UN TED STATESDISTRICTCOURT

SOUTH ERN DISTRICT OF FLORIDA

CASE N O.22-CR-60197-A H S

UNITED STATES OF AM ERICA,

v S.

DAvlo i.vAuRoxl

Defendant.

I

FACTUAL PRO FFER

,

'

The United States of Am erica and Defendant DAW D J. VARRONE

CDefendanf')agreethat,hadthiscasegonetotrial,theUnitedStateswouldhave

proven b dareastmabledoubt thefollowingfacts,am ongothers,wllich 'occurred , eyon ,

in Broward County,in theSouthern DistrictofFloridaand elsewhere:

Atalltimesm aterialtothe chargein theIndictm ent,theDefendantwasthe

ChiefExecutiveOfficerofTheCreditEngineersCTCE''),aFloridaCorporationin

Broward County,Florida.And,the Defendantwas the ChiéfExecutive Oo cer of

M indsetM erchants,Inc.,aFloridaCorporation inBrow ard County,Florida.

From inoraboutJanuary 2018tllrough inoraboutApril2022,theDefendant

agreed and conspired with his coconspirators to solicitVictim s- using interstate

wires- toleasetheircredittoTCE in exchangeforam ontblypaym ent.

. .

'

Speciscaly,theDefendant,throughTCE,usedtheVictims'éreditSlestoappl#

forlarge,high-interestloansfrom third-party lenders,the proceeds ofwhich were

deposited intotheVictim s)bank accounts. TheVictim sthen transferr'ed a1lorsom e

Case 0:22-cr-60197-AHS Document 18 Entered on FLSD Docket 12/15/2022 Page 1 of 4
theloan proceedstoTCE ortheDefendantatTD Bank Accountendingin#2220and

otheraccountscontrolledbytheDefendantandhiscoconspirators.

Theschem eincludedatérm repaym entstructtzrewith aO alloonPaym ent''at

the end of the term .The Balloon Paym ent would purportedly be enough for the

Victim sto pay of any outstanding balanceson the loanstaken outin their nam e.

However,in every instance,theDefendantand hisco-conspiratorsstopped m aking

m onthly paym entstotheVictim sbeforetheexpiration oftheterm period andnever

madethe'Ba/oon Paym ents.

ToinducetheVictim stoparticipatein thefm udulentscheme,theDefendant

and his coconspiratorsrepresented to the Victim svia phone,em ail,text,or social

m ediathatTCE wouldinvesttheVictim s'm oneyinahedgefundthatwouldgenerate

investm entreturns that could keep up with the m onthly payments on the highinterest-rateloansand stillprovideexcessretmm stotheVictim sforpassiveincom e.

The Defendant and his co-conspim tors touted the Defendant as a self-m ade

billionaire and represented thatTCE'S credit-leasing program had a 100% success

rate.Thése representations were lies intended to induce the Victim s to give the

Defendantand hisco-conspiratorsm oney fortheDefendantand llisco-conspirators'

personaluse.Infact,theVictim s'fundsw erenotinvestedinhedgefundsasprom ised

andwerem isappropriatedby theDefendantandhisco-conspirators.

On October24,2019,theArizona Corporation Com m ission entered an Order

toCeaseandDesist,OrderforAdministrativePenalties,andConsenttoSame(the

RArizonaConsentOrder'').Therein,theCommissionsetfoz'ththeTCE businessmodel

Case 0:22-cr-60197-AHS Document 18 Entered on FLSD Docket 12/15/2022 Page 2 of 4
and found thatbetween June 5,2018,and Septem ber 12,2018,Arizona investors

wired $324,:91.12 to TCE and thatcertain fundswere misappropriated by TCE.

Specifçally, the Arizona Consent Order states, V ittle or none of the Arizona

lnvestors'proceedswereinvestedwith ahedgeftzndo''

The Aeizona ConsentOrderconcluded thatTCE and two otherindividuals

violated the Arizona Securities Act,and thatthe Defendant di,rectly or indirectly

controlledTCEandwasjointlyandseverallyliabletothesameextentasTCEforany

violationsoftheArizonaSecuritiesAct.TheArizonaConsentOrderalsostatedthat

TCE had repaid the loansobtained by theArizona Investors.H owever,withoutthe

Com m ission's knowledge, the Defendant m ade the repayments to the Arizona

Victim susingdifferentVictim sif'unds.

The Defendant also funded the schem e and his fam ily's lifestyle by

fm udutently applying for and obtaining pandemic-relief funds in the form of

EconozmicInjuryDisasterLo>nsCEIDLD from theSmalBusinessAdministration

(RSBA'')usinginterstatewirecommunicationstoapplyfortheloansandreceiveioan

proceeds.Between A ugust5,2020,and M arch 25,2022,the Defendantand hiscoconspiratorsreceived $649,800 in gaudulentEIDL ftm ds9om thèUnited States

Governmentbased on falsestatem entsaboutthe grossrevenue,costsofgoodssold,

andnum berofem ployeesofboth M indsetM erchantsand TCE.

For exam ple, on M arch 25, 2022, the Defendant reao rm ed the false

representationsm adeon August5,2020,in EIDL Application N umber 3312700701

on behalfofM indsptM erchants,to receive m ore EIDL funds,and caused theU .S.

Case 0:22-cr-60197-AHS Document 18 Entered on FLSD Docket 12/15/2022 Page 3 of 4
TreasurytomakeanACH transferof$350,000toRegionsBankAccountendingin

#0944.

In addition tousingVictim fundsand SBA fundstocontinuetheirschem eby

payingotherVictim s'm ontbly installm ents,the Defendantand hisco-conspirators

used the funds to pay for their m ortgage and utilities at thei.r hom e in W eston,

Florida,as wellastheirfam ily'svelzicles,travel,entertainm ent,college expenses,

and OtherPersonalexpenses.

As a result: of the Defendant and his

misrepresentationsregardinèthepro/tabilityoftheTCEbusinessmodelandtheuse

co-conspirators' nlaterial

ofinvestorfunds,from in oraroundJanuary 2018,tllrough in or:roundApril2022,

the D efendant and llis co-conspirators,thm ugh interstate wire com m uu cations,

falsely andvfm udulently obtained atleastapproximately $5,500,000 9om over40

investors,ofwhichheretainedatleastapproximately2,941,943.33,inadditsontbthe

$649,800ingaudulentEIDL fundsobtained9om theU.nitedStatesGovernme'nt.

JUAN ANTOM O GONZXLEZ

UFRTED STATESATTORNEY

DATE 12/11/2022 :

DATE:la-!;-aA

DATE:1Q-1$>B2

BY: e

TREVOR C'. J S

ASSISTANTU'NITED STATESATTORNEY

BY: .

DAW D TAREAS

COU N SEL FO E DEFENDANT

BY:

DAW D J.VA RONE

DEFENDANT

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