United States v. Lawson

• Decision Date: 02 February 2022
• Docket Number: CRIMINAL ACTION 3:21-cr-00006-TCB-RGV
• Parties: UNITED STATES OF AMERICA v. KATRINA LAWSON, NIKIA WAKEFIELD, JAMES MCFARLAND, and INDIA MIDDLETON, et al.
• Court: U.S. District Court — Northern District of Georgia

UNITED STATES OF AMERICA
v.
KATRINA LAWSON, NIKIA WAKEFIELD, JAMES MCFARLAND, and INDIA MIDDLETON, et al.

CRIMINAL ACTION No. 3:21-cr-00006-TCB-RGV

United States District Court, N.D. Georgia, Newnan Division

February 2, 2022

MAGISTRATE JUDGE'S REPORT, RECOMMENDATION, AND ORDER

RUSSELL G. VINEYARD, UNITED STATES MAGISTRATE JUDGE

Defendants Katrina Lawson (“Lawson”), India Middleton (“Middleton”), Nikia Wakefield (“Wakefield”), and James McFarland (“McFarland”), collectively referred to as “defendants, ” are named along with six other co-defendants in a fourteen-count superseding indictment that charges conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349; wire fraud, in violation of 18 U.S.C. § 1343; bank fraud, in violation of 18 U.S.C. § 1344; mail fraud, in violation of 18 U.S.C. § 1341; and money laundering, in violation of 18 U.S.C. §1957. [Doc. 126].^[1]Middleton and Wakefield have filed motions for a bill of particulars, [Docs. 229 & 234], to which the government has filed a consolidated response in opposition,

1

[Doc. 255]; Middleton, Wakefield, and McFarland have filed motions to sever, [Docs. 230, 232, & 239], to which the government has filed a consolidated response in opposition, [Doc. 254]; and Lawson has filed a motion to suppress cell phone evidence, [Doc. 221], and following an evidentiary hearing on her motion held on October 6, 2021, ^[2] Lawson filed a supplemental motion to suppress cell phone evidence, [Doc. 272], the government filed a response in opposition, [Doc. 281], and Lawson filed a reply in support of her motions, [Doc. 288].^[3] For the reasons that follow, Middleton and Wakefield's motions for a bill of particulars, [Docs. 229 & 234],

2

are DENIED, and it is RECOMMENDED that Middleton, Wakefield, and McFarland's motions to sever, [Docs. 230, 232, & 239], and Lawson's motion to suppress and supplemental motion to suppress cell phone evidence, [Docs. 221 & 272], be DENIED.

I. INTRODUCTION

On March 16, 2021, a grand jury in the Northern District of Georgia returned an indictment against ten defendants that included charges of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349; wire fraud, in violation of 18 U.S.C. § 1343; bank fraud, in violation of 18 U.S.C. § 1344; mail fraud, in violation of 18 U.S.C. § 1341; and money laundering, in violation of 18 U.S.C. §1957, in connection with applications for funds made available through the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, including Economic Injury Disaster Loan (“EIDL”) grants and loans under the Paycheck Protection Program (“PPP”). See [Doc. 1]. The grand jury subsequently returned a superseding indictment against the same ten defendants on April 20, 2021. [Doc. 126].

The superseding indictment charges that on July 1, 2020, Lawson “sent a series of text messages from her cell phone number to defendant Alicia Quarterman [(‘Quarterman')] outlining a scheme to fraudulently obtain the EIDL Advance (i.e., the $10, 000 grant).” [Id. at 5 ¶ 15 (all caps omitted)]. Lawson specifically told Quarterman that she had “another money maker for us and I'll do

3

your [sic] for free but get some people together and I'm charging $1000 per application.” [Id. (internal marks omitted)]. Lawson explained to Quarterman through additional text messages “that EIDL Advance is a ‘grant' that did not have to be paid back” and further told her that they were “going to charge $2000 for [her] to do the application, they will get 10, 000 deposited in there [sic] account and they got to send [her] $2000 and [she would] split it with [Quarterman] for every person [Quarterman] g[o]t.” [Id. at 5-6 ¶ 16 (internal marks omitted)]. Quarterman agreed and Lawson then advised her of “the type of information needed from each person for the EIDL application, ” and that same day, Quarterman provided Lawson with her information so that Lawson could submit a “fraudulent EIDL application” on her behalf. [Id. at 6 ¶¶ 16-17].

