Title

A() 91 (Rev 08/û9) Crlmjnal Complalnt

U NITED STATES D ISTRICT COURT

for the

Southel'n District of Florida

United States of Am erica

Damion Mckenzie!

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CR IM IN AL COM PLAINT

l . the com plainant in this case

state that the fbllowing is true to the best of my knowledge and belief

On or about the datets) ot' M@y 15-JM,y

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in the county of Broward in the

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. tbe defendamts) violaled:

CrWc Section

18 U.S.C. jj 1343 and 2

18 U.S.C. jj 1344 and 2

18 U.S.C. 1 1349

OFimse Descriplion

W ire Fraud

Bank Fraud

Conspiracy/Attempt to Com m it W ire and Bank Fraud

This crim inal complaint is based t'm these facls-

SEE AU ACHED AFFIDAVIT

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Troy T. Walker

Aug 3, 2020

A FFID AW T

1, M ichael Benivegna, being first duly sworn, hereby depose and state as follows:

IN TRO D U CU O N A ND A GEN T BAC K G RO UND

I make this Affidavit in support of a crim inal com plaint charging DAM ION

MCKENZIE (ûEM CKENZIE'' or td Defendant''), with wire fraud, bank fraud, attempt and

conspiracy to cornmit wire fraud and bank fraud, in violation of 18 U.S.C. jj 1343, 1344, l 349,

and 2, from on or about M ay 1 5, 2020 to at least on or abotlt July 2, 2020, in the Southern D istrict

of Florida, and elsewhere (the Sç-l-arget Offenses'').

Defendant has participated in a schem e to obtain by fraud m illions of dollars in

forgivable loans through the Paycheck Protection Program (tSPPP'') and other government

programs, conspiring with a person now cooperating with the investigation (CSCHS 2'') and others.

Defendant sought a fraudulent PPP loan for his owm com pany, Five Plus lnvestm ent Group LLC

(ilFive Plus''), with CHS 2 providing falsified documents and subm itting the application on

D efendant's l half. Defendant also conspired to subm it a num ber of additional fraudulent PPP

loan applications for other com panies by recruiting other confkdemte loan applicants

in order to

receive kickbacks from those confedem tes. To intlate the size of these PPP loans, and the

corresponding kickbacks, the conspirators relied on a variety of false statem ents, including by

subm itting falsified bank statements and payroll tax form s. For example, the conspirators used

nearly identical versions of the sam e fabricated bank statem entss recycled in the PPP applications

for m ultiple com panies w ith m inor changes.

The conspirators in the scheme planned or prepared at least 90 fraudulent

applications, most of w hich were subm itted. Based on the evidence investigators have reviewed

to date, CH S 2, Defendant, and their co-conspirators applied for PPP loans that are together worth

more than $24 million dollars, with at least approximately 42 of those loans approved and funded

for a total of approximately $17.4 million. Certain of those loan recipients then wired a kickback

of varying am ounts, often approxim ately 25% of the fraudulent loan proceeds

to an account

controlled by CH S 2.

l am a Special A gent with the United States Departm ent of The Treasury, lnternal

Revenue Service, Criminal Investigation (:$lRS-CI'') and have been employed in this capacity since

October 2016. l am presently assigned to the M iam i Field Office. M y duties as a Special A gent

include the investigation of possible criminal violations of the lnternal Revenue Code (Title 26 of

the United States Code), the Bank Secrecy Act (Title 31 of the United States Code), and the M oney

Laundering Statutes (Title l 8 of the United States Code). I graduated from the Criminal

Investigator Training Program at the Federal Law Enforcem ent Training Center in April 20l 7 and

the Special A gent lnvestigative Techniques program at the N ational Crim inal Investigation

Training A cadem y in July 20 l 7. ln these tw o program s, I sttldied a variety of 1aw enforcement

tactics and crim inal investigator ttchniques rtlating to tax and ûnancial crim es. Sinct becom ing

an IRS-CI Special Agent, l have personally investigated and assisted in investigations relating to

the lnternal Revenue Law s and financial crim es. Recently, l have been assigned to work w ith the

U.S. Departm ent of Justice and other 1aw enforcement partners, including the Federal Bureau of

Investigation and the Sm all Business Administl-ation Offk e of lnspector Genem l, to investigate

possible fraud associated with the stim ulus and econom ic assistance program s created by the

federal governm ent in response to the COVID-19 program .

