Thomas E. Smith — Indictment, Case No. 20-CR-196

Summary

An indictment in the U.S. District Court for the Eastern District of Wisconsin, Case No. 20-CR-196, against Thomas E. Smith, Stephen E. Smith, Samuel A. Davis, Robert Hamilton and Jonathan E. Henley, charging violations of 18 U.S.C. §§ 1344, 1957, and 2. It describes Thomas E. Smith as a Pewaukee, Wisconsin resident and registered agent of T & T Holdings LLC, which was administratively dissolved on or about March 20, 2017. The indictment alleges that from about April 2020 through about July 2020 at least approximately $960,000 in fraudulently obtained loan proceeds went to the defendants and three individuals, and an additional $442,500 was attempted. Counts 1-14 are followed by forfeiture allegations.

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UNITED ~jff:,-iH~ili-lr.'t~rCOL~T
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lJNITED STATES OF AMERICA, 2020 OCT 20 P lj: 25
Plaintiff. CLERli Of LJ~tfALED 20 •t:R•l 96
V.

THO!'viAS E. SMITH,
Case No. 20-CR-
[18 U.S.C. §§ 1344, 1957, and 2]
-
STEPHEN E. SMITH,
SAMUEL A. DA VIS,
ROBERT HA.\1ILTON, ,md
JONATHAN E. HENLEY,

Defendants.

INDICTMENT

THE GRAND JURY CHARGES TIL4..T:

BACKGROU'.'!D

At all times material to this Indictment

The Defendantv and Relevant Entities

1. THOMAS E. SMITH was a resident of Pewaukee, Wisconsin, and the registered

agent ofT & T Holdings LLC ("T&T Holdings"), a Wisconsin limited liability company. T&T

Holdings was administratively dissolved on or about March 20, 2017.

2. STEPHEN E. SJ\,1ITH was a resident of J\,1ilwaukec, Wisconsin, and the registered

agent of CFA Auto Transport LLC ("CFA"), a Wisconsin limited liability company, and Complete

Fundamentals, Inc. ("Complete Fundamentals"), a Wisconsin non-stock corporation. S. SMITH

was also the organizer ofNew Beginnings Family Services LLC ("New Beginnings"), a Wisconsin

limited liability company.
3. SAMUEL A. DAVIS was a resident of Chicago, Illinois, and the registered agent

and president of Davis Development Group Inc. ("Davis Development"), an Illinois corporation.

4. ROBERT HAMILTON was a resident of Milwaukee, Wisconsin, and the president

and registered agent of Glory Transportation Services, LLC ("Glory Transportation"), a Wisconsin

limited liability company.

5. JONATH/>11'\J E. HENLEY was a resident of Chicago, Illinois, and the manager and

one of the registered agents of Premier Logistic Solutions LLC ("Premier Logistic"), an Illinois

limited liability company.

6. Individual 1 was a resident of Milwaukee, Wisconsin, and the registered agent of

Rebels Paris, LLC ("Rebels"), a Wisconsin limited liability company.

7. Individual 2 was a resident of Milwaukee, Wisconsin, and the registered agent of

Comfort Care Transit LLC ("Comfort Care"), a Wisconsin limited liability company.

8. Individual 3 was a resident of Milwaukee, Wisconsin. On or about May 21, 2020,

Individual 3 filed paperwork with the State of Wisconsin establishing himself as the registered

agent ofNew Beginnings.

The Small Business Administration

9. 1be United States Small Business Administration ("SBA") was an executive branch

agency of the United States government that provided support to entrepreneurs and small

bnsinesses. 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.

I 0. 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.

2
The Paycheck Protection Program

11. The Coronavims 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 are suffering the economic effects caused by the COVID-19

pandemic.

12. One source of relief that the CARES Act provided was the authorization of up to

$349 billion in forgivable loans to small businesses for payroll, mortgage interest, rent/lease, and

utilities, through a program referred to as the Paycheck Protection Progrmn ("PPP"). In April

2020, Congress authorized up to $310 billion in additional PPP funding.

