United States v. Buoi

84 F.4th 31

UNITED STATES, Appellee, v. Elijah Majak BUOI, Defendant, Appellant.

No. 22-1518

United States Court of Appeals, First Circuit

October 13, 2023

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. F. Dennis Saylor, IV, U.S. District Judge]

Scott T. Garosshen, with whom Seth B. Orkand, Mallori D. Thompson, and Robinson & Cole, LLP were on brief, for appellant.

Javier A. Sinha, Attorney, U.S. Department of Justice, with whom Rachael S. Rollins, United States Attorney, Donald Lockhart, Assistant United States Attorney, Mackenzie Queenin, Assistant United States Attorney, Della Sentilles, Trial Attorney, U.S. Department of Justice, Kenneth A. Polite, Jr., Assistant Attorney General, and Lisa H. Miller, Deputy Assistant Attorney General were on brief, for appellee.

Before Gelpí, Lynch, and Thompson, Circuit Judges.

GELPÍ, Circuit Judge.

Defendant-Appellant Elijah Majak Buoi ("Buoi") applied for multiple Paycheck Protection Program ("PPP") loans for his startup company, Sosuda Tech LLC ("Sosuda"), at the beginning of the COVID-19 pandemic. The Government investigated and charged Buoi for devising a scheme to defraud and obtain PPP funds by filing fraudulent PPP loan applications, and he was ultimately indicted on four counts of wire fraud, in violation of 18 U.S.C. § 1343, and one count of making false statements to a financial institution, in violation of 18 U.S.C. § 1014. At trial, Buoi moved for judgment of acquittal at the close of the Government's case on the grounds that the Government provided insufficient evidence to prove beyond a reasonable doubt that he intended to defraud or influence a financial institution. The district court denied the motion. Buoi renewed the motion at the close of his case, resulting in another denial. Buoi was subsequently convicted on all five counts. Boui appeals the conviction, challenging the sufficiency of the evidence presented as to intent, in addition to two ineffective assistance of counsel claims. We affirm the district court and dismiss Buoi's ineffective assistance of counsel claims without prejudice. See United States v. Mala, 7 F.3d 1058, 1063 (1st Cir. 1993).

I. Background

A. Facts

The facts that follow are derived from the testimony and exhibits presented at trial. Because there is a claim of insufficient evidence, "we recount the facts in the light most favorable to the verdict." United States v. Paz-Alvarez, 799 F.3d 12, 18 (1st Cir. 2015).

Buoi registered his company, Sosuda, with the Massachusetts Secretary of State on May 1, 2019, about a year before the COVID-19 pandemic.¹ Sosuda was a technology company designed to serve communities with limited technological resources. Buoi, on behalf of Sosuda, did not file tax returns for 2019 or 2020, and the company was not registered with the Massachusetts Department of Unemployment Assistance ("DUA"), meaning that it was not paying unemployment taxes. Sosuda did not have employees in 2019 or 2020.

In March 2020, COVID-19 was declared a pandemic. Congress responded by passing the Coronavirus Aid, Relief, and Economic Security ("CARES") Act, 15 U.S.C. §§ 9001-9141, to aid Americans negatively impacted by the COVID-19 pandemic. As a part of the act, the PPP was initiated to provide small businesses with financial assistance to keep their employees on the payroll and to cover specified expenses. CARES Act, ch. 116, 134 Stat. 286, 286-94 (2020) (codified as amended at 15 U.S.C. § 636(a)(36)). Under the program, PPP loans were issued by private lenders but were guaranteed by the Small Business Administration ("SBA") in the event that a borrower defaulted.

To obtain a PPP loan, a business was required to submit an application certifying the business's average monthly payroll expenses for the prior year, the number of employees, and whether the United States was the principal place of residence for all employees on the payroll. If the business did not have prior payroll expenses or existing employees, the business did not qualify for a PPP loan. By signing the application, the business's authorized representative certified that any loan funds "[would] be used to maintain workers and maintain payroll or make mortgage interest payments, lease payments, and utility payments" and that they "unders[tood] that if the funds [were] knowingly used for unauthorized purposes, the federal government [could] hold [them] legally liable, such as for charges of fraud." The applicant must have further certified that the information provided was "true and accurate" and that "making a false statement to obtain [the loan] [wa]s punishable under the law."

