a plea of guilty no later

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Oo mA NN nA FP W NY

oN NON MN BW NYO KF OO DON DA FP WYN KF OC

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than May 8, 2024, the United States will recommend that the Defendant receive a
two (2) level downward adjustment of responsibility, pursuant to U.S.S.G.
§3E1.1(a).

If the adjusted offense level determined by the Court is 16 or greater and the
Defendant pleads guilty and demonstrates a recognition and an affirmative
acceptance of personal responsibility for the criminal conduct; provides complete
and accurate information during the sentencing process does not commit any
obstructive conduct; accepts this Plea Agreement; and enters a plea of guilty no later
than May 8, 2024, the United States will, instead, move for a three (3) level
downward adjustment in the offense level for the Defendant’s timely acceptance of
responsibility, pursuant to U.S.S.G. § 3E1.1(a) and (b).

The United States and Defendant agree that at its option and on written notice
to Defendant, the United States may elect not to recommend a reduction for
acceptance of responsibility if, prior to the imposition of sentence, Defendant is
charged with, or convicted of, any criminal offense, or if Defendant tests positive
for any controlled substance.

d. Criminal History

The United States and Defendant have no agreement and make no
representations about Defendant’s criminal history category, which will be
determined by the Court after the United States Probation Office prepares and
discloses a Presentence Investigative Report.

11. Incarceration

The Defendant acknowledges that the United States will recommend a
sentence of incarceration within the sentencing guideline range determined by the
Court at the time of sentencing. The Defendant may recommend any lawful

sentence.

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oN NN BR WN KF OO ON DN FP WO NY KF CO

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12. Criminal Fine

The United States and Defendant may make any recommendation concerning
the imposition of a criminal fine. Defendant acknowledges that the Court’s decision
regarding a fine is final and non-appealable; that is, even if Defendant is unhappy
with a fine ordered by the Court, that will not be a basis for Defendant to withdrawal
from this guilty plea, or appeal Defendant’s conviction, sentence, or fine.

13. Mandatory Special Penalty Assessment

Defendant agrees to pay the $100 mandatory special penalty assessment to the
Clerk of Court for the Eastern District of Washington, pursuant to 18 U.S.C. § 3013,
and shall provide a receipt from the Clerk to the United States before sentencing as
proof of this payment.

14. Restitution

The United States and the Defendant hereby stipulate and agree that, pursuant
to 18 U.S.C. §§ 3663, 3663A and 3664, the Court should order the Defendant to pay
restitution to the United States Small Business Administration. Pursuant to 18
U.S.C. § 3663A(a)(3), the United States and Defendant agree that the appropriate
amount of restitution should be at least $126,204.18, which consists of at least
$63,199.58 for PPP loan application number 78126078-00 ($59,366.00 principal,
$865.28 accrued interest, and $2,968.30 lender fee) and at least $63,004.60 for PPP
loan application number 49653282-04 ($59,300.00 principal, $739.60 accrued
interest, and $2,965.00 lender fee). The United States reserves the right to request
additional restitution for any amounts owed to SBA relating to these two PPP loans,
including but not limited to, loan origination fees, recording fees, accrued interest,
and other loan costs.

With respect to restitution, the United States and the Defendant agree to the

following:

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Co OA N WD WH FP W NO

oN DO UN BP WN KY CT BO HN HD nH BPW NY K CO

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(a) Restitution Amount and Interest

The United States and Defendant stipulate and agree that, pursuant to 18
U.S.C. §§ 3663, 3663A and 3664, the Court should order restitution in an amount of
at least $126,204.18, and that any interest on this restitution amount, if any, should
be waived.

(b) Payments

The parties agree the Court will set a restitution payment schedule based on
Defendant’s financial circumstances. See 18 U.S.C. § 3664(f)(2), (3)(A). That
being said, Defendant agrees to pay not less than 10% of Defendant’s net monthly
income towards restitution.

Defendant understands the Treasury Offset Program (TOP) collects
delinquent debts owed to federal agencies. If applicable, the TOP may take part or
all of Defendant’s federal tax refund, federal retirement benefits, or other federal
benefits and apply these monies to Defendant’s restitution obligations. See 26
U.S.C. § 6402(d); 31 U.S.C. § 3720A; 31 U.S.C. § 3716.