13. The PPP allowed qualifying small businesses and other organizations to receive PPP

loans. Businesses were required to use PPP loan proceeds on 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.

14. Die mnount of a PPP loan that a small business was entitled to receive was

determined by the number of employees employed by the business and the business's average

monthly payroll costs.

15. 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 ofthe 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) nnmbcr of

employees. These figmcs were used to calculate the amount of money tl1e small business was

3
eligible to receive under the PPP. In addition, businesses applying for a PPP loan had to provide

documentation showing their payroll expenses.

16. The SBA oversaw the PPP. However, individual PPP loans were issued by private,

approved lenders who received and processed PPP applications and supporting documentation,

and then made loans using the lenders' own funds, which were I 00% guaranteed by the SBA.

Data from the application, including information about the borrower, the total amount of the Joan,

and the listed number of employees, was transmitted by the lender to the SBA in the course of

processing the loan.

Relevant F'inancial Institutions

17. Financial Institution 1 was a federally insured financial institution and member of

the Federal Home Loan Bank System headquartered in Green Bay, Wisconsin. Financial

Institution l was an approved SBA lender and participated as a PPP lender to small businesses.

18. Financial Institution 2 was a Federal Deposit Insurance Corporation-insured bank

headquartered in Mim1eapolis, Minnesota.

19. Credit Union 1 was a nationally insured credit union headquartered in Racine,

Wisconsin.

COUNTS ONE THROUGH SIX
BankFraud-18 U.S.C. § 1344 and§ 2

20. The Grand Jury re-alleges and incorporates by reference the factual allegations

contained in paragraphs l through 19 of this Indictment as if fully set forth herein.

The Scheme to Defraud

21. From in or about April 2020 through in or about July 2020, in the State and Eastern

District of Wisconsin and elsewhere,

4
THOMAS E. SMITH,
STEPHEN E. SMITH,
SAMUEL A. DAVIS,
ROBERT HA;\HLTOK, and
JONATHAN E. HENLEY,

and otllers known and llliknown to the Grand Jury, and aided and abetted by each other, did

knowingly execute and attempt to execute a scheme and artifice to defraud Financial Institution 1,

and to obtain, by means ofmaterially false and fraudulent pretenses, representations, and promises,

and by omission of material facts, certain moneys, fonds, credits, assets, securities, and oilier

property ovmed by and m1der the custody and control of Financial Institution 1.

The Purpose ofthe Scheme andArtifice

22. It was the purpose of the scheme for defendants T. SMITH, S. SlvfITH, DAVIS,

HAMILTON, and HENLEY, and others kno,vn and unknown to the Grand Jury, to unlawfully

emich themselves by: (a) submitting false and fraudulent PPP loan applications to financial

institutions falsely representing that the applicant entities were functional and operational

businesses and falsely promising to use the fund proceeds on covered business expenses, and

(b) concealing and causing tl1e concealment of these false and fraudulent applications.

Manner and Means ofthe Scheme

23. It was part of the scheme that defendants T. SMITH, S. SMITH, DAVIS,

HAMJLTON, HENLEY, Individual 1, Individual 2, Individual 3, and others, submitted and caused

to be submitted fraudulent PPP loan applications to Financial Institution 1 for the purpose of

obtaining funds from Financial Institution 1.

24. It was further part of the scheme that each of the PPP loan applications falsely

claimed that the PPP loan applicant company was in operation as of February 15, 2020, when in

fact it was not, and that it employed individuals for whom it paid salaries and payroll taxes, or paid

independent contractors (as reported on IRS Form 1099-MISC). In fact, CFA, Davis

5
Development, New Beginnings, Comfort Care, and Premier Logistic were not in operation in

February 2020. Specifically:

a. CFA's loan application falsely elaimed that it was operational as of February 15,

2020, when in fact it was not and went into "delinquent" status with the Wisconsin Depmtment of