The facts in this A ffsdavit come from my personal observations, my training and

experience, and inform ation obtained from other members of 1aw enforcem ent and from witnesses

Page 2 of 13

This A ffidavit is intended to show m erely that there is sufficient probable cause and does not set

forth all ofmy know ledge about this m atter.l

PR O BA BLE CAUSE

The Jv /c/leck Protection Pros am

The Coronavirus Aid, Relief, and Economic Security (iICARES'') Act is a fedeml

law enacted in or around M arch 2020 and designed to provide em ergency financial assistance to

the m illions of A mericans who are suffering the economic effects caused by the CO VlD-19

pandemic. One source of relief provided by the CARES Act was the authorizmtion of up to $349

billion in tbrgivable loans to small businesses forjob retention and certain other expenses, through

a prog am referred to as the PPP. In or around April 2020, Congress authorized over $300 billion

in additional PPP funding.

ln order to obtain a PPP loan, a qualifying btlsiness must subm it a PPP loan

application, which is signed by an authorized representative of the business. The PPP loan

application requires the business (through its authorized representative) to acknowledge the

program rules and m ake certain affirmative certitk ations in order to be eligible to obtain the PPP

loan. In the PPP Ioan application, the small business (through its authorized representative) must

state, among other things, its: (a) average monthly payroll expenses; and (b) number of employees.

These figures are used to calculate the am ount of m oney the sm all business is eligible to receive

under the PPP. ln addition, busintsses applying for a PPP loan m ust provide docum entation

show ing their payroll expenses.

The conduct and charges described in this A ffidavit are part of a larger investigation that

is being conducted in this D istrict and elsewhere. A s a result, not all num bered sources and

anonymous individuals and entities are described in every filing. I have included in this Affidavit

only those individuals and entities 1 have deemed necessary to explain the particular facts set forth

here.

Page 3 of 13

8. A PPP loan application m ust be processed by a participating lender

. lf a PPP loan

application is approved, the participating lender funds the PPP loan using its own monies

which

are 1 00% guaranteed by the Small Business Adm inistration (dçSBA'').Data from the application,

including information about the borrow er, the total amount of the loan, and the listed num ber of

em ployees, is transm itted by the lender to the SBA in the course of processing the loan

PPP loan proceeds must be used by the business on certain perm issible expenses-

payroll costs, interest on mortgages, rent, and utilities. The PPP allow s the interest and principal

on the PPP loan to be entirely forgiven if the business spends the Ioan proceeds on these expense

item s w ithin a designated period of tim e after receiving the proceeds and uses a certain anzount of

the PPP loan proceeds on payroll expenses.

The Schem e to Obtain Fraudulent PPP Loans

10. On or about May l3, 2020, Phillip J. Augtlstin (çbAugustin'') and CHS 2 worked

together to subm it a fraudulent PPP loan application on behalf of a com pany owned by A ugustin.

Augustin submitted a PPP loan of $84,515 to a federally insured bank (hereinafter GsBank 3'5),

through a third-party company processor (hereinafter ççBank Processor 1'').2 The application

included bank statements that are clear forgeries, and CHS 2 has admitted that the application was

based on docum ents that he fatsified tbr A ugustin.3

2 A11 banks referenced in

Corporation.

this AfGdavit are insured by the Federal D eposit lnsurance

3 On June 25, 2020, investigators arrested CH S 2 and another person now cooperating with

the investigation (tSCHS 39') and executed search warrants at their residences. Following his arrest,

CH S 2 chose to cooperate with the investigation in the hope of obtaining favorable consideration

in connection with his pending charges. CHS 2 w as interviewed on that day, and has continued to

cooperate w ith the investigation after obtaining counsel. M ost of his statements related herein

have been corroborated by records obtained from third parties or recovered from his electronic

devices.

