Indictment — United States v. Matthew Jason Welch (District of Montana)

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An Indictment in United States of America v. Matthew Jason Welch, in the United States District Court for the District of Montana, Billings Division, filed AUG 21 2020. The indictment charges wire fraud in Counts I-II under Title 18 U.S.C. § 1343, with a stated penalty of 20 years imprisonment, $250,000 fine, and three years supervised release. Its general allegations describe the defendant, who is alleged to have purported to operate a sole proprietorship providing construction services, the Small Business Administration, and the Paycheck Protection Program under the CARES Act.

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COLIN M. RUBICH

MICHAEL KAKUK

Assistant U.S. Attorney

U.S. Attorney’s Office

2601 Second Ave. N., Ste. 3200
Billings, MT 59101

Phone: (406) 247-4684

Fax: (406) 657-6989

E-mail: Colin.Rubich@usdoj.gov

AMANDA R. VAUGHN

Trial Attorney

Fraud Section, U.S. Department of Justice
1400 New York Ave. NW

Washington, D.C. 20530

Phone: (202) 616-4530

Fax: (202) 514-0152

E-mail: Amanda. Vaughn@usdoj.gov

ATTORNEYS FOR PLAINTIFF
UNITED STATES OF AMERICA

FILED

AUG 21 2020 x”

Clerk, U.S. Courts
District Of Montana
Billings Division

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA

BILLINGS DIVISION

UNITED STATES OF AMERICA, CR 20- \Q2-BLG- Yur

Plaintiff, INDICTMENT

VS. WIRE FRAUD
(Counts I-II)

MATTHEW JASON WELCH, Title 18 U.S.C. § 1343

Defendant.

(Penalty: 20 years imprisonment, $250,000
fine, and three years supervised release)

THE GRAND JURY CHARGES:
COUNTS I-II
GENERAL ALLEGATIONS
At all times relevant to this Indictment:
The Defendant

1. The defendant, MATTHEW JASON WELCH, was a resident of
Laurel, Montana, in the District of Montana.

2. WELCH purported to operate a sole proprietorship in his name that
provided construction services (the “Welch Sole Proprietorship”).

3. | Onor about November 12, 2019, WELCH was charged by a criminal
information in the Twenty-Second Judicial District of Montana, in Stillwater
County, Montana, with three counts of Deceptive Practices for Financial Gain, a
felony under Montana state law.

4. Onor about January 9, 2020, WELCH appeared for arraignment on
the criminal information and pled not guilty.

The Small Business Administration
5. 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.

6. 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.

The Paycheck Protection Program

7. 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 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 certain other expenses, through a program referred
to as the Paycheck Protection Program (“PPP”).

8. 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 eligible to receive under the PPP. In addition, businesses
applying for a PPP loan had to provide documentation showing their payroll
expenses.

9. A business applying for a PPP loan had to certify (through its
authorized representative) that no individual owning 20 percent or more of the
equity of the business was subject to an indictment, criminal information, or other
means by which formal criminal charges are brought in any jurisdiction. The
authorized representative submitting the application had to initial next to the
answer provided. Businesses with owners meeting the equity threshold who had
pending criminal charges were ineligible for a PPP loan.

10. A PPP loan application had to be processed by a participating
financial institution (the “lender”). Ifa PPP loan application was approved, the
lender funded the PPP loan using its own monies, which were 100% guaranteed by
the SBA. Data from the application, including information about the borrower,

the total amount of the loan, and the listed number of employees, was transmitted
by the lender to the SBA in the course of processing the loan.

11. PPP loan proceeds were required to be used by the business on certain
permissible expenses—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.

Relevant Financial Institution and Related Entities

12. Financial Institution 1 was a Federal Deposit Insurance Corporation-
insured financial institution headquartered in Salt Lake City, Utah. Financial
Institution 1 participated in the SBA’s PPP as a lender, and as such, was authorized
to lend funds to eligible borrowers under the terms of the PPP.

13. Company 1 was a commercial real-estate lender with offices in
Pennsylvania, Michigan, and California. Company | participated in the SBA’s
PPP as a lender and as an agent for other lenders, such as Financial Institution 1.
When Company 1 served as an agent for other lenders, Company 1 would review
the loan applications. Ifa loan application received by Company 1 was approved
for funding, a partner financial institution, such as Financial Institution 1,

disbursed the loan funds to the applicant.
14. Company 2 was a privately held company specializing in small-
business loans and financing with offices in Michigan, New York, and Arizona.
Company 2 participated in the SBA’s PPP by acting as a service provider between
small businesses and certain PPP lenders, including Financial Institution 1 and
Company 1. Small businesses seeking PPP loans could apply through Company
2. Company 2 would pass the application package to a partner lender, such as
Company 1 and Financial Institution 1.