Financial Institutions ("\VDFI") on or about July 1, 2019. CFA's application did not report that

S. SMITH restored the active status of CFA with WDFI on or about May 2020.

b. Davis Development's loan application falsely claimed that it was operational as of

February 15, 2020, when in fact Davis Development had heen administratively dissolved with the

Illinois Secretary of State ("ILSOS") as of on or about August 10, 2018. Davis Development's

application did not report that DAVIS reinstated the company on or about May 2, 2020.

c. New Beginnings' loan application falsely claimed that it was operational as of

February I 5, 2020, when in fact New Begil\l\ings had been administratively dissolved with WDFI

as of on or about April 13, 2020. New Beginnings' application did not report that S. SMITH

reinstated the company on or about May I, 2020.

d. Comfort Care's loan application falsely claimed that it was operational as of

February 15, 2020, when in fact Comfort Care was administratively dissolved with WDFI on June

13, 2017. Comfort Care's application did not report that Individual. 2 restored the active status of

Comfort Care v,'ith WDFI on or about May 12, 2020.

e. Premier Logistic's loan application falsely claimed that it was operational as of

February 15, 2020, when in fact Premier Logistic had been administratively dissolved with the

ILSOS as of on or about June 14, 2019. Premier Logistic's application did not report that

HENLEY reinstated the company on or about May 14, 2020.

25. [t was further part of the scheme that each of the PPP loan applications falsely

certified that the PPP loan applicant company employed individuals for whom it paid salaries and

6
payroll taxes, or paid independent contractors (as reported on IRS Form I 099-MISC) and falsely

represented the number of employees each company employed. Each ofthe PPP loar1 applications

also included falsified Employer's Quarterly Federal Tax Returns (IRS Forms 941) for each

quarter of2019 and the first quarter of 2020. In fact, none of the businesses had filed Forms 941

in any quarter of 20 I 9 or the first quarter of 2020, meaning that the company had no employees

for which federal taxes were paid during that period. Specifically:

a. CFA's loan application falsely claimed that its average monthly payroll was

$97,000 and that it employed 38 people.

b. Comfort Care's loan application falsely claimed that its average monthly payroll

was $92,000 and that it employed 23 people.

c. Davis Development's loan application falsely claimed that its average monthly

payroll was $71,000 and that it employed 20 people.

d. New Beginnings' loan application falsely claimed that its average monthly payroll

was $92,000 and that it employed 28 people.

e. Premier Logistic's loan application falsely claimed that its average monthly payroll

was $85,000 and that it employed 23 people.

f. Rebels' loan application falsely claimed that Rebels' average monthly payroll was

$62,000 and that it employed 17 people.

g. Glory Transportation's loan application falsely claimed that Glory Transportation's

average monthly payroll was $62,000 and that it employed 14 people.

26. It was further part of the scheme that defendants T. SMITH, S. SMITH, DAVIS,

HAMILTON, HENLEY, Individual 1, Individual 2, Individual 3, and others falsely represented

the intended nse of the funds, claiming that the funds would be used for legitimate business

expenses. Specifically, CFA, Comfort Care, Davis Development, New Beginnings, Premier

7
Logistic, and Rebels' loan applications each falsely claimed that it intended to spend loan proceeds

on payroll, lease or mortgage expenses, interest, and utilities. In fact, the loan funds were used

for, among other things, personal expcrues and other non-business expenses.

27. It was further part of the scheme that defendants T. SMITH, S. SMITH, DAVIS,

HENLEY, Individual 1, Individual Individual 3, and others opened or directed others to open

bank accounts at Financial Institution J to facilitate and expedite obtaining PPP loan funds,

including:

a. On or about May 5, 2020, S. SMITH opened bank account No. x8659 at Financial

Institution I in the name of CFA.

b. On or about May 5, 2020, DAVIS opened bank account No. x8733 at Financial

Institution 1 in the name of Davis Development.

c. On or about May 8, 2020, Individual 1 opened bank account No. x9383 at Financial

Institution 1 in the name of Rebels.

d. On or about May 13, 2020, Individual 2 opened bank account No. x2840 at

Financial Institution 1 in the name of Comfort Care.

e. On or about :v1ay 19, 2020, HENLEY opened bank account No. x7764 at Financial

Institution 1 in the name of Premier Logistic.

f. On or about May 22, 2020, Individual 3 opened bank account No. x6862 at

Financial Institution 1 in the name of New Beginnings.

