Second Superseding Indictment, United States v. Donte Jamal McClellon (W.D. Wash., November 29, 2023)

Summary

A second superseding indictment in United States v. Donte Jamal McClellon, No. CR22-0073-LK, in the U.S. District Court for the Western District of Washington at Seattle, filed November 29, 2023 as Document 174. The grand jury charges wire fraud in Counts 1-3 under Title 18, United States Code, Sections 1343 and 2, and bank fraud in Counts 4-5. It charges that McClellon submitted at least seven false PPP loan applications for entities including Frostlake, LLC, Skylake, LLC and Cannonlake, LLC, and obtained at least three PPP loans totaling at least $500,948. The wire fraud counts cover transmissions to Company One on May 7, 2020, May 8, 2020 and May 12, 2020 for a Frostlake application seeking at least $20,833. The forfeiture allegation lists approximately $16,394.44 seized on or about May 16, 2022 from a Webull Financial, LLC account.

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Case 2:22-cr-00073-LK Document174 Filed 11/29/23. Page1of13

Presented to the Court by the foreman of the The Honorable Lauren King
Grand Jury in open Court, in the presence of

the Grand Jury and FILED in the USS.

DISTRICT COURT at Seattle, Washington.

Subr ian, Clerk
» ks

UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF WASHINGTON

AT SEATTLE
UNITED STATES OF AMERICA, NO. CR22-0073-LK.
Plaintiff
y SECOND SUPERSEDING
DONTE JAMAL MCCLELLON,
Defendant.

The Grand Jury charges that:
The Paycheck Protection Program

1. 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 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.

Second Superseding Indictment - 1 UNITED STATES ATTORNEY
United States v. MeClellon 700 STEWART STREET, SUITE 5220

: . SEATTLE, WASHINGTON 98101
USAO No. 2021R00147

(206) 553-7970
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2. In order to obtain a PPP loan, a qualifying business was required to submit
a PPP loan application 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 a PPP loan. In the PPP loan application, the small business (through its
authorized representative) was required 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 were required to provide documentation
showing their payroll expenses.

3. PPP loan applications were processed by a participating lender. If a PPP
loan application was approved, the participating lender funded the PPP loan using its own
money, which the U.S. Small Business Administration (“SBA”) guaranteed in its
entirety. The lender transmitted to the SBA, in the course of processing the loan, data
from the application, including information about the borrower, the total amount of the
loan, and the listed number of employees.

4. The business receiving the PPP loan proceeds was required to spend the
funds on certain permissible expenses, such as 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 allowable expense items within
a designated period of time and used a specified portion of the PPP loan proceeds on
payroll expenses.

The Defendant and Relevant Entities

J. The defendant, DONTE JAMAL MCCLELLON, resided within the

Western District of Washington through at least the end of June 2020.

Second Superseding Indictment - 2 UNITED STATES ATTORNEY

United States v. McClellon 700 STEWART STREET, SUITE 5220
, S 101

USAO No. 2021R00147 EATTLE, WASHINGTON 9810

(206) 553-7970
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6. MCCLELLON owned and controlled various corporate entities registered
in Washington State, including Frostlake, LLC (“Frostlake”), Skylake, LLC (“Skylake”),
and Cannonlake, LLC (“Cannonlake”) (collectively, the “McClellon Entities”). None of
the McClellon Entities had employees or payroll expenses of its own.

7. Frostlake was a limited liability company that was registered with
Washington State in or around December 2016. Frostlake purportedly engaged in retail
and wholesale trade. Its principal place of business was MCCLELLON’s residential
address in Seattle, Washington. MCCLELLON was listed as its sole governor.

a. Frostlake was administratively dissolved on or around May 3, 2018.
On or about February 5, 2021, MCCLELLON filed documentation with Washington
State to reinstate Frostlake.

b. From at least on or around January 1, 2018 through at least
December 31, 2020, Frostlake had no employees for which it paid federal payroll taxes.

8. Skylake was a limited liability company that was registered with
Washington State in or around April 2016. Skylake purportedly engaged in finance and
real estate, and its principal place of business was MCCLELLON’s residential address in
Seattle, Washington. MCCLELLON was listed as its sole managing partner and
governor.

a. Skylake was administratively dissolved on or around September 1,
2017. On or about December 27, 2017, MCCLELLON filed documentation with
Washington State to reinstate Skylake.

b. Skylake was administratively dissolved again on or around
September 3, 2019. On or around June 13, 2020, MCCLELLON filed documentation
with Washington State to reinstate Skylake.

C. From at least on or around January 1, 2018 through at least

December 31, 2020, Skylake had no employees for which federal payroll taxes were paid.

