Sentencing Memorandum — No. 3:23-cr-02441 (Dkt. 39, S.D. Cal.)

Summary

The United States' eight-page sentencing memorandum, Document 39, filed 04/25/25 in United States v. Sean Winston, Case No. 23-CR-2441-RSH, in the U.S. District Court for the Southern District of California, signed by Assistant United States Attorney E. Christopher Beeler for United States Attorney Adam Gordon, ahead of sentencing on May 2, 2025 at 9:00 a.m. The government describes a 45-year-old defendant who used a shell company to fraudulently obtain $875,000 from two COVID-19 relief programs, the Paycheck Protection Program and Economic Injury Disaster Loans, and spent the money on a fleet of luxury vehicles. After setting out the CARES Act and the Economic Aid Act, it acknowledges that sentences for COVID-19 relief fraud vary widely and asks for 12 months in custody, citing the defendant's swift acceptance of responsibility and his usefulness on other matters.

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

Cite this document

“Sentencing Memorandum — No. 3:23-cr-02441 (Dkt. 39, S.D. Cal.).” Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/sentencing-memorandum-no-3-23-cr-02441-dkt-39-s-d-cal-656810c44b/, SHA-256 9cf8ae934a14186bcc537d8d7fb056d86c1b584f23558a3392aa1717a19cd8bd.

Full text

Case 3:23-cr-02441-RSH Document 39 Filed 04/25/25 PageID.131 Page 1 of 8

ADAM GORDON
1 United States Attorney
2 E. CHRISTOPHER BEELER
Assistant United States Attorney
3 California Bar No.: 330496
New York Bar No.: 5422068
4 Office of the U.S. Attorney
880 Front Street, Room 6293
5 San Diego, CA 92101
Tel: (619) 546-7748
6 Email: christopher.beeler@usdoj.gov
7 Attorneys for the United States
8 UNITED STATES DISTRICT COURT
9 SOUTHERN DISTRICT OF CALIFORNIA
10 UNITED STATES OF AMERICA, Case No.: 23-CR-2441-RSH
11 Plaintiff, UNITED STATES OF AMERICA’S
SENTENCING MEMORANDUM
12 v.
13 SEAN WINSTON, Date: May 2, 2025
Time: 9:00 a.m.
14 Defendant.
15
16
17
18 INTRODUCTION

19 Present before this Court is a 45-year-old Defendant who used his shell company to

20 fraudulently obtain $875,000 from two COVID-19 relief programs. He used the stolen
21 money to obtain a fleet of luxury vehicles. This conduct warrants a custodial sentence, but
22 considering Defendant’s swift acceptance of responsibility and other important factors, the
23 United States asks this Court to impose a 12-month custodial sentence.
24 STATEMENT OF FACTS

25 I. The Relevant COVID-19 Relief Programs

26 a. The Paycheck Protection Program

27 Enacted to provide emergency assistance to businesses affected by the coronavirus

28 pandemic, on March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act
(CARES Act) became law. See Public Law No. 116-136; 15 U.S.C. § 636(a)(36). Section