Defendant also understands the United States may, notwithstanding the Court-
imposed payment schedule, pursue other avenues to ensure the restitution obligation
is satisfied, including, but not limited to, garnishment of available funds, wages, or
assets. See 18 U.S.C. §§ 3572, 3613, and 3664(m).

Nothing in this acknowledgment shall be construed to limit Defendant’s
ability to assert any specifically identified exemptions as provided by law, except as
set forth in this Plea Agreement.

Until Defendant’s fine and restitution obligations are paid in full, Defendant
agrees fully to disclose all assets in which Defendant has any interest or over which
Defendant exercises control, directly or indirectly, including those held by a spouse,
nominee or third party.

Until Defendant’s fine and restitution obligations are paid in full, Defendant

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agrees to provide waivers, consents, or releases requested by the U.S. Attorney’s
Office to access records to verify the financial information.

(d) Obligations, Authorizations, and Notifications

Defendant agrees to truthfully complete the Financial Disclosure Statement
that will be provided by the earlier of 30 days from Defendant’s signature on this
plea agreement or the date of the Defendant’s entry of a guilty plea, sign it under
penalty of perjury and provide it to both the United States Attorney’s Office and the
United States Probation Office. The parties agree that Defendant’s failure to timely
and accurately complete and sign the Financial Disclosure Statement, and any update
thereto, may, in addition to any other penalty or remedy, constitute Defendant’s
failure to accept responsibility under U.S.S.G §3E1.1.

Defendant expressly authorizes the United States Attorney’s Office to obtain
a credit report on Defendant upon the signing of this Plea Agreement. Until the fine
or restitution order is paid in full, Defendant agrees to provide waivers, consents or
releases requested by the United States Attorney’s Office to access records to verify
the financial information.

Defendant agrees to notify the Financial Litigation Unit of the United States
Attorney’s Office before Defendant transfers any interest in property with a value
exceeding $1,000 owned directly or indirectly, individually or jointly, by Defendant,
including any interest held or owned under any name, including trusts, partnerships
and corporations. Further, pursuant to 18 U.S.C. § 3664(k), Defendant shall notify
the Court and the United States Attorney’s Office within a reasonable period of time,
but no later than 10 days, of any material change in Defendant’s economic
circumstances that might affect defendant’s ability to pay restitution, including, but
not limited to, new or changed employment, increases in income, inheritances,
monetary gifts or any other acquisition of assets or money.

Until the fine or restitution order is paid in full, Defendant agrees to disclose

all assets in which Defendant has any interest or over which Defendant exercises

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control, directly or indirectly, including those held by a spouse, nominee or third
party.

Pursuant to 18 U.S.C. § 3612(b)(F), Defendant understands and agrees that
until a fine or restitution order is paid in full, Defendant must notify the United States
Attorney’s Office of any change in the mailing address or residence address within
30 days of the change.

Defendant acknowledges that the Court’s decision regarding restitution is
final and non-appealable; that is, even if Defendant is unhappy with the amount of
restitution ordered by the Court, that will not be a basis for Defendant to withdraw
Defendant’s guilty plea, withdraw from this Plea Agreement, or appeal Defendant’s
conviction, sentence, or restitution order.

15. Judicial Forfeiture

The parties agree forfeiture applies. See 18 U.S.C. § 981(a)(1)(C) and 28
U.S.C. § 2461(c); 18 U.S.C. § 982(a)(2)(b). With respect to forfeiture, the parties
agree to the following:

(a) Forfeitable Property

The United States shall seek a forfeiture money judgment in this matter and
will not seek to forfeit specific property, except as set forth in this Plea Agreement
or authorized by law. The United States will not seek to forfeit proceeds in an
amount exceeding what Defendant actually obtained as a result of the crime. See
Honeycutt v. U.S., 137 S. Ct. 1626 (2017).

(b) Money Judgment

Defendant agrees to forfeit to the United States all right, title, and interest in
the following property: a $118,666 money judgment, which represents the amount
of proceeds Defendant obtained as a result of his illegal conduct.

