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district court to determine whether defendant is in breach of this agreement and, if so, to
permit the government to withdraw from the plea agreement. This waiver shall not be

construed to bar a claim by the defendant of ineffective assistance of counsel.

RESTITUTION

For purposes of 18 U.S.C. § 3663A, the victims of the offense and relevant conduct
pursuant to the plea agreement are Marana Stockyard & Livestock Market, Inc. (“MSY”),
Clay and Karen Parsons (collectively, the “Victims”).

Pursuant to 18 U.S.C. § 3663A, the Parties agrees that the defendant shall pay
restitution, compensatory in nature, of which amount the Government and the defendant
anticipate they may come to an agreement in advance of sentencing for any actual losses
that the defendant's offense of conviction directly and proximately caused the Victims. The
Parties agree that any restitution owed to the victims must be offset by the net sale proceeds
derived from, or the appraised or other agreed-upon value, of certain assets and properties
that the defendant, his family and/or their related entities, including, without limitation,
Nichols Family Trust and Nichols Family Investments, LLC, have transferred to the
victims already and in the future (the "Restitution Assets"). The defendant understands that
such restitution will be included in the Court’s Order of Judgment and that an unanticipated
restitution amount will not serve as ground to withdraw the defendant’s guilty plea or to
withdraw from this plea agreement.

The Restitution Assets to help satisfy the restitution amount, include, but are not
limited to the following:

A. The determined value of real property located in Pinal County, Arizona,

known as "Parcel Adjacent to 9381 E. Vah Ki Inn Rd, Coolidge, AZ 85128,"
Parcel Id No. 202-27-003Y, which Donald Hugh Nichols and Jane Ann
Nichols transferred to the victims on or about August 14, 2017, via quitclaim
deed. Value shall be determined either as net proceeds of sale or appraised

value less estimated costs and encumbrances.

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My guilty plea is not the result of force, threats, assurance or promises other than
the promises contained in this agreement. I agree to the provisions of this agreement as a
voluntary act on my part, rather than at the direction of or because of the recommendation
of any other person, and I agree to be bound according to its provisions.
I agree that this written plea agreement contains all the terms and conditions of my plea
and that promises made by anyone (including my attorney) that are not contained within
this written plea agreement are without force and effect and are null and void.

I am satisfied that my defense attorney has represented me in a competent manner.

I am not now on or under the influence of any drug, medication, liquor, or other
intoxicant or depressant, which would impair my ability to fully understand the terms and

conditions of this plea agreement.

FACTUAL BASIS AND SENTENCING FACTOR

J agree that the following facts accurately describe my conduct in connection with
the offense to which I am pleading guilty and that if this matter were to proceed to trial the

government could prove these facts beyond a reasonable doubt:

Seth Nichols began working at Marana Stockyard and Livestock Market, Inc. (MSY)
on June 1, 2013 as the Office Manager. Seth Nichols handled the day-to-day business
operations, which included: collecting incoming payments on accounts receivable
(ARs) for’ livestock from all purchasers, managing and administering all bank
accounts for MSY and Parsons Company, and preparing financial statements for the
businesses. Seth Nichols also was responsible for the custodial account maintenance,
which included managing sales proceeds and unpaid ARs in conformance with the
USDA regulations, and managing the credit line through Wells Fargo. Seth
Nichols also ran the Sales Time System, which is the software system used to
facilitate the auction on sale day, and reconcile buyer and seller accounts. Seth
Nichols is the son of Donald Hugh and Jane Nichols, and during this time, he also
worked as the manager for Nichols Cattle Co., LLC, or related legal entities. He was
responsible for paying for all cattle purchases made by the Nichols Cattle Co., LLC,
or related legal entities and managing their bank accounts.

Seth Nichols was also responsible for managing the Operations Accounts for MSY.

Seth Nichols was also responsible for the accounts for some of the Parsons family’s
related entities. When Seth was first hired, MSY held a smaller credit line at National

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I. Approximately $11,000, net proceeds from liquidation of IRA and
investment accounts—to be deposited with the clerk of the court and applied
to restitution.

J. Defendant specifically assigns his seventeen-point-five percent (17.5%)
interest AZ Data Investments, LLC interest to the United States and agrees
to cooperate and execute any agreements necessary to complete the
assignment-either before or after sentencing. Any funds the government
eventually receives from this assignment shall be applied to restitution.

