Case 1:18-cr-00169-JTN ECF No. 1 filed 08/08/18 PageID.

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UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

UNITED STATES OF AMERICA,

Plaintiff,

v.

ROBERT LYLE BUCKHANNON and INDICTMENT

KELLY JANE DeMOSS,

Defendants.
/

The Grand Jury charges:

At all times relevant to this Indictment:

1. Defendants ROBERT LYLE BUCKHANNON (hereinafter, “BUCKHANNON”)

and KELLY JANE DeMOSS (hereinafter, “DeMOSS”) were residents of Calhoun County,

Michigan, in the Southern Division of the Western District of Michigan.

2. In September 2012, DeMOSS registered with the State of Michigan a limited

liability company under the name “On Deck Sports Bar & Grill LLC” (hereinafter, “On Deck”).

In a 2013 Annual Statement filed with the state, the registered business address for On Deck was

225 W. Michigan Avenue, Battle Creek, Michigan. DeMOSS was identified as the registered agent

for, and sole Manager of, On Deck.

3. In September 2012, DeMOSS registered a limited liability company in the State of

Michigan under the name “S.G.E. Investments, LLC” (hereinafter, “S.G.E.”) In a 2013 Annual

Statement filed with the state, the registered business address for S.G.E. was 200 Wahwahtaysee

Way, Battle Creek, Michigan. DeMOSS was identified as the registered agent for, and sole

Manager of, S.G.E.

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4. Blackburne & Sons Realty Capital Corporation (“Blackburne”) was a nationwide

private money commercial lender headquartered in Sacramento, California. Blackburne was in the

business of originating commercial loans, selling ownership interests in those loans, and servicing

those loans.

5. On Deck was a sports-themed restaurant and bar located in a three-story building

at 225 W. Michigan Avenue, Battle Creek, Michigan. In April 2013, after extensive remodeling

of the first floor and second floor mezzanine interior of the building, BUCKHANNON and

DeMOSS opened On Deck for business. BUCKHANNON and DeMOSS represented that S.G.E.

was the sole owner of On Deck. BUCKHANNON was designated the General Manager of On

Deck who, along with DeMOSS, was responsible for the day-to-day operation of the business.

When On Deck opened in April 2013, BUCKHANNON and DeMOSS shared a residence at 200

Wahwahtaysee Way, Battle Creek, Michigan.

6. In May 2013, On Deck was forced to close as a result of a legal dispute with one of

its private investors and remained closed for several months.

7. In order to resolve the dispute and re-open the business, On Deck required a

substantial infusion of cash. In about June 2013, BUCKHANNON and DeMOSS sought to obtain

a private loan for On Deck to resolve the legal dispute, pay off certain business debts, and re-open

the business. While searching for a lender who would loan them $500,000 to re-start operations,

BUCKHANNON and DeMOSS, through a commercial loan broker, represented to Blackburne

that On Deck was located in a 5-unit mixed-use building with four rentable office spaces totaling

4,500 square feet. Moreover, BUCKHANNON and DeMOSS represented that the office space

was pre-leased to three tenants.

8. No later than August 2013, BUCKHANNON and DeMOSS entered into

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negotiations with Blackburne to obtain a commercial loan for On Deck. BUCKHANNON and

DeMOSS represented to Blackburne that On Deck would use the loan proceeds to settle the legal

dispute with the investor; pay off a note on the property; pay off building improvement debts and

revolving credit debts for certain furniture, fixtures, and equipment; and for working capital. At

no time did BUCKHANNON or DeMOSS represent to Blackburne that they would use the

business loan proceeds for personal expenses, including the purchase of a personal residence, nor

did they obtain approval from Blackburne to use the proceeds for personal expenses.

9. Blackburne required documentation of On Deck’s lease agreements with the three

tenants. On or about August 8, 2013, BUCKHANNON sent an e-mail to a Blackburne

representative indicating that BUCKHANNON was working on obtaining a copy of the leases

from his attorney’s office.

