Detroit resident Darrell Baker pleaded guilty today to bank fraud and money laundering arising out of a $590,000 Covid-19 fraud scheme, announced United States Attorney Matthew Schneider.
Joining in the announcement were Special Agent in Charge Steven M. D’Antuono, Federal Bureau of Investigation and Inspector General Hannibal Mike Ware of the Small Business Administration’s Office of Inspector General.
Darrell Baker, 56, pleaded guilty to one count of bank fraud arising from his effort to obtain some $590,000 by defrauding a Pennsylvania financial institution in the issuance of a Payroll Protection Program Loan. Baker also pleaded guilty to one count of money laundering, the result of financial transactions he engaged in with the fraudulently obtained funds.
United States Attorney Schneider stated, “My office and our law enforcement partners have no tolerance for frauds affecting programs designed to help our economy survive the Covid-19 pandemic. We will prosecute such cases aggressively, and today’s guilty plea is an example of our commitment to holding accountable anyone fraudulently obtaining pandemic relief funds to line their own pockets.”
“Mr. Baker's scheme exploited a fund designed specifically to support Americans during this financially challenging time,” said Steven M. D’Antuono, Special Agent in Charge of the FBI in Michigan. “Thanks to the hard work of the FBI and all of the agencies involved in this investigation, monies set aside for hard working Americans who are not able to work during this pandemic is secure and available for the people that need it most, not for the fraudsters like Mr. Baker."
According to the plea agreement, Baker applied for and obtained a $590,000 Payroll Protection Program Loan on behalf of a purported business that he owns, called “Motorcity Solar Energy, Inc.” The Payroll Protection Program is a program managed by the Small Business Administration (SBA) that provides loans to help businesses keep their workforces employed during the Covid-19 crisis. The SBA will forgive the loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities. The Payroll Protection Act loans are funded from participating banks, in this case Customers Bank in Pennsylvania.
According to the plea documents, Baker submitted paperwork with his loan application representing that Motorcity Solar Energy Inc. had 68 employees and, in 2019 paid wages, tips, and other compensation totaling $2.8 million. All of these representations were in fact false. Motor City Solar Energy had no employees, no payroll expenses of any kind, and was not an operational business. Baker submitted these false statements as part of a scheme to intentionally defraud Customers Bank and the Payroll Protection Program.
The plea documents state that Baker managed to withdraw approximately $172,000 of the $590,000 loan he obtained before Baker’s own financial institution froze the remainder, which was ultimately returned to Customer’s Bank. Baker used the funds he did obtain to purchase four cashier’s checks, and used the four checks to purchase two Cadillac Escalades, a Dodge Charger, and a Hummer. The plea agreement requires Baker to forfeit these vehicles. As part of the plea agreement, Baker also agreed to the entry of a money judgment against him in the amount of $172,484.40, which represents the portion of the loan that Baker obtained before his fraud was uncovered and the balance of the loan frozen.
Sentencing is set for January 14, 2021, before United States District Judge Laurie J. Michaelson,
The case is being prosecuted by Assistant United States Attorney John K. Neal. The investigation is being conducted jointly by the FBI and the SBA-OIG. .
A Detroit resident was charged in a criminal complaint for his alleged role in a scheme to obtain $590,900 from the Payroll Protection Program for a non-functioning business, announced United States Attorney Matthew Schneider.
Joining in the announcement was Special Agent in Charge Steven M. D’Antuono, Federal Bureau of Investigation.
Charged is Darrell Baker, 51, of Detroit, Michigan.
As alleged in the complaint, Baker applied for and obtained a $590,000 Payroll Protection Program Loan on behalf of a purported business that he owns, called “Motorcity Solar Energy, Inc.” The Paycheck Protection Program is a program managed by the Small Business Administration (SBA) that provides loans to help businesses keep their workforces employed during the Covid-19 crisis. The SBA will forgive the loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities. The Payroll Protection Act loans are funded from participating banks, in this case Customers Bank in Pennsylvania.
The complaint further alleges that Baker submitted paperwork with his loan application representing that Motorcity Solar Energy Inc. had 68 employees and, in 2019 paid wages, tips, and other compensation totaling $2.8 million. In fact, the state of Michigan had dissolved Motorcity Solar Energy Inc.’s status as a corporation in July 2019. All of Motorcity’s purported business locations were either empty suites or single-family residences, with no evidence of business activity. And Motorcity never established any account with the State of Michigan’s unemployment insurance program, which is a prerequisite for any valid employer in the state.