Page 4 of 13

1 l . Follow ing the success of that initial fraudulent PPP application, A ugustin and CH S

2 began to work on obtaining m ore and larger PPP loans fbr Augustin' s associates and others

generally for several hundred thousand dollars for each loan, up to as much as approximately $1.24

m illion. Based on the evidence investigators have reviewed so far

CH S 2 and Augustin

collectively coordinated applications for PPP loans that are together worth more than $24 million

dollars. The evidence also shows many more PPP loans were attempted but rejected by banks or

their partners, or w ere planned and prepared, but not subm itted before CH S 2's arrest

. The

evidence suggests that alI or nearly all of those loan applications were fraudulent

including

Defendant's loan application and the applications Defendant orchestrated by refening additional

confederates to the conspiracy.

Investigators have obtained m any other PPP loan applications that CHS 2 has

adm itted he subm itted as part ofthis schem e, based on falsified docum ents, and have also obtained

draft docum ents used or intended to be used in those applications or others. These applications a1l

follow the sam e pattern of fraud- m any w ith obviously counterfeit February 2020 bank

statements, and all with fabricated IRS Forms 94l (titled, CtEmployer's Quarterly Federal Tax

Return'') with the same indicia of fraud found in Augustin' s initial application but generally with

even larger inflated payroll num bers, thus yielding m uch larger loans.4 CH S 2 has explained to

investigators that the figures in the Forms 941 were the product of a form ula that allow ed him to

start w ith a target loan am ount, and then çûback into'' the payroll figures on the form

. Ht explained

how he used figures that would produce an average m onthly payroll for 2019 that

when m ultiplied

by 2.5, would yield the requested loan amount. ln turn, the num ber of em ployees reported was

4 Some loan applications also included voided checks that appear to be falsitsed

such as a

purported Bank 5 check that appears to have been produced on a computer and, as the subject line

reads, itconverted to PDF,'' rather than a scan of an authentic check

Page 5 of 13

chosen based on tk tional payroll figures, chosen to avoid an average employee salary that m ight

raise suspicion.

CH S 2 has also explained that he tried to use bank statem ents show ing that the

company had a large balance. Because so few companies had such a statem ent, and likely also

because it was easier than keeping track of their true statelnents, CH S 2 repeatedly subm itted near-

replicas of the same falsified bank statements.ln particular, CH S 2 appears to have recycled one

statement each from Bank 1, Bank 6, and Bank 7. In recycling a statem ent, CHS 2 generally

changed only the account nunlber and the accotlnt holder's nam e and address, such that each

version of the statem ent had identical figures and line items throughout the statem ent.

14. A review of records for bank accounts controlled by CH S 2 at Bank 5 confirm CH S

2's adm issions that he received num erous kickbacks, often of approxim ately 25% of the am ount

of the loans, and that he regularly w ired A ugustin a share of that kickback in the early stages of

the schem e. CH S 2 explained that they were doing so many loans by the end of M ay that he

changed course, instead w iring larger lump sum s. collecting Augustin's shares of the kickbacks

for multiple loans in one w ire.

Investigators are still receiving and analyzing records, but based on a prelim inary

analysis, as of July 24, 2020, investigators had identified a total of $2,367,765.82 in transfers to

CH S 2's accounts from entities that each obtained a sizzble PPP loan and that were identified in

the PPP files seized from CH S 2's and another co-conspirator's residences, as described below

or from individuals associated w ith those entities.

The PPP loans identified above as im plicated in the foregoing kickback paym ents

to CH S 2 represent only a fraction of the overall schem e. ln executing search wan-ants at the

respective residences of CH S 2 and CHS 3, federal agents found stacks of paper printed out and

Page 6 of 13

organized by entity, containing an 'sintake form ,'' fabricated Form s 941 , or both for each entity.

