AO 91 (Rev. 11/11) Criminal Complaint AUSA Sunil R. Harjani (312) 358-9353 UNITED STATES DISTRICT COUR! 2 NORTHERN DISTRICT OF TuNoek 8 C R 2 0 EASTERN DIVISION RECEIVED UNITED STATES OF AMERICA CASE NUMBER: APR 02 2018 vi UNDER SEAL MAGISTRATE JUDGE RENEE M. JOHNSON SHEILA M. FINNEGAN CRIMINAL COMPLAINT MAGISTRATE JUDGE FINNEGAN I, the complainant in this case, state that the following is true to the best of my knowledge and belief, From in or about January 2011 to in or about August 2017, at Chicago, in the Northern District of Illinois, Eastern Division, the defendant(s) violated: Code Section Offense Description Title 18, United States Code, Section Defendant devised, intended to devise, and 1341 participated in a scheme to defraud, and to obtain RECEIVED money and property, namely at least $600,000, by means of materially false and fraudulent al pretenses, representations and promises, and by APR 2 2018 > concealment of material facts, and for the purpose of executing the scheme, caused to be mailed a COMER US DBTRIGT COURT ory the U.S. mails of approximately ‘This criminal complaint is based upon these facts: _X_ Continued on the attached sheet. MARK STAKEM Special Agent, Federal Bureau of Investigation (FBI) ‘Sworn to before me and signed in my presence. Date: April 2, 2018. — City and state: Chicago, Mlinois _____ SHEILA FINNEGAN, US. Magistrate Judge Printed name and TitleUNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS I, Mark D. Stakem, being duly sworn, state as follows: 1. Tama Special Agent with the Federal Bureau of Investigation, and have been so employed for 19 years. My current responsibilities include the investigation of white collar crime, including mail fraud and wire fraud, 2. This affidavit is submitted in support of establishing probable cause: that RENEE M. JOHNSON has violated Title 18, United States Code, Section 1341, Because this affidavit is being submitted for the limited purpose of establishing probable cause in support of a criminal complaint charging JOHNSON with mail fraud, I have not included cach and every fact known to me concerning this investigation. I have set forth only the facts necessary to establish probable cause to believe that the defendant committed the offenses alleged in the complaint. 3. This affidavit is based on my personal knowledge, review of subpoenaed records, interviews of witnesses, and my training and experience, among other things. 4. As set forth below, the FBI is conducting an investigation of RENEE M. JOHNSON. JOHNSON was a bookkeeper at One Off Hospitality LLC (One Off), which owns restaurants and bars in the Chicago area, including Blackbird and Avec restaurants located on Randolph Street in Chicago, Illinois. ‘The investigation has revealed that there is probable cause to believe that JOHNSON was involved in a scheme to defraud One Off. Specifically, the FBI has determined that, from in or about January 2011 through in orabout August 2017, JOHNSON wrote hundreds of unauthorized checks from One Off’s business bank accounts to pay for her personal expenses and caused over $600,000 of losses. The FBI’s investigation has determined that the losses were primarily sustained by Blackbird and Avec restaurants. Background Information about One Off and JOHNSON 5. In or about March 2018, I interviewed Accountant A, the Director of Accounting and Finance at One Off, and Partner A, who was a partner in One Off. During this interview, Accountant A stated that JOHNSON had been employed by One Off since approximately April 1998, and she was the bookkeeper at One Off, In her role as bookkeeper, JOHNSON was a signatory on many of One Off's bank accounts. 6. According to Accountant A, One Off had bank accounts for multiple corporate entities, including for: (1) Blackbird and Avec restaurants; (2) the properties that housed Blackbird and Avec; (3) and One Offs headquarters in Chicago (collectively, the five corporate entities). JOHNSON was a signer on all of these bank accounts. According to Accountant A and Partner A, One Off maintained bank accounts at Bridgeview Bank from at least January 2011 through in or about April 2016. One Off also maintained accounts at MB Financial from in or about March 2016 through March 2018, 7. According to Accountant A and Partner A, JOHNSON’s responsibilities as ‘bookkeeper were to handle all incoming invoices for the five corporate entities, ensure all the invoices had necessary approvals from a manager or chef at one of the five corporate entitics, enter the invoices into One Off’s accounting software, cut checks weekly to vendors to pay the invoices, and mail the checks to the vendors. When entering the invoices 2into One Offs accounting software, JOHNSON had to code the invoices and payment to a ities had specific expense item for one of the five corporate entities. ‘The five corporate en expense categories such as food, labor, and utilities. Accountant A’s review of One Off's finances in 2017 8. According to Accountant A, during 2017, Accountant A began looking at the internal controls within One Offs accounting and bookkeeping systems. Accountant A had implemented a new accounting system which should have correlated with One Off's older accounting system, In or about August 2017, Accountant A noticed the new accounting system did not balance with the older accounting system, Prior’ to the implementation of the new system, JOHNSON was the individual responsible for entering, invoices and check payments in One Off’s older accounting system. 