Defendant understands the United States may seek for Defendant to forfeit
substitute property in satisfaction of the money judgment if the United States can

PLEA AGREEMENT -— 23
Co mA NN WH FP W NO

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establish the following regarding the above-described property (i.e., the money
judgment): a) it cannot be located upon the exercise of due diligence; b) it has been
transferred or sold to, or deposited with, a third party; c) it has been placed beyond
the Court’s jurisdiction; d) it has substantially diminished in value; e) it has been
commingled with other property and cannot be divided without difficulty. See 21
U.S.C. § 853(p);18 U.S.C. § 982(b)(1). The United States will not seek to forfeit
substitute property from other defendants or co-conspirators; it may only forfeit
substitute property from Defendant. See 21 U.S.C. § 853(p).
(d) Application of Forfeited Property to Restitution

Defendant understands the United States will seek restitution for the victim(s)
in this case independent of this money judgment. It is the parties’ mutual
understanding that the United States Attorney’s Office will seek approval to apply
the proceeds of any forfeited assets to Defendant’s restitution obligations.
Defendant recognizes the final decision to approve this application rests with the
Attorney General. See 18 U.S.C. § 981(d), (e); see also 28 C.F.R. 9 et. seq.

(e) Cooperation on Forfeited Assets

Defendant agrees to cooperate with the United States in passing clear title on
all forfeited assets. Defendant also agrees to assist the United States in locating any
assets that 1) are the proceeds of illegal conduct (as outlined in this Plea Agreement)
and 2) have not been dissipated. If such assets are located, then Defendant will
stipulate to their forfeiture.

(f) Waivers

Defendant agrees to waive oral pronouncement of forfeiture at the time of
sentencing. See Fed. R. Crim. P. 32.2(b)(4)(B). Defendant stipulates and agrees to
waive all constitutional and statutory challenges in any manner (including direct
appeal, habeas corpus, or any other means) to any forfeiture carried out in
accordance with the Plea Agreement on any grounds, including a claim that

forfeiture in this case constitutes an excessive fine or punishment.

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Defendant stipulates and agrees to hold the United States, and its agents and
employees, harmless from any and all claims whatsoever in connection with the
investigation, the prosecution of charges, and the seizure and forfeiture of property
covered by this Plea Agreement.

16. Supervised Release

The United States and Defendant each agree to recommend 3 years of
supervised release. Defendant agrees that the Court’s decision regarding the
conditions of Defendant’s Supervised Release is final and non-appealable; that is,
even if Defendant is unhappy with the conditions of Supervised Release ordered by
the Court, that will not be a basis for Defendant to withdraw Defendant’s guilty plea,
withdraw from this Plea Agreement, or appeal Defendant’s conviction, sentence, or
any term of Supervised Release.

The United States and Defendant agree to recommend that in addition to the
standard conditions of supervised release imposed in all cases in this District, the
Court should also impose the following conditions:

a. The United States Probation Officer may conduct, upon
reasonable suspicion, and with or without notice, a search of
Defendant’s person, residences, offices, vehicles, belongings,
and areas under Defendant’s exclusive or joint control;

b. | Defendant will provide financial information and copies of
federal income tax returns, and allow credit checks, at the
direction of the United States Probation Office;

c. Defendant shall disclose all assets and liability to the United
States Probation Office and shall not transfer, sell, give away,
or otherwise convey or secret any asset, without the advance
approval of the United States Probation Office;

d. Defendant is prohibited from incurring any new debt, opening

new lines of credit, or enter any financial contracts or

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obligations without the prior approval of the United States
Probation Office; and

e. Defendant shall participate in and complete financial
counseling and life skills programs at the direction of the
United States Probation Office.

Accordingly, Defendant understands that if Defendant commits one or more
violations of supervised release, Defendant could serve a total term of incarceration
greater than the maximum sentence authorized by statute for Defendant’s offense or
offenses of conviction.

17. Payments While Incarcerated

If Defendant lacks the financial resources to pay the monetary obligations
imposed by the Court, Defendant agrees to earn money toward these obligations by
participating in the Bureau of Prisons’ Inmate Financial Responsibility Program.

18. Additional Violations of Law Can Void Plea Agreement

The United States and Defendant agree that the United States may, at its
option and upon written notice to the Defendant, withdraw from this Plea Agreement
or modify its sentencing recommendation if, prior to the imposition of sentence,
Defendant is charged with or convicted of any criminal offense or tests positive for
any controlled substance.