According to the superseding indictment, Quarterman then “contacted multiple people, ” including co-defendants Tranesha Quarterman (“T. Quarterman”); Wakefield; Adarin Jones, also known as Adrian Jones (“Jones”); Darryl Washington (“Washington”); McFarland; Katie Quarterman (“K. Quarterman”); and Middleton, “mostly via text message from her cell phone, and told them about the EIDL scheme, her ‘fee,' and the needed personal information for the loan.” [Id. at 6 ¶ 18]. Quarterman “also told several of these individuals that they could recruit their friends or family to participate in the scheme, ” and thereafter, T. Quarterman “recruited at least four individuals, Wakefield recruited

4

at least three individuals, Washington recruited at least two individuals, and Jones, McFarland, and K. Quarterman each recruited at least one individual.” [Id. at 6 ¶ 19 (all caps omitted)]. T. Quarterman, Wakefield, Jones, Washington, McFarland, K. Quarterman, Middleton, and others would send their personal information via text message to Quarterman, who would then forward the information to Lawson to complete the online EIDL applications “by inputting false information for each applicant, ” which she then submitted to the Small Business Administration (“SBA”). [Id. at 7 ¶¶ 20-21]. Once she submitted the applications, Lawson then “took a screenshot of the EIDL application number and sent it via text message to Quarterman, ” who “then in turn sent the screenshot via text message to the co-conspirators, including but not limited to T. Quarterman, Wakefield, Jones, Washington, McFarland, K. Quarterman, and Middleton.” [Id. at 7 ¶ 22 (all caps omitted)]. Once the individuals received the $10, 000 EIDL Advance funds, they would pay Quarterman her “fee” from the proceeds “by cash, bank cashier's check, or mobile banking applications” and Quarterman would then split the money with Lawson “mostly by electronic banking means.” [Id. at 7 ¶ 23 (internal marks omitted)].

The superseding indictment charges that “[o]verall, between July 1, 2020 and August 1, 2020, Quarterman sent Lawson the information for at least 48 different individuals for the purpose of submitting the fraudulent EIDL

5

applications”; that Lawson “completed approximately 58 fraudulent EIDL applications (because some applications were denied and Lawson re-submitted an additional application for the same person)”; that “[a]ll of these applications contained false information in order to qualify for the funds”; and that the SBA “accepted and paid out at least $185, 500 on 19 EIDL applications submitted by Lawson on information given to her by Quarterman, ” with the “total amount sought through EIDL [being] at least $560, 000.” [Id. at 8 ¶ 24 (all caps omitted)].

The superseding indictment also charges that on July 14, 2020, Lawson and Quarterman considered expanding “their scheme to include the PPP loans” and that Lawson sent Quarterman a text message on July 27, 2020, explaining how the program worked, including that “You can get up to 20, 000 with the [PPP loans]” and that the “Loans are 100% forgivable if you follow the PPP loan forgiveness requirements issued by the [SBA], ” and she then stated that the “fee to do the loan [would be] $6000, so you end up with $14000.” [Id. at 8 ¶ 25 (internal marks omitted)]. Subsequently, Quarterman “contacted many of the same individuals that she originally contacted for the EIDL scheme and told them about the PPP loan and the new information needed to apply” and the “new fee structure, including charging up to $10, 000 for her share of the PPP loan because of the additional paperwork that had to be created, ” including “fraudulent Internal Revenue Service Forms 1040 Schedule C to show that the ‘businesses' of the co-

6

conspirators made certain amounts.” [Id. at 8-9 ¶ 26]. Thereafter, Quarterman “sent the information for 15 individuals to Lawson via text message, including but not limited to the information for herself, Wakefield, Middleton, and Montgomery, for the purposes of submitting fraudulent PPP loans to the SBA.” [Id. at 9 ¶ 27 (all caps omitted)]. Lawson completed the online applications and submitted them and then notified Quarterman via text message that the PPP loan applications “were complete and tracked them to determine if and when they were approved, ” and once the PPP loan proceeds were received, the individuals, including Wakefield and Montgomery, then paid Quarterman her “fee” from the PPP proceeds “in cash, bank cashier's check, or mobile banking applications.”^[4] [I d . at 9 ¶¶ 27-28 (internal marks omitted)]. Once Quarterman “received the ‘fee' for the fraudulent PPP loans, she and Lawson divided up the money using electronic banking methods.” [Id. at 10 ¶ 29 (all caps omitted)]. Overall, “the SBA partner banks initially approved 11 of the fraudulent PPP loans submitted by Lawson using information sent to her by Quarterman” and these “financial institutions paid out at least $124, 276 on six of the loans, as the additional five PPP loan applications were ultimately denied, ” with the “total amount sought for all of the

7

PPP applications submitted by Lawson [being] at least $224, 172.” [Id. at 10 ¶ 30 (all caps omitted)].

The superseding indictment charges in Count One that beginning on July 1, 2020, and continuing through August 30, 2020, the ten named defendants conspired to commit wire fraud, in violation of 18 U.S.C. § 1349. [Id. at 1-10 ¶¶ 1-30]. Count Two charges that on or about July 7, 2020, Lawson, Quarterman, and T. Quarterman, aided and abetted by one another, knowingly and unlawfully committed wire fraud, in violation of 18 U.S.C. §§ 1343 and 2, [id. at 10-11 ¶¶ 31-32]; Count Three charges that on or about July 1, 2020, Lawson, Quarterman, and Wakefield, aided and abetted by one another, knowingly and unlawfully committed wire fraud, in violation of 18 U.S.C. §§ 1343 and 2, [id. at 11 ¶¶ 33-34]; Count Four charges that on or about...