K. — Any and all interest of the defendant in the following entities:

SHN Holdings, LLC;

Windmill Management Group, LLC;

Florence 287, LLC;

Nichols Family Enterprises, LLC;

JSN Tire Sales, LLC;

M and N Trucking, LLC;

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8. Windmill Ventures, LLC;
9. Nichols Aviation, LLC;
10. JSN Partners, LLC;
11.SHN Florence 1, LLC; and
12. Any other entity in which Seth Nichols holds an interest.

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Defendant warrants that he is the owner or has an interest in the property listed
below, and knowingly and voluntarily agrees to hold the United States, its agents and
employees harmless from any claims whatsoever in connection with the seizure or
forfeiture of the above-listed assets covered by this agreement.

Where funds must be deposited with the Court, the defendant specifically agrees to
cooperate with the government and jointly file and execute any necessary paperwork

needed to have the funds deposited prior to sentencing.

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Real property located in Pinal County, Arizona, known as "9381 E. Vah Ki
Inn Rd., Coolidge, AZ 85128," Parcel Id No. 202-27-003P, which Donald
Hugh Nichols and Jane Ann Nichols transferred to the victims on or about
August 14, 2017, via quitclaim deed. Value shall be determined either as net
proceeds of sale or appraised value less estimated costs and encumbrances.
Real property located in Pinal county, Arizona, known as “1766 W Highway
87, Coolidge, AZ 85128”, Parcel ID No. 209-08-006, transferred to the
Victims on or about August 14, 2017, via quitclaim deed. Value shall be
determined either as net proceeds of sale or appraised value less estimated
costs and encumbrances.

One (1) 2016 Ford Pickup Truck, VIN 1FT8W3BTGEB05558, transferred
to the victims. Value shall be determined as net proceeds of sale.

$47,000 representing the proceeds from the sale of the defendant’s ownership
interest one helicopter, registration number N4153G—to be deposited with
the clerk of the court and applied to restitution.

$32,291.07 representing that portion of approximately 277 head of cattle
sold, on or about October 19-20th, 2017, at Willcox Livestock Auction, Inc,
and, on the same or similar dates, a Jordan Cattle Auction, San Saba, Texas,
which can be directly traced to or otherwise identified as the subject of
auction or other sales from or through MS Y—to be deposited with the clerk

of the court and applied to restitution.

' Approximately $24,000 in net proceeds of one single family residence

known as 10013 N. Avra Vista Drive, Marana, Arizona—to be deposited
with the clerk of the court and applied to restitution.

Approximately $53,379.71 in crop insurance proceeds ($19,894.00 and
$33,485.71)—to be deposited with the clerk of the court and applied to
restitution. The defendant further assures that all competing interests in the

rights of the crop insurance are satisfied prior to deposit.

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EFFECT ON OTHER PROCEEDINGS
J further understand that if I violate any of the conditions of my supervised release,
my supervised release may be revoked. Upon such revocation, notwithstanding any other
provision of this agreement, I may be required to serve a term of imprisonment or my

sentence may otherwise be altered. _

REINSTITUTION OF PROSECUTION
If the defendant's guilty plea is rejected, withdrawn, vacated, or reversed by any
court in a later proceeding, the government will be free to prosecute the defendant for all
charges as to which it has knowledge, and any charges that have been dismissed because
of this plea agreement will be automatically reinstated. In such event, defendant waives
any objections, motions, or defenses based upon the Speedy Trial Act or the Sixth

Amendment to the Constitution as to the delay occasioned by the later proceedings.

WAIVER OF DEFENDANT'S RIGHTS

I have read each of the provisions of the entire plea agreement with the assistance
of counsel and understand its provisions. I have discussed the case and my constitutional
and other rights with my attorney. I understand that by entering my plea of guilty I will be
giving up my right to plead not guilty; to trial by jury; to confront, cross-examine, and
compel the attendance of witnesses; to present evidence in my defense; to remain silent
and refuse to be a witness against myself by asserting my privilege against self-
incrimination; all with the assistance of counsel, to be presumed innocent until proven
guilty beyond a reasonable doubt, and to appeal.

I agree to enter my guilty plea as indicated above on the terms and conditions set
forth in this agreement.

Ihave been advised by my attorney of the nature of the charge to which I am entering
my guilty plea. I have further been advised by my attorney of the nature and range of the

possible sentence.