Second Superseding Indictment - 3 UNITED STATES ATTORNEY

United States v. McClellon 700 STEWART STREET, SUITE 5220
W

USAO No. 2021R00147 SEATTLE, WASHINGTON 98101

(206) 553-7970
we) bo bo — — — — — — —t — — oy

Case 2:22-cr-00073-LK Document174 Filed 11/29/23. Page4of13

9. Cannonlake was a limited liability company that was registered with
Washington State in or around December 2016. Cannonlake purportedly engaged in real
estate, retail, and wholesale trade. Its principal place of business was MCCLELLON’s
residential address in Seattle, Washington. MCCLELLON was listed as its sole governor.

a. Cannonlake was administratively dissolved on or about May 3,
2018. On or about June 17, 2020, MCCLELLON filed documentation with Washington
State to reinstate Cannonlake.
b. From at least on or around January 1, 2018 through at least
December 31, 2020, Cannonlake had no employees for which federal payroll taxes were
paid.
Relevant PPP Lenders

10. | Company One was a financial technology company headquartered in the
State of Georgia. Company One participated in the PPP program as an SBA-approved
lender. Small businesses seeking PPP loans could apply through Company One for PPP
loans. Company One would review the loan applications and if the loan was approved for
funding, Company One would disburse the loan directly to the borrower.

11. Bank One was a financial institution based in the State of Florida whose
deposits were insured by the FDIC. Bank One participated as an SBA-approved PPP
lender to small businesses.

12. Bank Two was a financial institution based in Utah whose deposits were
insured by the FDIC. Bank Two participated as an SBA-approved PPP lender to small
businesses.

COUNTS 1-3

(Wire Fraud)
13. The allegations in Paragraphs 1-12 are realleged and incorporated by

reference as if set forth in full herein.

Second Superseding Indictment - 4 UNITED STATES ATTORNEY
United States y. McClellon 700 STEWART STREET, SUITE 5220

. SEATTLE, WASHINGTON 98101
USAO No. 2021R00147 ey

(206) 553-7970
Case 2:22-cr-00073-LK Document174 Filed 11/29/23. Page5of13

14. Beginning at a time unknown but not later than in or about May 2020 and
continuing through at least February 2021, in King County, within the Western District of
Washington, and elsewhere, the defendant, DONTE JAMAL MCCLELLON, knowingly
and with intent to defraud, devised and executed and attempted to execute a scheme and
artifice to defraud Company One to obtain money and property in the custody and control
of Company One by means of material false and fraudulent pretenses, representations,
and promises, and the concealment of material facts, all by filing false and fraudulent
applications for PPP funds.

The Scheme and Artifice to Defraud

15. The essence of the scheme and artifice to defraud was for MCCLELLON to
unjustly enrich himself by obtaining PPP loan proceeds through false and misleading
pretenses, including by making false statements about: monthly payroll expenses; the
number of paid employees; whether the business was in operation as of February 15,
2020; the type of operations; and revenues, and by providing falsified financial
documents. MCCLELLON’s artifice and scheme to defraud included attempts to conceal
his illegal behavior.

Manner and Means of the Scheme and Artifice to Defraud

16. It was part of the scheme and artifice to defraud that MCCLELLON
submitted and caused to be submitted at least seven false and misleading loan
applications to various financial institutions seeking to obtain funds related to the PPP on
behalf of corporate entities registered in Washington State that he owned and controlled,
including Frostlake, Skylake, and Cannonlake (collectively, the “McClellon Entities”).

17. It was further part of the scheme and artifice to defraud that MCCLELLON
successfully obtained at least three PPP loans on behalf of the McClellon Entities totaling
at least $500,948.

Second Superseding Indictment - 5 UNITED STATES ATTORNEY
United States v. McClellon 700 STEWART STREET, SUITE 5220

. SEATTLE, WASHINGTON 98101
USAO No. 2021R00147 :

(206) 553-7970
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18. It was further part of the scheme and artifice to defraud that MCCLELLON
submitted a loan application to Company One, seeking at least $20,833 in PPP funds for
Frostlake.

19. It was further part of the scheme and artifice to defraud that MCCLELLON
included in the loan application to Company One multiple materially false statements,
including but not limited to:

a. That Frostlake had average monthly payroll of approximately
$8,334; and

b. That Frostlake was in operation on February 15, 2020, and had
employees for whom it paid salaries and payroll taxes or paid independent contractors.

20. It was further part of the scheme and artifice to defraud that MCCLELLON
submitted to Company One false documents in support of his PPP loan application,
including but not limited to a false tax document.

21. On May 8, 2020, in furtherance of the scheme to defraud, MCCLELLON
emailed Company One from the Gmail account idontlikelawyers4u@gmail.com—which
he used to apply for the Frostlake loan—to inquire why certain bank accounts were not
properly added to his account with Company One. Company One responded that one of
the bank accounts was invalid and directed MCCLELLON to add a valid checking
account. MCCLELLON added a valid checking account to his Company One account
several days later and ultimately received PPP funds into that account.