30
Case 3:23-cr-02441-RSH Document 39 Filed 04/25/25 PageID.132 Page 2 of 8

1 1102 of the CARES Act created the Paycheck Protection Program (PPP), which permitted
2 the U.S. Small Business Administration (SBA) to guarantee 100 percent of qualified loans
3 to small businesses. Under the law and its implementing regulations, small businesses
4 could use PPP loans to pay salaries and wages, business rent, utilities, and interest on pre-
5 COVID-19 debts. If a business used a PPP loan on such qualified expenses, Section
6 1106(b) of the CARES Act allowed forgiveness of the loan amount.
7 On December 27, 2020, the Economic Aid to Hard-Hit Small Business, Nonprofits
8 and Venues Act (Economic Aid Act) became law. See Pub. Law No. 116-260. Among
9 other things, the Economic Aid Act reauthorized another round of PPP loans, known as
10 “Second Draw” PPP loans to eligible small businesses that previously received a first draw
11 PPP loan under generally the same terms and conditions as the initial round of PPP loans.
12 Section 311 of the Economic Aid Act explained that one additional eligibility requirement
13 of a Second Draw PPP loan was that a borrower had to “demonstrate not less than a 25
14 percent reduction from the gross receipts” between 2019 and 2020. See generally 15 U.S.C.
15 § 636(a)(37).
16 To obtain a PPP disbursement, applicants typically had to provide documents to
17 show the existence of a payroll and, for Second Draw PPP, documents to show the 25%
18 reduction in gross receipts. Acceptable documents typically included payroll lists, Forms
19 941 (Employer’s Quarterly Federal Tax Return), bank statements, and profit and loss
20 statements. Applicants self-certified under penalty of perjury that all the information
21 provided was accurate.
22 b. Economic Injury Disaster Loans
23 Prior to and during the COVID-19 pandemic, the SBA offered Economic Injury
24 Disaster Loans (EIDL) to small businesses impacted by a disaster. See 15 U.S.C.
25 § 636(b)(2). Such disasters include hurricanes, tornadoes, wildfires, and any “major
26 disaster” as determined by the President. Id. The SBA extended EIDL loans to small
27 businesses impacted by the COVID-19 pandemic.
28
2 23-CR-2441-RSH

30
Case 3:23-cr-02441-RSH Document 39 Filed 04/25/25 PageID.133 Page 3 of 8

1 To obtain an EIDL loan, a qualifying business was required to apply directly to the
2 SBA and provide information about the business’s operations, such as the number of
3 employees, gross revenues for the 12-month period preceding the disaster, and the cost of
4 goods sold in the 12-month period preceding the disaster. In the case of a COVID-19 EIDL
5 loan, the 12-month period was from January 31, 2019, to January 31, 2020. The applicant
6 was required to certify that all of the information in the application was true and correct.
7 The amount of the loan, if the application was approved, was determined based, in part, on
8 information provided by the applicant about employment, revenue, and costs of goods sold.
9 Any funds issued under an EIDL loan were issued directly by the United States Treasury.
10 EIDL proceeds could only be used to pay fixed debts, payroll, accounts payable and
11 other bills that could have been paid had the disaster not occurred; however, such loan
12 proceeds were not intended to replace lost sales or profits, or expansion of the business.
13 Nor were EIDL proceeds to be used to repay debts incurred prior to the pandemic.
14 Moreover, in order to obtain EIDL monies, the prospective borrower was required to sign
15 a Loan Authorization and Agreement, certifying his or her willingness to comply with all
16 of the terms and conditions of the loan, including certifying that he or she would use all
17 proceeds of the loan solely as working capital to alleviate economic injury to the business
18 caused by the COVID-19 pandemic.
19 II. Defendant’s COVID-19 Pandemic Loan Fraud
20 Mr. Winston was the owner and chief executive officer of Atlas Capital
21 Management, LLC (Atlas Capital), a California corporation. Atlas Capital was a company
22 in search of work; it had no employees, made and sold no goods, provided no services, and
23 generated no revenue. Instead, Atlas Capital was a front company through which Mr.
24 Winston committed various acts of fraud. One such fraudulent endeavor consists of the
25 crimes for which Mr. Winston has pleaded guilty: five counts of wire fraud for his unlawful
26 acquisition and use of $875,900 from COVID-19 pandemic relief programs.
27 Between May 2020 and April 2022 and on behalf of Atlas Capital, Mr. Winston
28 applied for and sought forgiveness of two PPP loans and one EIDL To obtain these loans,
3 23-CR-2441-RSH