9. According to Accountant A, in or about August 2017, Accountant A tasked ‘Accountant B, another employee who reported to Accountant A, to review a wine vendor invoice that created an out-of-balance situation between the old and new accounting systems, Accountant B learned that two checks with the same check number from an Avec bank account were cut pursuant to the same invoice from the wine vendor. Accountant B reported the matter to Accountant A. Accountant A stated that she initially thought JOHNSON had made a mistake in the old accounting system. Accountant A further reviewed Avec’s bank records at MB Financial and observed two checks with the same check number corresponding to this wine invoice were paid by Aveo, one to the wine vendor and one to a financial company that was not an Avec vendor10. According to Accountant A, later in August 2017, Accountant A reviewed the bank accounts of Avec and Blackbird at MB Financial, Accountant A observed multiple instances of two checks with the same check number clearing based on the input in One Off’s accounting system of a single invoice by JOHNSON. Accountant A also observed JOHNSON made checks payable to certain credit card companies and mortgage companies, none of which were vendors of Avec or Blackbird. 11. According to Accountant A, over the next week or so, Accountant A reviewed the bank records of Avec and Blackbird and determined that JOHNSON had paid her personal expenses in the amount of several hundred thousand dollars using checks from one of the five corporate entities. Accountant A also determined that JOHNSON was making checks payable to her creditors because the checks JOHNSON was paying to the credit card companies were not vendors of any of the five corporate entities. According to ‘Accountant A, JOHNSON was not authorized by anyone to pay her personal expenses using checks from one of the five corporate entities. JOHNSON was confronted by One Off managers 12. According to Accountant A and Partner A, on or about August 24, 2017, Partner A requested that JOHNSON meet with them in a conference room at One Off headquarters. Accountant A, Partner A, Partner B, and JOHNSON were present in the meeting. Partner A presented JOHNSON with a stack of papers that detailed her alleged misappropriation from Avec and Blackbird. Partner A told JOHNSON that there were funds missing from Avec and Blackbird, and checks that corresponded to these missing funds were signed by JOHNSON and payable to vendors for the benefit of JOHNSON. 413. According to Accountant A and Partner A, JOHNSON did not go through any of the papers in the stack, JOHNSON did not make eye contact with anyone and stated, “This is me, I did this.” According to Accountant A and Partner A, JOHNSON further explained she was in over her head and had “helped too many people.” JOHNSON said she could not pay any funds back to any One Off entity. JOHNSON further stated that she assumed she was fired, and she wanted to collect her personal belongings. On her way out of the One Off offices, JOHNSON stated, “I'll give you free advice, Make sure the next bookkeeper you hire doesn’t do the bank reconciliations as well.” Accountant A’s additional analysis of JOHNSON’s checks 14. _ According to Accountant A, after the meeting with JOHNSON, Accountant ‘A continued her review of JOHNSON’s theft of funds from the five corporate entities to determine how much was stolen and how JOHNSON was able to conceal the scheme. 15. According to Accountant A, based upon her review, Accountant A determined that from at least January 2011 through August 2017, JOHNSON improperly wrote hundreds of checks from the five corporate entities payable to JOHNSON’s creditors. The total amount of these checks was approximately $604,113. 16. According to Accountant A, when One Off pays a vendor, it was standard procedure for One Off to maintain an invoice in One Off's files with a copy of the check issued to pay the invoice. In the many instances when JOHNSON improperly wrote checks to her creditors, there were no invoices or copies of checks maintained in One Offs files. 17. According to Accountant A, she discovered through looking at the accounting system’s audit trail that JOHNSON made fraudulent journal entries in One 5Off’s accounting system to hide her theft. Specifically, she found multiple instances where JOHNSON made a check payable to her creditor, but deleted the journal entry showing the payee of the check as JOHNSON’s creditor. Because JOHNSON used the same check number as a check previously used for a legitimate One Off purchase, the check numbers continued to be in sequential order in the accounting system. 18. Accountant A forwarded me around 15 examples of the aforementioned journal entries. 