THE SCHEME TO DEFRAUD

15. Beginning in or around April 2020 and continuing thereafter until in
or around May 2020, in the State and District of Montana, and elsewhere, the
defendant, MATTHEW JASON WELCH, devised and intended to devise a
scheme and artifice to defraud Financial Institution 1, Company 1, Company 2, and
the SBA and to obtain money and property by false and fraudulent pretenses,
representations, and promises, said scheme being more specifically described
below, and thereafter to execute the scheme and artifice so devised, transmitted,
and caused to be transmitted by wire communication in interstate commerce
certain signals, writings, and sounds.

PURPOSE OF THE SCHEME TO DEFRAUD

16. The purpose of the scheme to defraud was for WELCH to unjustly
enrich himself by obtaining PPP loan proceeds under false and misleading
pretenses, including by making false statements about his criminal history, and to
use the PPP loan proceeds to pay for restitution and other costs related to pending
criminal cases against WELCH in the Twenty-Second Judicial District of Montana
and elsewhere.

MANNER AND MEANS

17. It was part of the scheme to defraud that, on or about April 23, 2020,
WELCH submitted a false and misleading PPP loan application to Company 2 in
the name of the Welch Sole Proprietorship seeking approximately $35,000 in PPP
funds (the “PPP Application”) to support payroll, lease and mortgage-interest
costs, and utility costs. The PPP Application identified WELCH as the 100
percent owner of the Welch Sole Proprietorship and was signed by WELCH.

18. Inthe PPP Application, WELCH falsely certified that he was not
“subject to an indictment, criminal information, arraignment, or other means by
which formal criminal charges are brought in any jurisdiction.” In fact, at the
time that WELCH made this certification, he was subject to a criminal information
in the Twenty-Second Judicial District of Montana.

19. In was further part of the scheme to defraud that on or about May 4,

2020 and on or about May 12, 2020, WELCH provided additional documentation,
including purported tax documents related to the Welch Sole Proprietorship’s
business, as requested by Company 2, to support his claim for PPP funds without
disclosing his criminal history.

20. It was further part of the scheme to defraud that WELCH regularly
called and emailed representatives of Financial Institution 1, Company 1,
Company 2, and the SBA asserting that he was entitled to and eligible to receive
the PPP loan funds for which he submitted the PPP Application.

21. In furtherance of the scheme to defraud, on or about May 14, 2020, in
a phone call with a law-enforcement agent posing as a representative of Company
1, WELCH falsely stated that he did not have any criminal charges pending against
him as of the date of the PPP Application.

22. It was also part of the scheme to defraud that WELCH did not
disclose to the SBA, Company 1, Company 2, or Financial Institution 1 that
WELCH planned to use the PPP loan funds to pay for restitution and other costs
associated with criminal charges WELCH faced in the Twenty-Second Judicial
District of Montana and elsewhere.

INTERSTATE WIRING
COUNT I

On or about April 23, 2020, in the State and District of Montana, the
defendant, MATTHEW JASON WELCH, for the purpose of executing the scheme
described above, did knowingly cause to be transmitted in interstate commerce, by
means of wire communications, an electronic transmission between Montana and
Company 2’s servers outside of Montana, that is, WELCH’s submission of the PPP
Application, all in violation of 18 U.S.C. § 1343.

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M1
COUNT II
On or about May 12, 2020, in the State and District of Montana, the
defendant, MATTHEW JASON WELCH, for the purpose of executing the scheme
described above, did knowingly cause to be transmitted in interstate commerce, by
means of wire communications, an electronic transmission between Montana and
Company 2’s servers outside of Montana, that is, WELCH’s submission of

additional documentation to support the PPP Application, all in violation of 18

U.S.C. § 1343.
A TRUE BILL. | - |
Foreperson signature redacted. Original document filed under seal.
FOREPERSON
4. _ i Crim. Summons ‘K
KURT G. ALME Warrant:

United State S Attorney. _

fa JOSEPH E/ all

Criminal Chief Assistant U.S. Attorney

10

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