Statement of Facts, United States v. Marlon McKnight (E.D. Va., January 18, 2022)
Summary
A Statement of Facts in United States of America v. Marlon McKnight, Criminal No. 4:21cr71, in the U.S. District Court for the Eastern District of Virginia, Newport News Division, filed January 18, 2022 as Document 21. The parties agree the government would prove that the defendant applied for three EIDL loans and a PPP loan with false statements about income, employment, business entities and prior criminal record. It states that an EIDL application for McKnight Cleaning Service claimed three (3) employees and $85,000 in gross revenues, that $34,900 was deposited on or about August 13, 2020, and that a later request for an increase was supported by a false 2019 tax return. It states a PPP application of February 7, 2021 requested $35,417.50 and claimed five (5) employees, and that the EIDL proceeds were misapplied.
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“Statement of Facts, United States v. Marlon McKnight (E.D. Va., January 18, 2022).”
Original at ecf.vaed.uscourts.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/statement-of-facts-usa-v-mcknight-dkt-21-e-d-va-ed2a3f64e5/
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Case 4:21-cr-00071-AWA-RJK Document 21 Filed 01/18/22 Page 1 of 7 PageID# 60
FILED
IN OPEN COURT
IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF VIRGINIA
CLERK, U.S. DiSTRiCT COURT
Newport News Division NORFOLK. VA
UNITED STATES OF AMERICA
V. CRIMINAL NO.4:21cr71
MARLON MCKNIGHT,
Defendant.
STATEMENT OF FACTS
Ifthis matter were to proceed to trial, the United States of America would prove heyond a
reasonable doubt, by competent and admissible evidence, the following facts:
1. The United States Small Business Administration (SBA) is an executive-branch
agency of the United States government that provides support to entrepreneurs and small
businesses. The mission of the SBA is 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 commrmities after disasters.
2. As part ofthis effort, the SBA enables and provides for loans through banks, credit
imions and other lenders. These loans have government-backed guarantees. In addition to
traditional SBA funding programs. The CARES Act, which was signed into law in March 2020,
established several new temporary programs and provided for the expansion of others to address
the COVID-19 outbreak.
3. One ofthese new programs is the SBA Paycheck Protection Program (PPP), which
is a loan designed to provide a direct incentive for small businesses to keep their workers on the
Case 4:21-cr-00071-AWA-RJK Document 21 Filed 01/18/22 Page 2 of 7 PageID# 61
payroll. Under this program,the SBA will forgive all or part ofloans if all employees were kept
on the payroll for eight weeks and borrowers submit documentation confirming that the loan
proceeds were used for payroll, rent, mortgage interest, or utilities. Interested applicants apply
through an existing SBA lender or any other participating federally insured financial institution.
4. The PPP application process requires applicants to submit a Borrower Application
Form through an SBA-approved financial entity. The application contains information as to the
purpose of the loan, average monthly payroll, number of employees and backgrormd of the
business and its owner, including questions relating to criminal history. Applicants are also
required to make good faith certifications, including that economic uncertainties have necessitated
their loan requests for continued business operations and that they intend to use loan proceeds only
for the authorized and not any duplicative purposes.
5. Another related response to the COVID-19 outbreak is an expansion of an existing
disaster-related program - the Economic Injury Disaster Loan (EIDL) - to provide for loan
assistance (including $10,000 advances) for small businesses and other eligible entities for loans
up to $2 million. The EIDL proceeds can be used to pay fixed debts, payroll, accoimts payable
and other bills that could have been paid had the disaster not occurred; however, such loan
proceeds are not intended to replace lost sales or profits or for expansion of a business.
6. Unlike certain other types of SBA-guaranteed loans,EIDL fimds are issued directly
fiom the United States Treasury and applicants apply through the SBA via an online portal and
application. The EIDL application process, which also uses certain outside contractors for system
support, collects information concerning the business and the business owner, including:
information as to the gross revenues for the business prior to January 31, 2020; the cost of goods
Case 4:21-cr-00071-AWA-RJK Document 21 Filed 01/18/22 Page 3 of 7 PageID# 62
sold; and information as to any criminal history ofthe business owner. Applicants electronically
certify that the information provided is accurate and are warned that any false statement or
misrepresentation to the SBA or any misapplication of loan proceeds may result in sanctions,
including criminal penalties.
A. First EIDL Application
7. On or about August 10, 2020, with respect to Count One of the Indictment,
MARLON MCKNIGHT, the defendant herein (hereinafter "MCKNIGHT"), electronically
applied for an EIDL (loan number ending 8205) using the company name of McKnight Cleaning
Service. MCKNIGHT claimed that McKnight Cleaning Service was located at 20 Diamond Hill
Rd., in Hampton, Virginia. Such application resulted in the electronic transmission of
information between the Eastern District of Virginia and locations outside the Commonwealth of
Virginia.
8. MCKNIGHT claimed that this business opened on February 14, 2014, with an
ownership start date of February 14, 2015, and further listed it as a maid and cleaning service
business with three (3) employees. The defendant claimed that the gross revenues for the 12
months prior to the disaster were $85,000, and that the cost of goods sold was $15,000.
MCKNIGHT responded in the negative to a question about whether he had been convicted, plead
guilty or placed on any form of parole or probation related to any felony. In fact, MCKNIGHT
had recently been released to a halfway house after serving a sentence of imprisonment related to
a prior federal fraud conviction that resulted in his incarceration from in or about November 2018
through in or about May 2020.
