Orange County Resident Sentenced To Over Four Years In Prison For Scheme To Defraud Multiple Victim Investors
OAKLAND – The U.S. Attorney’s Office has filed two informations charging six defendants with a variety of crimes in connection with an alleged scheme to obtain millions of dollars by submitting fraudulent loan applications through the U.S. government’s Payroll Protection Program (PPP), announced U.S. Attorney Ismail J. Ramsey, Internal Revenue Service Criminal Investigation Special Agent in Charge Darren Lian, Small Business Administration Office of Inspector General, Western Region Special Agent in Charge Weston King, and Office of Inspector General for the Board of Governors of the Federal Reserve System and the Consumer Financial Protection Bureau, Acting Western Region Special Agent in Charge Cory Nootnagel. All six defendants are scheduled to make their initial federal court appearances next week before U.S. Magistrate Judge Kandis Westmore.
Central to the allegations in the charging documents is the role of Frank Mosley, 58, of Oakland, a former IRS Revenue Officer and current City of Oakland Tax Enforcement Officer. According to the charging documents, Mosley conspired with others to submit fraudulent PPP-loan applications and then, after securing the proceeds from the loans, used his share of the illegally-obtained proceeds for personal investments and expenses. The PPP is administered by the U.S. Small Business Administration as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act is a federal law enacted in March 2020 to provide billions of dollars in emergency financial assistance to millions of Americans suffering from the economic effects of the COVID-19 pandemic. The PPP provided forgivable loans to small businesses for job retention and limited other business expenses. According to the informations, the defendants, including Mosely, received approximately $3 million as a result of submitting fraudulent loan applications under the PPP program.
The two informations provide numerous details of the alleged conspiracy. According to the first information, between July of 2020 and September of 2021, Frank Mosely, along with four other defendants—his brother Reginald Mosley (60, of Sacramento), Marcus Wilborn (50, of Elk Grove), Aaron Boren (56, of Roseville), and Scott Conway (52, of Rocklin)—submitted fraudulent documents on behalf of four entities. Although each of the companies’ PPP loan applications certified that each company had between 19 and 49 employees and approximately $150,000 to $430,000 in monthly payroll, in reality, all four companies were little more than shell companies, with no payroll expenses. In addition, upon receipt of the PPP loan proceeds, the defendants allegedly did not use the funds for any legitimate business expenses, such as to pay employees. Rather, they used the funds for significant personal expenses, personal credit cards, personal investments, and distributions to their family members.
The first information further alleges that in August of 2020, Frank Mosley and Reginald Mosley submitted the first successful loan application on behalf of an entity they controlled called Forward Thinking Investors, Inc. After receiving over $1 million in fraudulently obtained funds in the first transaction, Reginald Mosley allegedly recruited acquaintances— including Wilborn, Boren, and Conway— who owned companies that existed prior to February 2020 to submit additional fraudulent loan applications. As part of the scheme, Frank and Reginald Mosley helped prepare the fraudulent loan applications for Wilborn, Boren, and Conway, who then funneled portions of the fraudulently-obtained funds back to Frank and Reginald Mosley. In fact, Frank and Reginald Mosley reduced their illegal agreement to writing, circulating via email a written contract laying out the amount they would receive for helping prepare and submit the fraudulent loan applications. Specifically, Frank and Reginald Mosley demanded a kickback of at least 15% of the fraudulently obtained proceeds for loans submitted by each of the other three co-conspirators. After obtaining the fraudulent loan proceeds, Frank and Reginald Mosley filed fraudulent payroll tax returns with the IRS in an attempt to cover up their scheme.
The second information describes how the sixth defendant, Kenya Ellis, 55, of Los Angeles, allegedly aided and advised Frank Mosley, Reginald Mosley, and others, in submitting fraudulent PPP loans on behalf of their own companies. In addition, the second information describes how in 2020 and 2021, Ellis allegedly obtained more than $296,000 in PPP and other COVID-related loans on behalf of an entity called Global Processor, Inc. (GPI). Specifically, the information alleges Ellis falsely represented in her loan applications that she was the owner of GPI. In fact, however, Ellis had no legitimate relationship with GPI and the true owner of GPI had no awareness of, nor involvement in, the preparation and submission of the loan applications. The applications Ellis submitted also made false statements about GPI’s monthly payroll and number of employees.
The charges presented in the informations are merely allegations and the defendants are presumed innocent unless proven guilty in a court of law.
Frank Mosley, Reginald Mosley, Wilborn, Boren, and Conway are charged with conspiracy to commit bank fraud, in violation of 18 U.S.C. § 1349, which carries a maximum sentence of 30 years in prison. Frank and Reginald Mosley are also charged with aiding and advising in the filing of false tax returns in violation of 26 U.S.C. § 7201(2), which carries a maximum sentence of three years in prison. Ellis is charged in a separate case with bank fraud in violation of 18 U.S.C. § 1344, which carries a maximum sentence of 30 years in prison. In addition to a prison sentence, the court can order the defendants to pay restitution, to serve an additional period of supervised release and to pay additional assessments. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The defendants are scheduled to make their initial federal court appearances before Magistrate Judge Westmore on the following dates:
|Defendant||Date of Initial Appearance|
|May 18||Frank Mosley, Reggie Mosley, and Boren|
Assistant U.S. Attorney Abraham Fine is prosecuting the case with the assistance of Kay Konopaske. The prosecution is the result of an investigation by the Internal Revenue Service Criminal Investigations, the Office of Inspector General for the Small Business Administration, and the Office of Inspector General for the Board of Governors of the Federal Reserve System and the Bureau of Consumer Financial Protection.