The intake fbrms contained fields for the information needed to fabricate the docum ents and fill

out other aspects of the PPP application: identifying inform ation about the ow ner and company,

as well as bank account inform ation for receiving the Ioan. A section at the end m arked (IBELOW

IS OFFICE U SE ON LY'' included blank fields for the iix umber of Employees,'' tsM onthly Payroll

Expense,'' and tSSBA Loan Pre-Approval Am ount.'' Between CH S 2's and CH S 3's residences,

investigators seized paper files for PPP loan applications for approxim ately 80 different entities.

Data obtained fron: the SBA show ed additional PPP loan applications from

additional entities that text m essage and em ail records show had been referred to CH S 2 by

Defendant or other individuals.

The Fraudulent PPP Loan to Defendant's C'tavlplap: Five #/Iz,ç

18. According to Florida's Division of Corporations website (%ssunbiz''), Five Plus was

incorporated in 20 l 8 w ith its listed principal address in M iam i, Florida. M CKEN ZIE is listed on

Sunbiz as one of five m anagers of Five Plus w ith a separate address in M iam i Gardens, Florida.

According to separate bank records, on or about M ay 26, 2020, M CKENZIE opened a bank

account in the nam e Five Plus and listed him self as the sole signatory on the account.

19. From on or about M ay 16, 2020 through on or about M ay l9, 2020, an application

and supporting documents for a PPP loan w ere electronically subm itted on behalf of Five Plus to

Bank 2 through Bank Processor 1. The submitted documents kw luded, among othtr things: (1)

purported Forms 941 for all four quarters of 2019; (2) a company bank statement for Five Plus;

and (3) two blank checks.

20. The purported Forms 94l show quarterly payroll of almost $300,000 each quarter,

for 10 em ployees. Each w as signed by hand w ith the name ttDam ion M cKenzie'' as the com pany

Page 7 of 13

ow ner, and also listed M CKEN ZIE as the com pany's designee and as a %%paid Preparer,'' though

he is not a paid tax preparer. The Five Plus Form s 941 fbllow the sam e style and pattern as the

m any other falsified Form s 94l that CH S 2, described above, acknow ledged that he helped create

and subm it in the course of the schem e, including in the indicia of fraud.s IR S records show that

Five Plus did not, in fact, file any Folnns 941 for any quarter of 20 1 9 or the first quarter of 2020

and Florida Departm ent of Revenue records show that Five Plus did not report any wages or

employees for that same period.

The purported company bank statem ent, w hich was subm itted in electronic, PDF

form at, is a clear forgery. First, the statem ent is not from Five Plus's bank. Second, according to

the docum ent's file dtprom rties,'' the statem ent w as created using t'PDFFILLER

'' a program used

to edit electronic PDF Gles, and was iûmodified using i'Ikxt.''

22. ln a letter dated June 2, 2020, Bank Processor l inform ed M CK EN ZIE that his PPP

loan application was rejected. The following reason was stated on the letter for the rejection:

i'Unable to verify Applicant's identity from docum ents subm itted or discrepancies in inform ation

subm itted.''

5 A s noted above, M CK ENZIE was listed as b0th owner and paid preparer. D ozens of other

Forms 941 subm itted in this scheme evidence the sam e error. CH S 2 has adm itted that these

documents share that feature because he misunderstood the form, and he (or someone following

his instructions) prepared all of the Forms 94 1 at issue. The content of the forms also indicate

falsification. A ll four quarterly form s are nearly identical, and the four form s for Five Plus are

identical, down to the penny, in reported figures. They also evidence a pattern of payroll spending

that is likely false : each of the quarters show s increases from the first to second to third month of

the quarter. For each identical form , the sam e figures are reported for the tax liability incurred in

the first month of each quarter, the same figure for the second month of each quarter (increased

from the first month), and the same Ggure for the third month of each quarter (increased from the

second month). The result is that the company reports a perfectly rem ating cycle of ascending

payroll costs w ithin each quarter, dropping dow n again at the start of the next quarter. CHS 2 has

explained that this was due to a form ula he used, allocating different percentages of the quarterly

payroll tax liability to each month of each quarter.

Page 8 of 13

CHS 2 Conf-lrmed to Law Enforcement that the Five #/1u PppLoan Application PZW,N

Fraudulent

23. lnvestigators spoke w ith CHS 2 about M CKEN ZIE and the Five Plus PPP loan.