10. On or about August 9, 2013, DeMOSS signed, on behalf of On Deck, S.G.E., and

herself, a Blackburne loan approval letter agreeing to borrow $494,000 from Blackburne for On

Deck’s “mixed-use property with 5-units” located at 225 W. Michigan Avenue in Battle Creek.

The loan was subject to limitations and conditions, including “Current executed copies of all

leases.”

11. On or about August 21, 2013, and again on September 4, 2013, BUCKHANNON

sent an e-mail to a Blackburne representative that indicated in the body of the message, “Please

find the leases attached.” The attachment was a document entitled “On Deck Leases.pdf.” The

attachment contained three documents that were entitled “LEASE AGREEMENT.” The

documents represented to Blackburne that On Deck had three one-year signed lease agreements

totaling $42,000 per year of rental income, as follows:

a. A lease dated July 15, 2013, between On Deck and Tenant 1 for “600

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square feet on the second floor and 1,400 square feet on the third floor

of the south building” commencing October 1, 2013, and ending

September 30, 2014, at a rate of $1,500 per month. The document was

purportedly signed by Tenant 1 and countersigned by BUCKHANNON

for On Deck.

b. A lease dated August 5, 2013, between On Deck and Tenant 2 for

“1,200 Square feet on the Third Floor North, Unit 301A” commencing

October 1, 2013, and ending September 30, 2014, at a rate of $1,000 per

month. The document was purportedly signed by Tenant 2 and

countersigned by BUCKHANNON for On Deck.

c. A lease dated July 29, 2013, between On Deck and Tenant 3 for “1,200

Square feet on the south end of the Third Floor, South Unit 302A”

commencing October 1, 2013, and ending September 30, 2014, at a rate

of $1,000 per month. The document was purportedly signed by Tenant

3 and countersigned by BUCKHANNON for On Deck.

In truth and fact, each purported “LEASE AGREEMENT” was fake and fraudulent, as On Deck

did not have valid, signed leases with tenants. The second floor in the front of the building

consisted of a bar area, dance floor, and seating, and the rear was unfinished. The third floor was

an unfinished storage area.

12. During the period of time On Deck was closed, BUCKHANNON and DeMOSS

moved out of 200 Wahwahtaysee Way, Battle Creek, Michigan, stored their belongings, and

moved into a Battle Creek motel.

13. On or about September 4, 2013, DeMOSS signed a contract to buy a house located

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at 224 Wahwahtaysee Way in Battle Creek for $172,000 with a $2,500 deposit. At the time,

DeMOSS did not have the funds for the deposit or a down payment for a personal residence.

14. On or about September 10, 2013, a Blackburne representative e-mailed

BUCKHANNON asking On Deck to provide him with “verified deposits for the leases.”

BUCKHANNON replied, “Let me get you the copies of the checks.” BUCKHANNON further

indicated that the rent checks would be held and deposited upon closing the loan with Blackburne.

15. Blackburne received copies of at least two purported rent checks. The first check

was dated October 1, 2013, and made payable to On Deck for $1,500 for “October Rent” that

appeared to be signed by Tenant 1. The second check was dated October 1, 2013, and made

payable to On Deck for $1,000 for “Rent” and appeared to be signed by Tenant 2. Those checks

falsely and fraudulently represented to Blackburne that On Deck had valid lease agreements with,

and genuine first month rent checks from, those tenants when in fact it did not.

16. On or about September 26, 2013, DeMOSS signed a residential loan application to

borrow $137,600 to purchase the home at 224 Wahwahtaysee Way. The application advised

DeMOSS that she would be required to pay $37,274.94 in cash at closing to purchase the home.

17. Blackburne was unable to close the On Deck loan on the original terms. On or about

October 2, 2013, DeMOSS signed on behalf of On Deck, S.G.E., and herself, another Blackburne

loan approval letter agreeing to borrow $456,000 from Blackburne on terms less favorable to On

Deck. The document included a condition that Blackburne receive a copy of all lease and rental

agreements. On or about the same day, BUCKHANNON and DeMOSS sent the agreement to

Blackburne using a facsimile machine at the Comfort Inn motel in Battle Creek.

