Where the evidence supported two family members’ convictions for their roles in a fraudulent Paycheck Protection Program loan scheme, they were affirmed.
Background
Izzat Freitekh and Tarik Freitekh were convicted of various offenses arising from their roles in a fraudulent Paycheck Protection Program, or PPP, loan scheme. As a result of the scheme, appellants received $1.75 million in PPP loan funds to which they were not entitled. The government was ultimately able to recover $1.3 million of the PPP funds.
Count Three
Izzat argues that the evidence at trial was insufficient to support a conviction for conspiracy to commit money laundering. The court disagrees. The government submitted multiple emails in which Izzat forwarded Tarik the requests from Bank of America, or BOA, for more information or documentation in support of the loan applications. It was following these emails that Tarik allegedly uploaded falsified documentation in support of the loan applications.
This provided the jury a basis from which to infer that Izzat conspired to engage in monetary transactions involving criminally derived proceeds by, for example, writing checks to his family members with funds from the fraudulently obtained PPP loans. And the government was not required to present direct evidence of his knowledge of the illicit nature of the funds — evidence of willful blindness was sufficient for the jury to convict.
Count Eight
The government charged Izzat with knowingly making materially false during the July 2020 meeting with the government. A rational fact finder could readily conclude that Izzat assisted in creating the purported Kyber story by, among other things, falsifying the envelopes Izzat allegedly received from Kyber to conceal the illicit PPP loan scheme. A rational trier of fact could conclude that Izzat made false statements at the July 2020 meeting with the government when he swore to the government that neither he nor Iman had reached out to BOA regarding the status of the loan applications.
Count Nine
Tarik argues that the evidence presented at trial was insufficient to convict him for falsifying and concealing material facts. Tarik first argues that the chat log was not material to the government’s investigation as the “decision to charge [him] on the other alleged offenses[] had been reached long prior” to the submission of the chat log to the government.
And second, Tarik argues that the evidence is insufficient because the government did not prove that he submitted the chat log in question to his attorney. Instead, Tarik relies on the fact his former attorney, Christopher Fialko, received the chat log in an email from a third party. Both of these arguments lack merit.
Former counsel
Tarik argues that the District Court violated his Sixth Amendment right to counsel of his choice when it granted Fialko’s motion to withdraw as counsel over Tarik’s objection. And Izzat contends that the District Court violated his Sixth Amendment right to confront Fialko by limiting his cross examination of Fialko. Finally, regarding his own prior counsel, Izzat argues that the District Court erred by admitting Preston Odom’s testimony which he asserts was unduly prejudicial and unnecessary to the government’s case. The court rejects each argument.
Sentencing
Izzat challenges the District Court’s application of the “loss” and “gross receipts” enhancements pursuant to Guidelines § 2B1.1. He argues that these enhancements do not apply because he was acquitted of the associated conduct at trial. Izzat further argues that the District Court erred by failing to consider whether “loss” as written in § 2B1.1 is genuinely ambiguous before relying on the commentary to that section. The court rejects both arguments.
Tarik first contends that only the amount of money laundered in connection with his substantive money-laundering conviction on Count Four ($149,000), as opposed to the amount of the entire PPP loan scheme ($1.75 million), should control his sentencing calculations.
Tarik also argues that the District Court improperly calculated the loss amount by relying on the “intended loss” definition in the commentary to § 2B1.1.
Tarik also argues that the District Court improperly applied a two level enhancement for use of sophisticated means because PPP loan fraud necessarily relies on sophisticated conduct. Finally, Tarik contends that the District Court erred by refusing to consider relevant 18 U.S.C. § 3553(a) factors that he says warranted a downward variance in his case. The court again rejects each argument.
Affirmed.
Concurring opinion
Quattlebaum, J., concurring in part, and concurring in the judgment:
I join the majority opinion except for part II.C.2. As to that part, I also affirm the District Court. But I do so for different reasons.
United States v. Freitekh, Case Nos. 22-4735, 22-4736, Sept. 3, 2024. 4th Cir. (Thacker), from WDNC at Charlotte (Whitney). William Robinson Heroy, Mark Allen Yurachek and James Walter Kilbourne Jr. for Appellants. Kevin James Barber for Appellee. 50 pp.