Additional documents that were often filed with the PPP application included the IRS Form 940 and IRS Form 941. An IRS Form 940 is an annual tax return document filed by a company pursuant to the Federal Unemployment Tax Act, showing the total compensation paid to its employees. An IRS Form 941 is a quarterly tax return document filed to report Social Security taxes, income taxes, and Medicare taxes withheld from employee paychecks.

On April 21, 2020, Buoi attended a virtual PPP loan seminar and, according to his handwritten notes, the PPP was created to "help[ ] business[es] keep their workforce employed during the Coronavirus COVID-19 crisis" and "to provide a direct incentive for small businesses to help to keep their workers on the payroll." Between April 2020 and June 2020, Buoi applied for six different PPP loans with four lenders. There were multiple inconsistencies in the loan applications and documentation submitted by Buoi, taken in turn below.

Bank of America PPP Loan Applications

Buoi submitted a PPP loan application to Bank of America ("BOA") on April 21, 2020, seeking $9,400,000, claiming Sosuda had 353 employees, an average monthly payroll of $3,000,000, and certifying the United States as the principal place of residence for his employees. Buoi also submitted Excel sheets as payroll documentation, justifying the $3,000,000 in payroll based on the expenses for the last seven months of 2019 and for two weeks in February 2020. BOA did not credit these Excel sheets, so tax forms were requested. Buoi told the BOA employee that he had very little payroll in 2019 and did not file 2019 taxes. The BOA employee told Buoi that these forms were required for the loan process to continue. After this communication, Buoi submitted an IRS Form 941 with what he claims are projections, stating that Sosuda had 353 employees and paid $9,498,987 in wages, tips, and other compensation during that period. This form was backdated to April 30, 2020. In addition, Buoi submitted an IRS Form 940 stating Sosuda made $34,800,000 in payments to employees in 2019 and had no employees in any other state but Massachusetts. This form was backdated to January 31, 2020. BOA denied the PPP loan application.

Buoi submitted a second PPP loan application to BOA on May 29, 2020, claiming 95 employees and $800,000 monthly payroll. The IRS Form 941 submitted with this application claimed 96 employees with $2,400,000 in wages, and the IRS Form 940 submitted claimed $9,600,000 paid to employees. BOA denied this loan application as well.

Lendio PPP Loan Applications

Buoi applied to Lendio for a PPP loan on May 21, 2020, seeking $1,900,000. Buoi claimed that he had 18 employees and an average monthly payroll of $150,000. Buoi certified in this application that Sosuda's employees' principal place of residence was the United States, Sosuda in fact had employees, the funds would be used to retain workers, and all of the information provided was true and accurate. The IRS Form 940 Buoi submitted with this application stated that Sosuda paid its employees $1,800,000, and the IRS Form 941 stated Sosuda had 18 employees in the first quarter of 2020 and paid them $450,000. Both forms were backdated, as they were in the BOA application. Buoi also provided Excel sheet payroll documents, like the ones included in his BOA application, covering the same time period, albeit with different numbers. Lendio denied this application.

Buoi submitted a second application to Lendio on May 29, 2020, claiming to have 95 employees and an average monthly payroll of $800,000. During this time, Buoi had a list of potential employees curated by LinkedIn and Indeed (which are employment-focused websites) who had not actually started working for Sosuda. Lendio requested an employee list in addition to Buoi's PPP loan application and 2019 tax return documents. In response to Lendio's request, Buoi sent a list of approximately 100 employees, including the date they were hired, their full-time status, and taxes deducted with net earnings. The list of employees contained some entries with missing last names and some of the listed employees were colleges or universities, like Penn State and Wilson College. There were 35 examples of crossover between the list of potential employees Buoi wished to hire and the list Buoi provided to Lendio in support of his PPP loan application claiming that said employees were on payroll. It is unclear from the record whether this application was accepted.

Fundbox PPP Loan Application

Buoi applied for a PPP loan from Fundbox on June 7, 2020, certifying that the funds sought were going to be used to retain employees already on the payroll and that the information provided in the application was true and accurate. Buoi claimed that Sosuda had 96 employees and an $800,000 average monthly payroll. Accompanying this application were IRS Form 940, claiming $9,600,000 paid to employees, and IRS Form 941, claiming 96 employees and $2,400,000 in wages, tips, and compensation paid, both backdated the same as before. Fundbox approved this loan and transferred $2,000,000 to Sosuda's account.

Newtek PPP Loan Application

Buoi then applied for a PPP loan with Newtek on June 9, 2020, using the same figures and dates as the Fundbox application -- 96 employees and $800,000 average monthly payroll -- and the...