Jefferson City Man Indicted in $27.1 Million Dollar Bank Fraud Scheme
Fraud Scheme Included $12.4 Million in Paycheck Protection Plan Loans
JEFFERSON CITY, Mo. – A Jefferson City man has been indicted by a federal grand jury for a more than $27.1 million fraud scheme that included more than $12.4 million in PPP loans for four businesses, as well as a fraudulent loan for a development in Indiana.
Tod Ray Keilholz, 59, was charged in a 52-count indictment returned under seal by a federal grand jury in Jefferson City on Wednesday, Sept. 14. That indictment was unsealed and made public today after Keilholz was arrested without incident at his home.
Keilholz remains in federal custody pending a detention hearing on Sept. 20, 2022. The court granted the government’s motion for a detention hearing, which cited evidence that Keilholz posed serious risks of flight and obstruction of justice, as well as a threat to the safety of other persons and the community.
The federal indictment charges Keilholz with eight counts of bank fraud, six counts of making false statements to a financial institution, and four counts of making false statements to the Small Business Administration. These charges are related to four fraudulent Paycheck Protection Program loans and a multi-million-dollar fraud scheme related to a development in Valparaiso, Indiana.
The indictment also charges Keilholz with 24 counts of money laundering related to financial transactions of funds derived from his bank fraud scheme, and with 10 counts of aggravated identity theft related to the use of other people’s identities during the commission of his bank fraud scheme.
On March 27, 2020, The CARES Act established several new temporary programs and provided for the expansion of others to address the COVID-19 pandemic. Among these programs, the Paycheck Protection Program (PPP) authorized forgivable loans to small businesses to retain workers and maintain payroll, make mortgage interest payments, lease payments, and utility payments.
Keilholz was the sole owner of TRK Construction, LLC, TRK Valpo, LLC, TL Builders, LLC, and Project Design, LLC.
According to the indictment, Keilholz received a total of $12,430,932 in PPP loans for his four businesses. In each of those loan applications, the indictment says, Keilholz failed to disclose his ownership in the other three businesses, and made materially false and fraudulent claims in the loan applications and supporting documentation. Keilholz allegedly inflated the income of those businesses and claimed payrolls for employees who did not exist or no longer worked for him. Additionally, the indictment says, Keilholz applied for a $7,818,705 PPP loan for TRK Valpo but the loan was denied by the bank.
Keilholz received a $1,706,260 PPP loan for TRK Construction, a $3,618,815 PPP loan for TL Builders, a $3,903,857 PPP loan for Project Design, and a $3,202,000 PPP loan for TRK Valpo.
Keilholz also applied for second round PPP loans for TRK Construction, TL Builders, and Project Design. Each loan was rejected by the bank. Each loan would have been limited to $2 million based on each application.
Keilholz allegedly used PPP loan proceeds for unauthorized purposes other than legitimate payroll, lease and mortgage interest, and utilities as required by the PPP. Keilholz, through TRK Construction, had accrued substantial and delinquent indebtedness to a number of lenders, the indictment says, and all or part of these debts were satisfied by PPP loan proceeds.
The indictment also alleges that Keilholz identified his wife as an employee of TRK Construction, TRK Valpo, and Project Design, while she worked as a full-time employee of the state of Missouri as a budget analyst. Between May and December 2020, Keilholz’s wife received a total of $325,000 from TRK Construction, TRK Valpo, and Project Design funded with PPP loan proceeds.
In addition to the four fraudulent PPP loans, the indictment alleges that the fraud scheme included $3,526,771 in a loan and line of credit related to a development in Valparaiso.
According to the indictment, Keilholz signed a promissory note with Hawthorn Bank in 2017 for $550,000 for TRK Valpo, which financed the purchase of and was secured by the real property in Valparaiso. Keilholz signed another promissory note, for more than $1 million, in 2018 for TRK Construction as a line of credit secured by the Valparaiso property. This line of credit was ultimately increased to $2 million. Keilholz signed another promissory note for $976,771 for TRK Construction as a line of credit in 2018, which was secured by the Valparaiso property and two properties in Jefferson City.
On Feb. 7, 2020, the Hawthorn Bank loan officer responsible for those loans wrote a memorandum to those loan files that stated, in part, that Keilholz “needed to bring the loans current and demonstrate that the project remains viable or the bank would move forward with aggressive collection or liquidation of collateral.” Hawthorn Bank entered into a forbearance agreement with TRK Construction and TRK Valpo, and with Keilholz and his wife as guarantors of the three of those loans, on April 28, 2020.
On July 3, 2020, Keilholz allegedly used PPP loan funds to purchase a $3,302,830 cashier’s check, which was applied to the outstanding balances on the Hawthorn Bank loans.
The indictment alleges that Keilholz provided materially false information to Hawthorn Bank to obtain loans, loan extensions, loan renewals, and loan forbearance. Keilholz allegedly provided Hawthorn Bank with an insufficient funds check for payment of interest on loans.
The indictment also contains a forfeiture allegation, which would require Keilholz to forfeit to the government any property involved in, or derived from the proceeds of, the alleged offenses, including five properties in Jefferson City, one property in Valparaiso, one property in La Porte, Ind., six vehicles (a 2020 Chevrolet Silverado, a 2021 Chevrolet Tahoe, two 2021 Chevrolet Silverados, a 2019 BMW X5, and a 2017 Ford F250 Lariat), a 2020 John Deer ZTrak, a 2020 John Deere Tractor, a Kubota Compact Track Loader, two utility trailers and two enclosed cargo trailers.
The charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Supervisory Assistant U.S. Attorney Michael S. Oliver. It was investigated by the Board of Governors of the Federal Reserve System, Consumer Financial Protection Bureau, Office of Inspector General; the Small Business Administration, Office of Inspector General; the Treasury Inspector General for Tax Administration; the FBI; and IRS-Criminal Investigation.