22. Toconceal the scheme to defraud, MCCLELLON transferred PPP funds he
received, based on the false representations he made and caused to be made in the
fraudulent PPP application, between financial accounts he controlled shortly after he first

received the funds.

Second Superseding Indictment - 6 UNITED STATES ATTORNEY
United States v. McClellon 700 STEWART STREET, SUITE 5220

- SEATTLE, WASHINGTON 98101
USAO No. 2021R00147 :

(206) 553-7970
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23. To further conceal the scheme to defraud, MCCLELLON filed papers to
reinstate Frostlake LLC with the Washington Secretary of State in February 2021 after
the business had been dissolved in May 2018.

Execution of the Scheme and Artifice to Defraud

24. Onor about the dates set forth below, in Seattle, in the Western District of
Washington, and elsewhere, defendant DONTE JAMAL MCCLELLON, for the purpose
of executing the above-described scheme to defraud, did knowingly transmit and cause to
be transmitted by means of wire communication in interstate commerce the following

writing, signals, pictures, and sounds:

Count Date Interstate Wire Transmission

| May 7, 2020 Electronic transmission of documents in support of loan
application containing false information in the name of
Frostlake LLC from Washington state to Company One

server outside of Washington state

2 May 8, 2020 Electronic transmission of correspondence between
MCCLELLON (using email address
idontlikelawyers4u@gmail.com) in Washington state and
Company One (outside of Washington state) via Google

server outside of Washington state

3 May 12, 2020 | Electronic transmission of loan application with false
information and false certifications in the name of

Frostlake LLC from Washington state to Company One

server outside of Washington state

All in violation of Title 18, United States Code, Sections 1343 and 2.

Second Superseding Indictment - 7 UNITED STATES ATTORNEY
United States v. McClellon 700 STEWART STREET, SUITE 5220

‘ SEATTLE, WASHINGTON 98101
USAO No. 2021R00147 ,

(206) 553-7970
Case 2:22-cr-00073-LK Document174 Filed 11/29/23. Page 8of13

COUNTS 4-5
(Bank Fraud)

25. The allegations in Paragraphs 1-12 are realleged and incorporated by
reference as if set forth in full herein.

26. Beginning at a time unknown but not later than in or about May 2020 and
continuing through at least February 2021, in King County, within the Western District of
Washington, and elsewhere, the defendant, DONTE JAMAL MCCLELLON, knowingly
carried out a scheme and artifice to obtain moneys, funds, assets, and other property
owned by and under the custody and control of financial institutions participating in the
PPP loan program, and insured by the Federal Deposit Insurance Corporation (FDIC), by
means of materially false and fraudulent pretenses, representations, and promises, as
further and more particularly set forth below.

The Scheme and Artifice to Defraud

27. The essence of the scheme or artifice to defraud was for MCLELLON to

file fraudulent PPP applications on behalf of the McClellon Entities. He then unjustly

|| enriched himself by transferring those funds into his personal investment accounts and

spending the PPP proceeds on personal expenses that are disallowed under the terms of
the loan.

28. Through this scheme or artifice, MCLELLON improperly obtained PPP
loans through false and misleading pretenses including by making false statements about
the monthly payroll expenses, number of paid employees, fact of operations, type of
operations, and revenues of the McClellon Entities, and by providing falsified financial
documents.

29. Through this scheme or artifice, MCLELLON attempted to conceal his
illegal behavior through money transfers, filing reinstatement paperwork on behalf of the

McClellon Entities, and creating false tax documents.

Second Superseding Indictment - 8 UNITED STATES ATTORNEY

United States v. McClellon 700 STEWART STREET, SUITE 5220
. S W. 98101

USAO No. 2021R00147 CATT, WASHINGTON

(206) 553-7970
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Manner and Means of the Scheme to Defraud

30. It was part of the scheme or artifice that MCCLELLON submitted and
caused to be submitted at least seven false and misleading loan applications to various
financial institutions seeking to obtain funds related to the PPP on behalf of corporate
entities registered in Washington State that he owned and controlled, including the
McClellon Entities.

31. It was further part of the scheme or artifice that MCCLELLON successfully
obtained at least three PPP loans on behalf of the McClellon Entities totaling at least
$500,948.

32. It was further part of the scheme or artifice that MCCLELLON submitted a
PPP loan application to Bank One seeking at least $282,800 in funds on behalf of
Skylake.

33. It was further part of the scheme or artifice that MCCLELLON knowingly
included in the loan application to Bank One multiple materially false statements,
including but not limited to:

a. That Skylake had 13 employees;

b. That Skylake had average monthly payroll of $104,815.42; and

c. That Skylake was in operation on February 15, 2020, and had
employees for whom it paid salaries and payroll taxes or paid independent contractors.