1 reviewed these journal entries and audit trails, and observed that JOHNSON hid the fact that she made checks payable to her creditors. ‘The documents show that in some instances when JOHNSON cut a check to pay her personal expenses, she cut a new check with the same check number to pay for a legitimate expenditure, In many instances, JOHNSON then deleted evidence of the fraudulent check to her creditors within a minute or two of initially entering it in One Off's accounting system. On other occasions, when JOHNSON deleted evidence of the fraudulent check to her creditors, she used a different check number to pay for the legitimate expenditure, or. sometimes did not cut a new check at all. Thus, JOHNSON varied the methods that she employed in the scheme, but nevertheless the checks I examined that were deleted from One Offs accounting system were not for legitimate business expenses but were for her own personal benefit. FBI Review of Checks From One Off Accounts 19. Accountant A provided me with a subset of the MB Financial and Bridgeview Bank checks payable from the five corporate entities between on or about January 1, 2011 and August-11, 2017. I reviewed this subset of checks that cleared the 6accounts, and I observed over 500 checks were written from the MB Financial and Bridgeview Bank accounts from the five corporate entities to the following entities: Wells Fargo; Gold Coast Bank, Nationstar, Bank of America Home Loans Servicing, Everhome, Discover, Citi Cards, Prudential, Allstate. Accountant A told me none of these entities were vendors of the five corporate entities. 20. Publicly available records, and information obtained from individuals at One Off, show that JOHNSON or her spouse purchased ot inherited multiple properties in the Chicago area in the last two decades. The public records show that Nationstar Bank (now known as Mr. Cooper), Wells Fargo Bank and Gold Coast Bank are lien holders against three of the properties purchased or inherited by JOHNSON or her spouse. I also interviewed a representative of Gold Coast Bank who told me that JOHNSON and her spouse have an outstanding mortgage on a property which houses a bar in Chicago. 21. Based on my review of the checks JOHNSON made payable to credit card and mortgage companies, I observed multiple vendors had their remittance addresses as P.O. Boxes. Based on my training and experience investigating white collar crime, I know that P.O. Boxes only accept mail from the U.S, Postal Service, not carriers like Federal Express or United Parcel Service. Therefore, I believe there is probable cause to believe that JOHNSON used the U.S. mail to submit many of her unauthorized checks to credit cards and mortgage companies. 22. During February 2017, JOHNSON wrote two checks to Management Company A. One of these checks was from the Avec account at MB Financial in theamount of $1,552.04, while the second check was from the Blackbird account at MB Financial in the amount of $1,039.23. 23. On March 14, 2018, I interviewed representatives from Management Company A. Management Company A stated they managed a condominium property on Belmont Avenue in Chicago, and JOHNSON owned a unit there. In late 2016 and early 2017, JOHNSON was in arrears on her condominium assessments collected by Management Company A. According to the representative from Management Company ‘A, JOHNSON received monthly invoices from Management Company A 24. JOHNSON made payments of $1,552.04 and $1,039.23 by check on or about February 17, 2017 of her assessment dues, which made her account current, According to the representative from Management Company A, if a customer paid the assessment by check, Management Company A only accepted the checks at their P.O, Box address in Chicago. Because P.O, Box addresses only accept mailings through the U.S. mail, there is probable cause’ to believe that JOHNSON used the U.S. mails to pay her condominium property expenses using misappropriated funds from One Off. Thus, there is probable cause to believe that, on or about February 17, 2017, JOHNSON mailed Aveo check number 3706, in the amount of $1,552.04, and Blackbird check number 3609, in the amount of $1,039.23, via U.S. Mail to Management Company A’s P.O. Box in Chicago. Request for Issuance of a Complaint and Arrest Warrant 25. Based upon the foregoing information, there is probable cause to believe that, from in or about January 2011 and continuing through in or about August 2017, JOHNSON devised, intended to devise and participated in a scheme to defraud, and to obtain money 8and property, namely at least $600,000, by means of materially false and fraudulent pretenses, representations and promises, and by concealment of material facts, and for the purpose of executing that scheme, and attempting to do so, caused to be mailed a check through the U.S. mails to Management Company A, on ot about February 17, 2017, in the amount of approximately $1,552.04, which constituted funds belonging to Avec that was used to pay JOHNSON’s personal expenses, in violation of Title 18, United States Code, Section 1341 CONCLUSION 26. Based on the above information, I respectfully submit that there is probable cause to believe that a mail fraud offense, in violation of Title 18, United States Code, Section 1341, has been committed by JOHNSON, and therefore respectfully request that this Court issue a criminal complaint and arrest warrant for JOHNSON. FURTHER AFFIANT SAYETH NOT ‘Mark Stakem Special Agent Federal Bureau of Investigation Subscj pee before me this 2 day of April 2018, at Chicago, Ilinois. priest “Sig Ftoiforable Sheila Finnegan United States Magistrate Judge Northern District of Illinois