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9. Following the submission of this EIDL application, MCKNIGHT was offered a
loan of $35,000, for which he accepted a loan agreement on or about August 11, 2020.
MCKNIGHT contacted the SBA for status updates. The loan funded on or about August 13,
2020, and $34,900 was deposited into the defendant's 1st Advantage Federal Credit Union bank
account, which the defendant opened on or about July 7, 2020, and had an accovmt balance of
$10.00. Between August 13-31, 2020,the defendant withdrew and/or transferred approximately
$22,900 ofthese proceeds. The remainder ofthe funds were all withdrawn in September 2020.
10. On or about January 19,2021, MCKNIGHT contacted the SBA and inquired as to
how to submit a request for an increase in the loan amount. The defendant submitted a false 2019
tax return in support of a request for an increase.
B. Second EIDL Annlication
11. On or about August 11, 2020, MCKNIGHT applied for a second EIDL
(application number ending 2211),this time using the business name KCM Property Management.
MCKNIGHT listed the business address as 20 Diamond Hill Road, in Hampton, Virginia.
MCKNIGHT also indicated he employed four (4) individuals and received gross revenue of
$115,000 in the past twelve(12) months prior to the disaster, with cost of goods sold of$75,000.
MCKNIGHT responded in the negative to a question about whether he had been convicted, plead
guilty or placed on any form of parole or probation related for any felony.
12. Following submission of this application, MCKNIGHT contacted the SBA about
its status and was asked for additional information, including a recent business tax return.
Although the defendant advised that he would submit tax documentation, he failed to do so. The
SBA declined this application on or about August 26,2020, due to unverifiable information.
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C. Third EIDL Application
13. On or about January 18, 2021, MCKNIGHT applied for a third EIDL (application
number ending 7575), again using the business name McKnight Cleaning Services.
MCKNIGHT listed the business address as 3 Sunbriar Way,in Hampton, Virginia. MCKNIGHT
also indicated he employed five(5)individuals and received gross revenue of$85,000 in the past
twelve (12) months prior to the disaster, with cost of goods sold of $15,000. MCKNIGHT
responded in the negative to a question about whether he had been convicted,plead guilty or placed
on any form of parole or probation related for any felony.
14. Following submission ofthe application, MCKNIGHT contacted the SBA about its
status and was advised that this was a duplicate application to the prior one he had filed in August
2020.
D. PPP Application
15. On February 7, 2021, MCKNIGHT submitted an application for a PPP loan that
was transmitted to the SBA,in the name ofMcKnight Cleaning Services. MCKNIGHT requested
$35,417.50 in loan proceeds. On this application, MCKNIGHT claimed that the business had five
(5) employees with an average monthly payroll of $14,167. MCKNIGHT claimed that the
purpose ofthe loan was for payroll costs.
16. Question 6 of the PPP Borrower Application Form asked "Within the last 5 vears,
for anv felonv involving fraud, briberv. embezzlement, or a false statement in a loan application
or an application for federal financial assistance, or within the last vear. for anv other felonv. has
the Applicant tifan individual)or anv owner ofthe Applicant 1)been convicted;2)pleaded guilty:
3) pleaded nolo contendere: 41 been placed on pretrial diversion: 51 been placed on anv form of
Case 4:21-cr-00071-AWA-RJK Document 21 Filed 01/18/22 Page 6 of 7 PageID# 65
parole or probation ^including probation before iudgment'l?" MCKNIGHT checked"NO"for this
question and electronically signed his initials, verifying the accuracy of his response.
17. MCKNIGHT electronically signed this PPP application on February 7, 2021,
attesting that the information provided was true and accurate and that he understood the criminal
penalties associated with providing false statements to the SBA. The defendant submitted a
photograph of his Virginia driver's license and a false 2019 tax return along with the PPP
application.
18. From on or about at least August 2020,to in or about at least February 2021,in the
Eastern District of Virginia and elsewhere, MARLON MCKNIGHT,the defendant herein, devised
and intended to devise a scheme and artifice to defraud, and to obtain money by means of
materially false and fraudulent pretenses, representations, promises and omissions.
19. The defendant sought to fraudulently obtain disaster-related benefits in the form of
SBA-sponsored Economic Injury Disaster(EIDL)loans and an SBA Paycheck Protection Program
(PPP)loan.
20. In so doing, the defendant submitted applications (by electronic transmission of
information in interstate commerce)for loans imder the EIDL and PPP programs that contained
false statements, misrepresentations and omissions related to the defendant's income,
employment, claimed business entities and his prior criminal record. The defendant falsely
attested on the aforementioned loan applications that the information presented was true and
accurate.
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21. The defendant utilized a 1st Advantage Federal Credit Union account in order to
receive disaster-related benefits. The defendant received and obtained approximately $34,900 in
EIDL proceeds into a 1st Advantage Federal Credit Union account.
22. The defendant misapplied the EIDL proceeds for purposes unrelated to those
authorized by the United States Small Business Administration.
Respectfully Submitted,
Jessica D. Aber
UNITED STATES ATTORNEY
By:
Brian J. Samuels
Assistant United States Attorney
After consulting with my attorney, I hereby stipulate that the above Statement of Facts
are true and accurate, and that had the matter proceeded to trial, the United States could prove
these facts beyond a reasonable doubt.
)N MCKNIGHT
Defendant
I am counsel for MARLON MCKNIGHT. I have carefully reviewed the above
Statement of Facts with him. To my knowledge, his decision to stipulate to these facts is an
informed and voluntary one.
les S. Ellenson, Esq.
Counsel for the Defendant
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