30
Case 3:23-cr-02441-RSH Document 39 Filed 04/25/25 PageID.134 Page 4 of 8

1 Mr. Winston submitted fake employee lists with false payroll data, phony bank records,
2 and bogus business federal tax returns. Not only did these fabrications render Mr.
3 Winston’s applications materially false, he also misappropriated all of the fraudulently
4 obtained funds.
5 Specifically, all COVID-19 pandemic loan proceeds were deposited into Atlas
6 Capital’s bank account at Comerica Bank. The bank account records fail to show any
7 business expenses such as payroll, operational expenses, or other costs a business might
8 incur. Instead, Atlas Capital’s bank records confirm that Mr. Winston used the business
9 account—and the COVID-19 pandemic relief funds—exclusively on personal expenses
10 such as rent payments for his house, groceries, furniture, purchases from Internet retailers,
11 and on the purchase or lease of the following luxury cars:
12 • A 2021 Cadillac Escalade;
13 • A 2020 Chevrolet Corvette;
14 • A 2018 Rolls-Royce Dawn;
15 • A 2022 Mercedes Benz S580; and
16 • A 2021 Lamborghini Urus.
17 In late September 2023, federal law enforcement executed a series of seizure
18 warrants and seized these five luxury vehicles and all funds in two Atlas Capital bank
19 accounts. The vehicles have either been administratively forfeited or, in the case where Mr.
20 Winston had leased the car, returned to the bona fide owner.
21 ARGUMENT
22 I. Guidelines Calculation
23 A. Base Offense Level
24 The parties agree that the court should start its calculation of the Base Offense Level
25 for wire fraud using U.S. Sentencing Guideline (USSG) Section 2B1.1(a)(1) 1 because the
26 USSG references wire fraud to this section and the charge carries a maximum 20 year or
27 more term of imprisonment. The Base Offense Level is 7.
28 1 All USSG references are cited to amendments effective November 1, 2024.

4 23-CR-2441-RSH

30
Case 3:23-cr-02441-RSH Document 39 Filed 04/25/25 PageID.135 Page 5 of 8

1 B. Specific Offense Characteristics
2 The court should add the following points to Defendant’s Base Offense Level.
3 1. Loss
4 The parties agree that the loss caused by Defendant’s fraud is the total amount he
5 fraudulently obtained from and has not paid back to the SBA: $875,000. See ECF 8 at 4-5.
6 This amount is the “actual loss” defined in the Guidelines. This loss results in a 14-point
7 increase. USSG § 2B1.1(b)(1)(I).
8 2. Sophisticated Means
9 The parties also agree to an additional 2-point increase for sophisticated means.
10 USSG § 2B1.1(b)(10)(C). The Guidelines permit a two-level increase if “the offense
11 otherwise involved sophisticated means and the defendant intentionally engaged in or
12 caused the conduct constituting sophisticated means.” Id. The application note explains
13 that “‘sophisticated means’ means especially complex or especially intricate offense
14 conduct pertaining to the execution or concealment of the offense. . . . Conduct such as
15 hiding assets or transactions, or both . . . indicates sophisticated means.” Id. cmt. n.9
16 The Ninth Circuit has recognized “the enhancement properly applies to conduct less
17 sophisticated than the list articulated in the application note.” United States v. Jennings,
18 711 F.3d 1144, 1147 (9th Cir. 2013). In Jennings, the defendants “syphoned money” from
19 their business into another bank account they gave a legitimate appearing name to, and then
20 the defendants used the money for personal purposes without reporting the money as
21 income. Id. at 1145-47. The Ninth Circuit held this conduct justified application of the
22 sophisticated means enhancement. Id. at 1147.
23 To render Atlas Capital eligible for COVID relief funds, Mr. Winston created and
24 used a variety of fictional documents. These include various fabricated payroll records
25 listing fake employees by name and salary, six months of bank account statements for the
26 third quarter of 2019 and 2020 for an account Mr. Winston did not open until 2021, and a
27 false business tax return on Form 1120-S for tax year 2020. These overlapping false
28 documents show a level of sophistication Mr. Winston utilized to create the fiction that
5 23-CR-2441-RSH