The complaint further alleges that, in the two days after the loan was funded, Baker purchased four cashiers checks and withdraw an additional $60,000 in cash. None of these cashier’s checks went to payroll or other business expenses. Indeed, Baker used the four cashiers checks to purchase two Cadillac Escalades, a Dodge Charger, and a Hummer. According to the complaint, Baker purchased one of vehicles for his brother-in-law and one for his sister; the remaining two vehicles Baker kept for his own use and enjoyment.
United States Attorney Schneider stated “Defendant Baker is charged with lying to obtain money that was supposed to help small businesses struggling with their payroll and expenses due to the COVID-19 pandemic. Defrauding banks to obtain loans is never acceptable, and doing so during our current national emergency is unconscionable. This prosecution is yet another example of our office’s commitment to holding accountable anyone who would exploit the COVID-19 crisis for their own greedy desires.”
“The Paycheck Protection Program is designed as a lifeline to businesses struggling to survive this current crisis. Instead of using these loans to salvage a legitimate business, the defendant allegedly bought expensive personal items for himself and his family,” said SAC D’Antuono. “These actions harmed hard-working Americans and deserving small businesses. The FBI is committed to investigating anyone who seeks to take advantage of a global pandemic to line their own pockets at the expense of American taxpayers.”
A complaint is only a charge and is not evidence of guilt. Trial cannot be held on felony charges in a complaint. When the investigation is completed a determination will be made whether to seek a felony indictment.
The case is being prosecuted by Assistant United States Attorney John K. Neal. The investigation is being conducted by the FBI.
Case Name: United States of America v. Jackson et al
A former Detroit Police Office was convicted today by a federal jury in Detroit on the charge of conspiracy to distribute controlled substances, U.S. Attorney Matthew Schneider announced today.
Joining Schneider in the announcement were Acting Special Agent in Charge Rainer S. Drolshagen of the Federal Bureau of Investigation’s Detroit Division, and Special Agent in Charge Keith Martin, Drug Enforcement Administration, Detroit Field Division.
The four-day trial was conducted before U.S. District Judge Sean Cox. The jury deliberated approximately one day before convicting Christopher Staton, 52.
According to the evidence presented at trial, Staton, a former officer with the Detroit Police Department, was part of a drug trafficking organization and conspired with Meltwaine Dukes and Sedrick Jackson, both known drug dealers, to distribute and to possess with the intent to distribute controlled substances, including cocaine and fentanyl. Staton used his position as a police officer to assist the drug trafficking organization by running license plates and providing other sensitive law enforcement information. For instance, after a law enforcement officer stopped one of the organization’s drug couriers who was trying to deliver almost one kilogram of fentanyl, Staton provided advice to Dukes about how to handle the situation, and also agreed to find out if the courier was actually arrested. On another occasion, Staton, at the request of Dukes, conducted a staged traffic stop of Jackson, who was transporting drugs or drug proceeds, in order to fool their drug supplier to think that police had taken the drugs / money. Staton was in a police vehicle and armed with a firearm at the time of the stop. Staton was paid $20,000 in cash for performing the staged traffic stop and fake arrest. In addition to using his position as a police officer to assist Dukes and Jackson in running the drug business, Staton was also a drug customer—purchasing drugs from Dukes for re-sale.
“Although the vast majority of police officers in Michigan are fully dedicated to protecting the public, sometimes there is an infrequent example of an officer driven by corruption and greed,” stated United States Attorney Matthew Schneider. “Here, instead of protecting and serving the public, Staton acted at the behest of the drug dealers peddling fentanyl. Nonetheless, former Officer Staton’s actions, while egregious, do not overshadow the outstanding work of so many other great police officers.”
“Christopher Staton turned his back on his oath to serve and protect the citizens of Detroit. He used his position to make it easier for drug traffickers to push controlled substances into our community and now faces justice for his greed,” stated DEA Special Agent in Charge Martin. “I applaud our law enforcement partners and the U.S. Attorney’s Office of Eastern Michigan for their efforts in this investigation.”
“This former officer took illegal advantage of his law enforcement position,” Acting Special Agent in Charge Drolshagen said. “His conviction is a reminder that the laws apply evenly to every Michigan resident, including those who carry badges to uphold them. I extend thanks to our partners at the Drug Enforcement Administration and the Detroit Police Department’s Office of Internal Affairs for their collaboration in removing this individual from his position of authority.”
The case was investigated by the by the FBI Detroit Area Public Corruption Task Force, in collaboration with the Detroit Police Department’s Office of Internal Affairs and the Drug Enforcement Administration. The case is being prosecuted by Assistant U.S. Attorneys Steven Cares and Mitra Jafary-Hariri.