18. On or about October 9, 2013, the $456,000 Blackburne loan was approved, closed,

and was fully funded. Blackburne recorded a mortgage on the On Deck property as security for

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the loan. Additionally, DeMOSS was personally liable to repay the loan.

19. On or about October 10, 2013, DeMOSS received and deposited a check in the

amount of $126,169.10, which consisted of Blackburn loan proceeds, into On Deck’s Comerica

Bank account #XXXXXXX456. Prior to that deposit, On Deck had $0 in the account. DeMOSS

wrote several checks to make payments on several business and personal debts, including a

personal vehicle loan.

20. On October 11, 2013, DeMOSS wrote a $2,600 check from On Deck’s Comerica

Bank account #XXXXXXX456 payable to BUCKHANNON’s son. The memo line of the check

read “Deposit” and DeMOSS wrote “Deposit House” in the check register column entitled “In

Payment Of.” The purpose of this check was to repay a loan BUCKHANNON and DeMOSS

obtained from BUCKHANNON’s son to purchase the home at 224 Wahwahtaysee Way.

21. On or about October 12, 2013, DeMOSS wrote a $36,500 check from On Deck’s

Comerica Bank account payable to BUCKHANNON. The memo line of the check was left blank.

DeMOSS wrote “House” in the check register column entitled “In Payment Of.” On or about the

same day, BUCKHANNON deposited $36,300 from that check into his account at Comerica Bank

#XXXXXXX716. Prior to the deposit, BUCKHANNON had $0 in that account.

22. On or about October 15, 2013, BUCKHANNON purchased a Comerica Bank

Cashier’s Check in the amount of $36,000 payable to DeMOSS by withdrawing funds from his

personal Comerica Bank account #XXXXXXX716. The source of the funds was the $36,500

check he deposited three days earlier. The Cashier’s Check receipt included a handwritten

notation: “Gift.” On or about the same date, DeMOSS deposited the $36,000 Cashier’s Check into

her account at Chemical Bank #XXXXXXX847. Prior to the deposit, DeMOSS had $432.95 in

that account.

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23. On or about October 15, 2013, BUCKHANNON and DeMOSS signed a document

entitled “GIFT LETTER AFFIDAVIT” in connection with the purchase of 224 Wahwahtaysee

Way. The document falsely represented that BUCKHANNON provided DeMOSS with an outright

gift to assist her with the closing of a real estate loan for the residence and that DeMOSS would

not be obligated to repay the money at any time. In truth and fact, the source of the $36,000 was

Blackburne loan proceeds from On Deck’s account, funds which DeMOSS and On Deck were

obligated to repay to Blackburne.

24. On or about October 30, 2013, DeMOSS signed an updated residential loan

application to finance the purchase of 224 Wahwahtaysee Way. DeMOSS reported no personal

debts or liabilities despite being personally obligated to repay the $456,000 Blackburne loan. Also

on that date, DeMoss wired $36,584.16 from her Chemical Bank account #XXXXXXX847 to a

title company to purchase 224 Wahwahtaysee Way. Blackburne had no knowledge that

BUCKHANNON and DeMOSS used On Deck’s loan proceeds for the purchase of the personal

residence and had no mortgage on 224 Wahwahtaysee Way.

25. As of October 31, 2013, On Deck’s Comerica Bank balance was overdrawn by

$30.71.

26. In November 2013, On Deck reopened for business. On December 30, 2013, On

Deck was destroyed by a fire that originated in the third floor storage area. As a result of both the

Defendants’ scheme and artifice to defraud Blackburne and the fire, Blackburne and On Deck’s

insurance carrier suffered financial losses.

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COUNT 1
(Conspiracy to Commit Wire Fraud)

27. Paragraphs 1 through 26 are incorporated by reference as if fully set forth herein.

28. From in or about June 2013, to in or about October 2013, in Calhoun County, in

the Southern Division of the Western District of Michigan,

ROBERT LYLE BUCKHANNON and

KELLY JANE DeMOSS

did conspire with each other to devise a scheme and artifice to defraud and to obtain money from

Blackburne & Sons Realty Capital Corporation by means of false and fraudulent pretenses,

representations, and promises using wire communications in interstate commerce.