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ELIZABETH A. STRANGE n

First Assistant — Lie veo wn core
District of Arizona

MICHAEL JETTE

Assistant U.S. Attorne

Arizona State Bar #021843

United States Courthouse _

405 W. Congress Street, Suite 4800
Tucson, Arizona 85701

Telephone: 520-620-7300 _ _
Email: Michael.jette@usdoj.gov

Attorneys for Plainti

FEB - 5 2018

garry
° DEPUTY.

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA

United States of America, No. 18-wi-00009-01-CKJ (BGM)
Plaintiff, CRIZ-Ite -CKT (RGU
PLEA AGREEMENT
vs.
SETH NICHOLS,
Defendant.

i

The United States of America and the defendant agree to the following disposition
of this matter:
PLEA
The defendant agrees to plead guilty to the Information charging the defendant with
a violation of 18 U.S.C. § 1344, Bank Fraud, a felony.

ELEMENTS OF THE OFFENSE
Bank Fraud (18 U.S.C. § 1344)
1. The defendant knowingly executed, or attempted to execute, a scheme or

artifice to defraud a financial institution;
2. To obtain any of the moneys, funds, credits, assets, securities, or other
property owned by, under the custody or control of a financial institution;

3. By means of false or fraudulent pretenses, representations, or promise.



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and Stockyard Administration with falsified payment documents purporting to show
that Nichols Cattle Co., LLC, or related legal entities, had paid for the cattle.

In an effort to hide his criminal conduct and cover up the line of credit losses Seth
Nichols provided Clay Parsons and Wells Fargo with false P/L statements, false
balance sheets, false income statements, false borrowing base calculations, and false
bank statements. In addition to the unpaid cattle purchases and exhausting the line of
credit, MSY and the Forensic accountants have discovered an additional preliminary
amount in incorrect allocation of money paid to Nichols Cattle Co., LLC, or related
legal entities by Seth Nichols. These included checks, wires, and ACH payments
written to the various Nichols Cattle Co., LLC, or related legal entities.

Date: 2-S= POE ASV ZEN
Seth Nichols

Defendant

DEFENSE ATTORNEY'S APPROVAL

Ihave discussed this case and the plea agreement with my client in detail and have
advised the defendant of all matters within the scope of Rule 11, Fed. R. Crim. P., the
constitutional and other rights of an accused, the factual basis for and the nature of the
offense to which the guilty plea will be entered, possible defenses, and the consequences
of the guilty plea, including the defendant's waiver of the right to appeal. No assurances,
promises, or representations have been given to me or to the defendant by the government
or by any of its representatives which are not contained in this written agreement. I concur
in the entry of the plea as indicated above and on the terms and conditions set forth in this
agreement as in the best interests of my client. I agree to make a bona fide effort to ensure
the guilty plea is entered in accordance with all the requirements of Rule 11, Fed. R. Crim.
P.

a
Date: oS Pima) Drv
Michael Harwin, Esq.
Attorney for Defendant

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Bank of Arizona, and switched to Wells Fargo in 2015. The line of credit with Wells
Fargo was intended to permit MSY to maintain ARs for a short period until
buyer/dealers could pay for their cattle purchases. Seth Nichols was responsible to
provide Wells Fargo proper documentation each month as a borrowing base using
outstanding ARs. Seth Nichols signed and submitted all borrowing base certificates
to Wells Fargo through Wells Fargo’s employee, Larry Young. Mr. Young
communicated almost exclusively with Seth Nichols about the status of the loan. To
the knowledge of Clay Parsons, the majority owner of the company, the Wells Fargo
credit line was in good standing with Wells Fargo, and the business had liquidity in
its accounts. This was due to false documents provided to him by Seth Nichols, which
included: profit and loss statements, balance sheets, income statements, and bank
statements. From time to time, Larry Young would request that Seth Nichols sign
and submit modified borrowing base certificates and/or modified financial reports to
support the lending history of Wells Fargo. In those instances, Larry Young would
prepare the amended documents and present them to Seth Nichols for signature. In
many cases, they were contradicted by financial records previously submitted to
Wells Fargo. Nevertheless, Seth Nichols signed and submitted the amended
borrowing basé certificates, as prepared by Larry Young, and Larry Young accepted
them on behalf of Wells Fargo.