CHS 2 stated that he had m et M CKEN ZIE through A ugustin. According to CH SZ, the three of

them had discussed M CKEN ZIE'S PPP loan, as well as M CKEN ZIE'S referrals, for which

M CK ENZIE would receive a sm all cut. As stated above, CH S 2 and A ugustin had already agreed

to share the 25% kickback paym ents that CH S 2 would usually receive from referrals, including

from M CKEN ZIE'S referrals.

24. A s to the Five Plus PPP loan, CH S 2 confirm ed that the loan application w as

fraudulent. CHS 2 stated that he: (1) created for M CKENZIE an online account for Five Plus with

Bank Processor 1 ; (2) created and submitted the fake Five Plus bank statement; and (3) created

and subm itted the false Form s 941 . According to CHS 2, however, he em ailed the Form s 941 to

M CKENZIE unsigned, and then MCKENZIE tmailed the forms backto him with signatures. (As

described below , 1 have reviewed em ails that appear to corroborate CHS 2's description of this

email exchange.)

25. According to CHS 2, MCKENZIE'S PPP loan application was ultimately rejected.

IP session records from Bank Processor l corroborate CH S 2's statement that he

assisted w ith the subm ission of tht Five Plus loan application. Bank Processor 1's IP records for

that loan application show that a computer with an IP address (ending in 170) associated with CHS

2's residence in Brow ard County, Florida, logged into the Five Plus loan account as early as M ay

16, 2020. The session records also reveal subsequent logins by the same IP address (ending in

l 70), as well as by a computer associated with the Broward County residence of one of Augustin's

associates, and by mobile devices. One ofthost mobile devices (with an IP addrtssing ending in

Page 9 of 13

250) logged into the Five Plus loan account as early as M ay 16, 2020, and, according to bank

records, also accessed M CKEN ZIE'S personal bank account that day.

27. CH S 2 also stated that, in addition to the Five Plus loan, M CK ENZIE referred to

him a num ber of fl-iends/associates for the purpose of creating and subm itting additional fraudulent

PPP loans. As stated above, CH S 2 and A ugustin w ould generally share the kickback paynw nts

for these referm ls. CH S 2 stated that, at som e point in the schem e, A ugustin instructed him not to

pay M CKENZIE a portion of the kickback paym ents that CH S 2 received from M CKEN ZIE'S

referrals. A ccording to CH S 2, w hen M CKEN ZIE would inquire about not receiving his cut, CH S

2 w ould refer him to Augustin.

Emails and Text M essazes Cba/irvl M CKENZIE 'S K nowinq Participation in the Fraud

28. As part of its investigation, Iaw enforcem ent obtained cornm unications between

CH S 2 and M CKENZIE, including text m essages and emails. l have reviewed a number of these

com m unications, which discuss, among other things, M CKENZIE'S PPP loan and the Ioans for

individuals M CKEN ZIE referred to CH S 2.

29. On or about M ay l 5, 2020, CH S 2 em ailed M CKEN ZIE Form s 94l for Five Plus

for all four quarters of 20l 9. The fonns were filled out (including stating that Five Plus had 1 0

employees and almost $300,000 in quarterly payroll) but were not signed. The same day,

M CKEN ZIE em ailed CH S 2 sir ed copies of the four Form s 941.

On or about M ay 16, 2020, M CK ENZIE forwarded CH S 2 an em ail from Bank

Processor l titled, 'ûYour Paycheck Protection Program loan has been subm itted.'' The em ail

stated, in part: llDam ion, Your application w as sent to the SBA to be processed. Based on capacity,

the SBA m ay take up to a few days to process your application.''

Page 10 of 13

31. On or about M ay 20, 2020, M CKENZIE texted CHS 2: ûç-rhey said the voided check

is under review once they done they w ill email.'' M CK EN ZIE then texted: $(I dont have a business

account for this business i am going to try to get one open todayjust in case they ask for it.''