19. Waiver of Appeal Rights

In return for the concessions that the United States has made in this Plea

Agreement, Defendant agrees to waive Defendant’s right to appeal Defendant’s

PLEA AGREEMENT -— 26
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oN DN UN BPW NY KF ODO HN Dn BP WO NBO KF CO

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conviction and the sentence the Court imposes. Defendant expressly waives
Defendant’s right to appeal any fine, term of supervised release, or restitution order
imposed by the Court. Defendant expressly waives the right to file any post-
conviction motion attacking Defendant’s conviction and sentence, including a
motion pursuant to 28 U.S.C. § 2255, except one based on ineffective assistance of
counsel arising from information not now known by Defendant and which, in the
exercise of due diligence, Defendant could not know by the time the Court imposes
sentence. Nothing in this Plea Agreement shall preclude the United States from
opposing any post-conviction motion for a reduction of sentence or other attack upon
the conviction or sentence, including, but not limited to, writ of habeas corpus
proceedings brought pursuant to 28 U.S.C. § 2255.
20. Withdrawal or Vacatur of Defendant’s Plea

Should Defendant successfully move to withdraw from this Plea Agreement
or should Defendant’s conviction be set aside, vacated, reversed, or dismissed under
any circumstance, then:

this Plea Agreement shall become null and void;

b. the United States may prosecute Defendant on all available
charges;

c. The United States may reinstate any counts that have been
dismissed, have been superseded by the filing of another
charging instrument, or were not charged because of this Plea
Agreement; and

d. — the United States may file any new charges that would
otherwise be barred by this Plea Agreement.

The decision to pursue any or all of these options is solely in the discretion of
the United States Attorney’s Office.

Defendant agrees to waive any objections, motions, and/or defenses

Defendant might have to the United States’ decisions to seek, reinstate, or reinitiate

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charges if a count of conviction is withdrawn, set aside, vacated, reversed, or
dismissed, including any claim that the United States has violated Double Jeopardy.

Defendant agrees not to raise any objections based on the passage of time,
including but not limited to, alleged violations of any statutes of limitation or any
objections based on the Speedy Trial Act or the Speedy Trial Clause of the Sixth
Amendment.

21. Waiver of Attorney Fees and Costs

Defendant agrees to waive all rights Defendant may have under the “Hyde
Amendment,” Section 617, P.L. 105- 119 (Nov. 26, 1997), to recover attorneys’ fees
or other litigation expenses in connection with the investigation and prosecution of
all charges in the above-captioned matter and of any related allegations (including,
without limitation, any charges to be dismissed pursuant to this Plea Agreement or
any charges previously dismissed or not brought as a result of this Plea Agreement).

22. Integration Clause

The United States and Defendant acknowledge that this document constitutes
the entire Plea Agreement between the United States and Defendant, and no other
promises, agreements, or conditions exist between the United States and Defendant
concerning the resolution of the case. This Plea Agreement is binding only on the
United States Attorney’s Office for the Eastern District of Washington, and cannot
bind other federal, state, or local authorities. The United States and Defendant agree
that this Agreement cannot be modified except in a writing that is signed by the

United States and Defendant.

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I have read this Plea Agreement and I have carefully reviewed and discussed
every part of this Plea Agreement with my attorney. I understand the terms of this
Plea Agreement. I enter into this Plea Agreement knowingly, intelligently, and
voluntarily. I have consulted with my attorney about my rights, I understand those
rights, and I am satisfied with the representation of my attorney in this case. No
other promises or inducements have been made to me, other than those contained in
this Plea Agreement. No one has threatened or forced me in any way to enter into

this Plea Agreement. I agree to plead guilty because I am guilty.

David Kurt Schneider Date
Defendant

I have read the Plea Agreement and have discussed the contents of the
agreement with my client. The Plea Agreement accurately and completely sets forth
the entirety of the agreement between the parties. I concur in my client’s decision
to plead guilty as set forth in the Plea Agreement. There is no legal reason why the
Court should not accept Defendant’s guilty plea.

Deric Orr Date
Attorney for Defendant

PLEA AGREEMENT -— 30

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