On August 4, 2017, Clay Parsons discovered that the line of credit with Wells Fargo
had an outstanding balance of nearly $2M, and the liquidity in the operations account
was $1.3M less than he was previously informed. This discovery came to light
after Seth Nichols led Clay Parsons to erroneously believe Clay Parsons’ company
was in good financial standing. Seth Nichols initially claimed the missing money was
in uncollected ARs, that he [Seth Nichols] was simply not doing his job of collecting,
and the money could easily be obtained. Since August 4, 2017, via internal accounting
and the help of hired forensic accountants, MSY has found that Nichols Cattle Co.,
LLC, or related legal entities acquired approximately $ 1.3-$1.5M in cattle that were
not paid from 2015-2017. This account receivable was concealed by Seth
Nichols fraudulently manipulating the books and records of MSY, and included
creation of false documents such as bank statements and wire payments from Nichols
Cattle Co., LLC, or related legal entities to MSY.

Seth Nichols also provided these false documents to Wells Fargo to keep the line of
credit available, which unknowingly to Clay Parsons, were falsely covering Nichols
Cattle Co., LLC, or related entities cattle purchases. In some cases, the false
statements were requested by Larry Young to support the historical lending practices
of Wells Fargo. Seth Nichols, in an effort to be compliant with the USDA regulations
on custodial account maintenance, drew down the Marana Stockyards line of credit
until he exhausted it. Essentially, Nichols Cattle or related legal entities received free
cattle which were later sold, without paying MSY. Seth Nichols provided Packers

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The defendant further agrees that, pursuant to 18 U.S.C. § 3613, all monetary
penalties imposed by the Court, including restitution, will be due and payable and subject
to enforcement by the government. If the Court imposes a schedule of payments, the
defendant understands that the schedule of payments is merely a minimum schedule of
payments and not the only method, nor a limitation on the methods, available to the
government to enforce the judgment. However, so long as the defendant complies with
payment schedules that maybe ordered by the Court, the probation department or the
Government, the Government will not take action against defendant’s assets. However, if
the Defendant either earns; borrows; or is given/gifted assets including land, cash, or
interests in any entity or asset, the Government may seek to forfeit/seize the asset for the
benefit of the victim.

If defendant participates in the Bureau of Prisons’ Inmate Financial Responsibility
Program (IFRP) during any period of incarceration, the defendant agrees that payment of
criminal monetary penalties imposed by the Court, including restitution, is due during
imprisonment at a rate of not less than $25.00 per quarter and shall be paid through the
IFRP.

The defendant agrees to cooperate fully with the Government and the United States
Probation Office in the identification of assets available to be applied toward restitution in
which he has any actual, beneficial, or joint ownership, wherever located, and will execute
such documentation, as may be required to locate and secure such assets, as may be deemed

necessary by the Government or the United States Probation Office.

DISCLOSURE OF INFORMATION TO U.S. PROBATION OFFICE
The defendant understands the government's obligation to provide all information
in its file regarding defendant to the United States Probation Office. The defendant fully
understands and agrees to cooperate fully with the United States Probation Office in

providing all information requested by the probation officer.



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her defense attorney. Defendant nevertheless affirms that he/she wants to plead guilty
regardless of any immigration consequences that this plea may entail, even if the

consequence is.defendant’s automatic removal from the United States.

PLEA ADDENDUM
This written plea agreement, and any written addenda filed as attachments to this
plea agreement, contained all the terms and conditions of the plea. Any additional
agreements, if any such agreements exist, shall be recorded in a separate document and
may be filed with the Court under seal. Accordingly, additional agreements, if any, may

not be in the public record.

WAIVER OF DEFENSES AND APPEAL RIGHTS

The defendant waives any and all motions, defenses, probable cause determinations,
and objections that the defendant could assert to the information or indictment, or to the
petition to revoke, or to the Court's entry of judgment against the defendant and imposition
of sentence upon the defendant providing the sentence is consistent with this agreement.
The sentence is in accordance with this agreement if the sentence imposed is within the
stipulated range or below the stipulated range if the Court grants a variance. The defendant
further waives: (1) any right to appeal the Court's entry of judgment against defendant; (2)
any right to appeal the imposition of sentence upon defendant under 18 U.S.C. § 3742
(sentence appeals); (3) any right to appeal the district court’s refusal to grant a requested
variance; (4) any right to collaterally attack defendant's conviction and sentence under 28
U.S.C. § 2255, or any other collateral attack; and (5) any right to file a motion for
modification of sentence, including under 18 U.S.C. § 3582(c). The defendant
acknowledges that this waiver shall result in the dismissal of any appeal or collateral attack
the defendant might file challenging his/her conviction or sentence in this case. If the
defendant files a notice of appeal or a habeas petition, notwithstanding this agreement,

defendant agrees that this case shall, upon motion of the government, be remanded to the