34. — It was further part of the scheme or artifice that MCCLELLON knowingly
submitted to Bank One false documents in support of his PPP loan application including
but not limited to false tax documents.

35. To conceal the scheme or artifice, MCCLELLON transferred PPP funds he
received, based on the false representations he made and caused to be made in the
fraudulent PPP application, between financial accounts he controlled shortly after he first

received the funds.

Second Superseding Indictment - 9 UNITED STATES ATTORNEY

United States v. McClellon 700 STEWART STREET, SUITE 5220
S WAS 98101

(206) 553-7970
RO BRO RO RD OR eee

Case 2:22-cr-00073-LK Document174 _ Filed 11/29/23. Page 10of13

36. To further conceal the scheme to defraud, MCCLELLON filed papers to
reinstate Skylake LLC with the Washington Secretary of State on June 11, 2020 after the
business had been dissolved in September 2019.

37. It was further part of the scheme or artifice to defraud that MCCLELLON
submitted a PPP loan application to Bank Two seeking at least $197,315 in funds on
behalf of Cannonlake.

38. It was further part of the scheme or artifice to defraud that MCCLELLON
knowingly included in the loan application to Bank Two multiple materially false
statements, including but not limited to:

a. That Cannonlake had 13 employees;

b. That Cannonlake had an average monthly payroll of $78,926.00, and

C. That Cannonlake was in operation on February 15, 2020, and had
employees for whom it paid salaries and payroll taxes or paid independent contractors.

39. It was further part of the scheme or artifice to defraud that MCCLELLON
knowingly submitted to Bank Two false documents in support of his PPP loan
application, including but not limited to false tax documents.

40. It was further part of the scheme or artifice to defraud that MCCLELLON
filed papers with the Washington Secretary of State to reinstate Cannonlake LLC on June
17, 2020, after Cannonlake had been dissolved in May 2018.

41. Toconceal the scheme to defraud, MCCLELLON transferred PPP funds he
received, based on the false representations he made and caused to be made in the
fraudulent PPP application, between financial accounts he controlled shortly after he first

received the funds.

Execution of the Scheme.to Defraud

Second Superseding Indictment - 10 UNITED STATES ATTORNEY

United States v. MeClellon 700 STEWART STREET, SUITE 5220
' 101

USAO No. 2021R00147 SEATTLE, WASHINGTON 9810

(206) 553-7970
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42. On or about the dates identified below, in King County, within the Western
District of Washington, and elsewhere, for the purpose of executing and attempting to
execute this scheme and artifice to obtain moneys, funds, assets, and other property
owned by and under the custody and control of financial institutions by means of
materially false and fraudulent pretenses, representations and promises, MCCLELLON
knowingly caused to be conducted the following acts, with each act constituting a

separate Count of this Indictment:

Count | Approximate Description
Date
4 June 11, 2020 MCCLELLON submitted a fraudulent application with

false supporting documentation to Bank One for a PPP
loan in the name of Skylake.

5 June 23, 2020 MCCLELLON submitted a fraudulent application with

false supporting documentation to Bank Two for a PPP

loan in the name of Cannonlake.

All in violation of Title 18, United States Code, Sections 1344(2) and 2.
FORFEITURE ALLEGATION

The allegations contained in Counts 1-5 of this Indictment are hereby realleged
and incorporated by reference for the purpose of alleging forfeiture.

Upon conviction of any of the offenses alleged in Counts 1-3, the defendant,
DONTE JAMAL MCCLELLON, 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:

Second Superseding Indictment - 11 UNITED STATES ATTORNEY
United States v. McClellon 700 STEWART STREET, SUITE 5220

. SEATTLE, WASHINGTON 98101
USAO No. 2021R00147 :

(206) 553-7970
Case 2:22-cr-00073-LK Document174 _ Filed 11/29/23. Page 12of13

1. Approximately $16,394.44 seized on or about May 16, 2022, from a
Webull Financial, LLC., account number ending -66-11, held in the name of Donte
McClellon; and

2. A sum of money reflecting the proceeds the Defendant obtained from the
offense.

Upon conviction of any of the offenses alleged in Counts 4-5, the defendant,
DONTE JAMAL MCCLELLON, shall forfeit to the United States, pursuant to Title 18,
United States Code, Section 982(a)(2), any property that constitutes or is traceable to
proceeds of the offense. This property includes, but is not limited to:

1. Approximately $16,394.44 seized on or about May 16, 2022, from a
Webull Financial, LLC., account number ending -66-11, held in the name of Donte
McClellon; and

2. A sum of money reflecting the proceeds the Defendant obtained from the
offense.

Substitute Assets. If any of the above-described forfeitable property, as a result of
any act or omission of the defendant,

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,

Second Superseding Indictment - 12 UNITED STATES ATTORNEY
United States y. McClellon 700 STEWART STREET, SUITE 5220

USAO No. 2021R00147 se


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