28. It was further part of the scheme tliat after the PPP loans were deposited into the

applicant company's bank account at Financial Institution I, defendants T. SMITH, S. SMITH,

DAVJS, HAMILTON, Individual I, Individual 2, and Individual 3 transferred or directed the

transfer of the loan proceeds to each other, and to entities controlled by one of the defendants,

enabling them to enrich themselves from the loan proceeds.

8
29. Jt was further part of the scheme that when defendants T. SMITH, S. SMITH,

DAVIS, HAt\l!ILTON, HENLEY, Individual 1, Individual 2, and Individual 3 learned that

Financial Institution 1 froze or inquired about their loan applications, that Defendants, Individual

1, Individual 2, and Individual 3 took steps to mi,'Tepresent, conceal, hide and cause to be

misrepresented, concealed, and hidden, the existence, purpose, and acts done in furtherance of the

scheme.

30. ft was further part of the scheme that in total, at least approximately $960,000 was

provided to Defendants, Individual 1, Individual and Individual 3 in fraudulently obtained loan

proceeds, and an additional $442,500 was attempted to be fraudulently obtained by Defendants,

Individual 1, Individual 2, and Individual 3.

Executions

31. On or about the following dates, in the Stale and Eastern District of Wisconsin and

elsewhere, Defendants T. SMITH, S. SMITH, DAVJS, HAMILTON, and HENLEY, aided and

abetted by each other and by others known and unknown to the Grand Jury, did knowingly execute

and attempt to execute the above-described scheme to defraud by committing and willfully causing

others to commit the following acts, each of which constituted an execution of the fraudulent

scheme:

Snbmission of fraudulent PPP loan
. T. S'v!ITH April 26,
l application for Davis Development to $177,500
DAVIS 2020
Financial Institution 1
Submission of fraudulent PPP loan
T. SMITH $242,500
2 May 1,2020 application for CFA to Financial Institution
S.SMITH
1
Submission of fraudulent PPP loan
IT. SMITH $155,000
".) May 1, 2020 application for Glory Transportation to
; HAMILTON
Financial Institution l

9
Submission of fraudulent PPP loan
T. SMITH
4 May 8, 2020 application for Rebels to Financial $155,000
S. SMITH
Institution 1
Submission of fraudulent PPP loan
5 T. SMITH May 15, 2020 application for Comfort Care to Financial $230,000
Institution 1
f-----+ · · - - - - · - - + - - - - - ~ - - + - - - - - - - , - - - - ~ - - - - - - - - - - + - - - - - - - j
Submission of fraudulent PPP loan
T. SMITH
6 May 20, 2020 application for Premier Logistic to Financial $212,500
HENLEY
Institution 1

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

10
COUNTS SEVEN THROUGH "FOURTEEN
Money Laundering 18 l:.S.C. § 1957

32. The Grand Jury rc•alleges and incorporates by reference the factual allegations

contained in paragraphs 1 through 31 of this Indictment as if fully set forth herein.

33. On the dates specified below, in the State and Eastern District of Wisconsin and

elsewhere, Defendants T. SMITH, S.SMITH, DAVIS, and HAMILTON, aided and abetted by

each other and by others known and unknown to the Grand Jury, knowingly engaged in., attempted

to engage in, and caused others to engage in a monetary transaction by, through, and to a financial

institution, affecting interstate and foreign commerce, knowing that such transaction involved

criminally derived property of a value greater than $10,000, such property having been derived

from a specified unlawful activity, that is, bank fraud, in violation of Title 18, United States Code,

Section 1344:

Count • · ,I Approximate
Defendant(s) · · · ·· ·. · · DeilcriptiQn of.T:ransa¢tion
.····· I Date .