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3553(a) in imposing a sentence, pursuant to Fed. R. Crim. P. 11(c)(1)(C), the parties
stipulate and agree that the below guideline calculations are appropriate for the charge for

which the defendant is pleading guilty:

Base Offense Level: 2B1.1(a)(1 7
Loss Amount 2B1.1(b)(1 in +16
Financial Hardship 2B1.1(b)(2)(A) +2
Aggravating Role oo 3B1.1(c +2
Acceptance of Responsibility . 3E1.1 -3
Barly Disposition/Government Savings 5K3.1/5K2.0 4
Total Adjusted Offense Level: 20

3. Sentencing Range: Pursuant to Fed. R. Crim. P. 11(c)(1)(C), the government
and the defendant stipulate and agree that the following are the applicable guideline ranges
for the offense, based on the defendant’s criminal history category (CHC):

CHC I: a sentencing range of 33-41 months imprisonment.
CHC Ii: a sentencing range of 37-46 months imprisonment.
CHC Ul: a sentencing range of 41-51 months imprisonment.
CHC Iv: a sentencing range of 51-63 months imprisonment.
CHC V: a sentencing range of 63-78 months imprisonment.
CHC VI: a sentencing range of 70-87 months imprisonment.
4. The defendant may withdraw from the plea agreement if he/she receives

a sentence that exceeds 60 months.

5. The parties agree that the defendant had an aggravated role in the offense for
the purpose of role analysis under U.S.S.G. §§ 3B1.1 and 3B1.2.

6. If the Court, after reviewing this plea agreement, concludes any provision is
inappropriate under Fed. R. Crim. P. 11(c)(5), it may reject the plea agreement, giving the
defendant, in accordance with Fed. R. Crim. P. 11(d)(2)(A), an opportunity to withdraw
the defendant's guilty plea.

7. The defendant recognizes that pleading guilty may have consequences with
respect to his/her immigration status if defendant is not a citizen of the United States.
Under federal law, a broad range of crimes are removable offenses, including the offense(s)
to which defendant is pleading guilty. Removal and other immigration consequences may
be the subject of a separate judicial or administrative proceeding, and the defendant has

discussed the direct and collateral implications this plea agreement may have with his or

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STIPULATIONS, TERMS AND AGREEMENTS

Maximum Penalties
A violation of 18 U.S.C. § 1344, Bank Fraud, is punishable by a maximum fine of
$1,000,000.00, or a maximum term of imprisonment of thirty (30) years, or both, plus a
term of supervised release of three years and a special assessment of $100. The special
assessment is due and payable at the time the defendant enters the plea of guilty, and must
be paid by the time of sentencing unless the defendant is indigent. If the defendant is
indigent, the special assessment will be collected according to Title 18, United States Code,

Chapters 227 and 229.

AGREEMENTS REGARDING SENTENCE

1. The defendant and the government agree to a sentencing range from 0
to 60 months. The defendant and the government agree the loss for United States
Sentencing Guideline purposes under §2B1.1, no more than $3,000,000. The defendant
and the government further agree that all criminal and civil matters arising out this conduct
are resolved by this plea against the defendant only. In exchange for this global settlement,
the defendant, his family, or related legal entities agree to provide certain replacement
properties pursuant to 18 USC §3664(e)(4)(A) which are defined below as the "Restitution
Assets." The list of "Restitution Assets" listed below is not intended to be an exclusive list
from which restitution may or will be paid. Instead, the defendant, his family, and their
related entities will remain responsible for any and all amounts of restitution determined to
still be owed, after applying or giving credit for the Restitution Assets. The defendant's
family and related entities have committed to working with the victims to pay all monies
owed, if any amounts remain owed, after application of the Restitution Assets. To the
extent a civil action is required to collect such unpaid sums, it is not being waived or
released by this Agreement.

2. Guideline Calculations: Although the parties understand that the Guidelines

are only advisory and just one of the factors the Court will consider under 18 U.S.C. §

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GOVERNMENT'S APPROVAL
I have reviewed this matter and the plea agreement. I agree on behalf of the United
States that the terms and conditions set forth are appropriate and are in the best interests of
justice.
ELIZABETH A. STRANGE

First Assistant
District of Arizona

Date: -S7
Mike Jette
Assistant U.S. Attorney

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