32. On or about M ay 19, 2020, M CKENZIE texted CH S 2 w ith inform ation that

appears to relate to a diffemnt fraudulent loan application, including: (1) a social security number;

(2) date of birth; (3) email address; and (4) employer identification number (i:EIN''). Later that

day, M CKENZIE texted CHS 2 : ibcan you get (NAME REDACTEDI at $290k?''

33. On or about M ay 1 9, 2020, CH S 2 separately em ailed M CK EN ZIE a blank intake

inform ation form to be filled out w ith the personal and business inform ation for M CKEN ZIE'S

referrals. And in a separate text message, CHS 2 stated: $iI just sent you a fonm to f5ll out with each

client its easier with us to upload application we are swamped A lso if the corp and hom e address

are the same just put same on corp address.'' On or about May 2 l , 2020, MCKENZIE emailed

CH S 2 com pleted intake forms regarding two referrals.

During my review of M CKEN ZIE'S comm unications w ith CH S 2, l found what

appears to be inform ation pertaining to at least ten different people and corporate entities. Further

investigation, including review of data collected by the SBA and bank records, to date has

identified PPP loans totaling more than $3.3 million corresponding to these names and entities.

Bank Records Confirm M CKENZIE'S Knowinz Participation in the Fraud

35. l have reviewed CH S 2's bank records, which reflect paym ents to CHS 2 from

MCKENZIE'S referrals as well as payments by CHS 2 to Augustin (who had brought in

M CKENZIE to the scheme). For example, on or about M ay 26, 2020, CHS 2 received a wire

transfkr in the amount of $122,155 related to a PPP application in the name of a company

(hereinafter 'Ecompany 14'') that M CKENZIE had referred to CHS 2. The same day, from that

Page 11 of 13

same account, CHS 2 wired $39.970 into one of Augustin' s bank accounts. CHS 2 contirmed that

the paym ent to Augustin represented his share ofthe kickback from Company 14.6

Bank records and text m essages also reflect paym ents directly to M CKEN ZIE from

his referrals, follow ed by paym ents from M CKEN ZIE to CHS 2. For exam ple, on June 8, 2020,

CH S 2 provided M CKEN ZIE w ith his bank account information via text m essage and stated:

ltAfter your m oney send m e 80k.'' M CKENZIE responded, ifOk.'' Separately, on or about June

8, 2020, M CKENZIE deposited two checks in the amounts of $85,000 and $90,000 from a

company M CKEN ZIE had referred to CH S 2. On or about June l 1 , 2020, CH S 2 received a wire

transfer in the amount of $80,000 directly from Five Plus. That same day, from the same account,

CHS 2 wired $40,000 to one of Augustin' s bank accounts. CHS 2 explained to investigators that

the $80,000 tmnsfer was in connection with one of M CKENZIE'S referrals, who had wired the

kickback paym ent directly to M CK ENZIE instead of CH S 2.

Other banking records show deposits consistent w ith M CKEN ZIE receiving

additional kickbacks. Betw een approximately M ay 26, 2020 and July 2, 2020, M CK EN ZIE

received payments of $20,000, $5,000, and $45,000 from three separate companies. Diflkrent

banking records show CH S 2 received separate paym ents from each of those three com panies.

6 Bank records show that on M ay 26, 2020, the same day CHS 2 paid $39,970 to Augustin,

CHS 2 also made a purchase at a jewelry store in the amount of $73,000.

Page 12 of 13

CO NCLUSIO N

Based on the fbrgoing, I respectfully subm it that there is probable cause to believe

that DAM ION M CKENZIE comm itted the Target Otlknses

FIJRTHER YOt JR AFFIA NT SA YETI I NA UGHT

M ICHA EL BENIVEGNA

Special Agent

IRS-CI

A ttested to by the applicant in accordance

with the rtquirem ents ik'ed

. R. Crim . P. 4. 1

by telephone on this Day ot- August

2020

$ x. z

IION. PATRIC K M , HUNT

UNITED STATES M AGISI'RATF, JU I7Gl:'

Page 13 of 13

Troy T. Walker

Aug 3, 2020