Cashier's check for approximately $30,000
!
withdrav..u from Glory Transportation's Financial
7 HAMILTON • May 6, 2020
Institution l account No. x2240, written to T. !

i SMITH.
! Cashier's check for approximately $50,000
withdrawn from Glory Transportation's Financial
8 HAMILTON May 8, 2020 Institution I account No. x2240, deposited into Credit
Union l account No. x2707, held in the name of
HAMILTON.
Cashier's check for approximately $20,000
: withdrawn from Rebels' Financial Institution l
9 T. SMlTH May 18, 2020 , account No. x9383, deposited into Financial
I Institution 1 account ending in 1719, held in the

name ofT&T Holdings.
Cashier's check for approximately $20,000
withdrawn from Rebels' account No. x9383,
deposited into Financial Institution 2 account No.
I 10
!
S. SMITH : May 18, 2020
x4088, held in the name of S. SMITH d/b/a Complete
;
Fundamentals.
I I :
······-

11
.

Approximate
! Count Defendant(s) Descriptiop. of Transaction
Date .
'
Cashier's check for approximately $40,000 :
withdrawn from Comfort Care's Financial Institution
11 T. SMITH May 20, 2020 1 account No. x2840, deposited into Financial
! Institution 1 account No. x424 l, held in the name of
_,_,
T. SMITH. ~-----
' Cashier's check for approximately $75,000
withdrawn from Davis Development's Financial
T. SMIIB
12 May 21, 2020 Institution 1 account No. x8733, deposited into
DAVIS
, Financial Institution 1 account No. xl 719, held in the I
''
i name ofT&T Holdings. '
i Cashier's check for approximately $25,000
withdrawn from CF A's Financial Institution I
T. SMITH
13 May 22, 2020 account No. x8659, deposited into Financial
S. SMITH
Institution 1 account No. xl 719, held in the name of
T&T Holdings.
j
Cashier's check for approximately $25,000
withdrawn from CFA's Financial Institution l
. 14 IS. SMITH May 22, 2020 account Ko. x8659, deposited into Financial
i Institution 2 account Ko. x4088, held in the name of
i • S. SMITH d/b/a Complete Fundamentals. i

Each in violation of Title 18, United States Code, Section 1957 and Section 2.

12
FOID'EITURE ALLEGATIONS

The allegations contained in Cmmls 1-14 of this Indictment are hereby realleged and

incorporated by reference for the purpose of alleging forfeiture. Upon conviction of an offense

alleged in Counts 1-14, Defondants shall forfeit to the United States, pursuant to Title 18, United

States Code, Set,1ion 981(a)(l )(C), by way of Title 28, United States Code, Section 2461( c), any

prope1ty that constitutes or is traceable to proceeds of the offense. This property includes, but is

not limited to, a sum of money reflecting the proceeds Defendants obtained from the offense.

The allegations contained in Counts 1-14 of this Indictment are hereby realleged and

incorporated by reference for the purpose of alleging forfeiture. Upon conviction of an offense

alleged in Counts 1-14, Defendants shall forfeit to the United States, pursuant to Title 18, United

States Code, Section 982(a)(l), any property involved in the offense, or any property traceable to

sueh property. This property includes, but is not limited to, a sum ofmoney reflecting the proceeds

Defendants obtained from the offense.

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

Defendants,

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;

it is the intent of the United States, pursuant to Title 21, United States Code, Section 853(p), and

Title 28, United States Code, Section 246I(c), to seek the forfeiture of any other property of the

13
Defendants, up to the value of the above-described forfeitable property.

A TRUE BILL:

/ (,' ·- :lo - J.. o ?.. 0

~~1~~:;r=
United States Attorney
Dated:
-----"- -- - -- -- -- -

~A!:f:!~
Acting Chief, U.S. Department of Justice, Fraud Section

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