30
Case 3:23-cr-02441-RSH Document 39 Filed 04/25/25 PageID.136 Page 6 of 8

1 Atlas Capital was (1) a functioning and thriving business and (2) eligible to receive vast
2 sums of money from COVID-19 relief programs.
3 C. Adjustments
4 1. Acceptance of Responsibility
5 In its Sentencing Summary Chart, the United States has moved this Court for a
6 three-level decrease for Mr. Winston’s acceptance of responsibility under Guideline
7 Section 3E1.1. Almost immediately following the seizure of his assets, Mr. Winston
8 admitted to his felonious conduct in various proffer sessions with the government, waived
9 indictment, and signed a plea agreement on November 1, 2023.
10 2. Zero-Point Offender
11 Mr. Winston qualifies for a two-level decrease for not having a criminal history and
12 otherwise qualifying for this adjustment under Guideline Section 4C1.1.
13 II. Sentencing Factors
14 Pursuant to the Sentencing Reform Act, 18 U.S.C. § 3553, the Court “shall impose
15 a sentence sufficient, but not greater than necessary, to comply with the purposes set forth
16 in” Section 3553(a)(2), and, in so doing, the Court “shall consider,” various factors
17 enumerated in Section 3553(a). Given the nature of Defendant’s crimes, the factors of
18 particular importance in this case are the history and characteristics of Defendant, the
19 need to promote deterrence, and the avoidance of sentencing disparities. A sentence of
20 12 months is sufficient, but not greater than necessary, to comply with the sentencing
21 guidelines. This term sentence reflects the seriousness of Defendant’s lying, stealing, and
22 cheating for his own financial gain.
23 A. Nature and Circumstances of the Offense
24 Defendant’s plea agreement outlines an extensive scheme to defraud the United
25 States by stealing emergency funds intended to provide a lifeline for struggling businesses
26 during an unprecedented global pandemic that caused people to die and businesses to
27 shutter for good. His actions were far from a momentary lapse of judgment or a one-time
28 mistake: over the course of nearly two years, Defendant submitted five false COVID-19
6 23-CR-2441-RSH

30
Case 3:23-cr-02441-RSH Document 39 Filed 04/25/25 PageID.137 Page 7 of 8

1 relief applications that included fabricated business documents like fake payroll and
2 employees lists, fake bank account statements, and fake federal tax returns.
3 With the money stolen, Mr. Winston made no attempt to spend the money on eligible
4 business expenses. Instead, he misappropriated every nickel from these important relief
5 programs, including on the acquisition of a small fleet of luxury cars like a 2018 Rolls
6 Royce and 2021 Lamborghini.
7 B. Personal History and Characteristics
8 Defendant is a 45-year-old family man. He has four young children with his wife of
9 over twenty years. See Presentence Investigation Report (PSR) ¶ 53, ECF 15. As gleaned
10 from meetings with Defendant and through conversations with defense counsel, Defendant
11 is an engaged and loving father to these these young children. He did not graduate high
12 school, but appears intelligent, hardworking, and entrepreneurial. Should Defendant apply
13 his enterprising nature and work ethic to honest services, the sky is his limit.
14 C. Deterrence
15 In addition to the need for specific deterrence, the need for general deterrence
16 warrants a meaningful sentence. The COVID-19 emergency was not the first and will not
17 be the last time the government relies on self-reporting to get much needed assistance to
18 the public. Put simply, there needs to be a real risk of incarceration to weigh against the
19 opportunity to enrich oneself. See United States v. Martin, 455 F.3d 1227, 1240 (11th Cir.
20 2006) (finding that crimes that are “rational, cool, and calculated” rather than “crimes of
21 passion or opportunity” are “prime candidates for general deterrence”) (citation omitted).
22 D. Sentencing Disparities
23 The imposed sentences for COVID-19 relief fraud vary widely in the federal district
24 courts because each court considers the nature of the fraud itself and the individualized
25 defendant. While a 12-month sentence for stealing $875,000 may seem low to some people,
26 this Court is aware of some unique circumstances present in this case that are likely not
27 present in other similarly situated COVID-19 relief fraud schemes. Those unique aspects
28 justify a 12-month sentence.
7 23-CR-2441-RSH

30
Case 3:23-cr-02441-RSH Document 39 Filed 04/25/25 PageID.138 Page 8 of 8

1 CONCLUSION
2 Defendant is appearing to be sentenced for an illegal scheme to steal $875,000
3 during a global pandemic. His theft for personal benefit is countervailed by his rapid
4 admission of guilt and usefulness on other matters. For the reasons provided, this Court
5 should sentence Defendant to 12-months custody.
6
DATED: April 25, 2025 Respectfully submitted,
7
8 ADAM GORDON
United States Attorney
9
10 /s/ E. Christopher Beeler
E. CHRISTOPHER BEELER
11 Assistant United States Attorney
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
8 23-CR-2441-RSH

File and source

File: 39.pdf
Size: 162,892 bytes
SHA-256: 9cf8ae934a14186bcc537d8d7fb056d86c1b584f23558a3392aa1717a19cd8bd
Our copy: 39.pdf
Original: No public link identified.