Object of the Conspiracy

29. The principal object of the conspiracy was to obtain money from Blackburne by

means of false and fraudulent pretenses and representations to unlawfully enrich themselves,

including by converting to their own personal use business loan proceeds fraudulently obtained

from Blackburne that were intended for On Deck Sports Bar & Grill LLC.

18 U.S.C. § 1349
18 U.S.C. § 1343

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COUNT 2
(Wire Fraud)

30. Paragraphs 1 through 26 are incorporated by reference as if fully set forth herein.

31. From in or about June 2013, to in or about October 2013, in Calhoun County, in

the Southern Division of the Western District of Michigan,

ROBERT LYLE BUCKHANNON and

KELLY JANE DeMOSS

knowingly devised a scheme and artifice to defraud and to obtain money from Blackburne & Sons

Realty Capital Corporation, by means of false and fraudulent pretenses, representations, and

promises using wire communications in interstate commerce, and aided and abetted each other

with devising and executing the scheme and artifice.

The Wires

32. For the purpose of executing the scheme and artifice to defraud, Defendants

transmitted and caused to be transmitted certain writings, signs, signals, and sounds in interstate

commerce by means of a wire communication. Specifically, on or about the dates indicated,

Defendants transmitted, and caused to be transmitted, the following interstate wire

communications in furtherance of the scheme:

On or About Date Description

August 8, 2013 BUCKHANNON sent an e-mail to a Blackburne representative in
California with the subject “Fwd: Closing Documents 225 W. Michigan
Avenue” attaching various documents.
August 21, 2013 BUCKHANNON sent an e-mail to a Blackburne representative in
California with the subject “Leases” attaching a document “On Deck
Leases.pdf.”
September 4, 2013 BUCKHANNON sent an e-mail to a Blackburne representative in
California with the subject: “Fwd: Leases” attaching a document “On
Deck Leases.pdf.”
September 5, 2013 BUCKHANNON sent an e-mail to a Blackburne representative in
California with the subject “Re: Appraisal” attaching a document
“Blackburne Loan Approval.PDF.”

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September 10, 2013 A Blackburne representative in California sent an e-mail to

BUCKHANNON with the subject “Re: Form” requesting verified
deposits for the leases.
September 10, 2013 BUCKHANNON sent an e-mail to a Blackburne representative in
California with the subject “Re: Form” advising an attorney will send
Blackburn a copy of lease checks.
September 17, 2013 Blackburne transmitted $10,000 by wire transfer to Monarch Community
Bank account #XXXXXXX540.
September 18, 2013 Blackburne transmitted $10,000 by wire transfer to Monarch Community
Bank account #XXXXXXX540.
September 19, 2013 Blackburne transmitted $25,000 by wire transfer to Monarch Community
Bank account #XXXXXXX540.
September 20, 2013 Blackburne transmitted $20,000 by wire transfer to Monarch Community
Bank account #XXXXXXX540.
September 20, 2013 Blackburne transmitted $30,000 by wire transfer to Monarch Community
Bank account ##XXXXXXX540.
September 23, 2013 Blackburne transmitted $20,000 by wire transfer to Monarch Community
Bank account #XXXXXXX540.
September 24, 2013 Blackburne transmitted $20,000 by wire transfer to Monarch Community
Bank account #XXXXXXX540.
September 26, 2013 Blackburne transmitted $20,000 by wire transfer to Monarch Community
Bank account #XXXXXXX540.
September 30, 2013 Blackburne transmitted $20,000 by wire transfer to Monarch Community
Bank account #XXXXXXX540.
October 2, 2013 BUCKHANNON and DeMOSS transmitted to Blackburne by facsimile
machine a loan approval letter dated October 2, 2013, that was signed by
DeMOSS.
October 3, 2013 Blackburne transmitted $10,000 by wire transfer to Monarch Community
Bank account #XXXXXXX540.
October 4, 2013 Blackburne transmitted $221,000 by wire transfer to Monarch
Community Bank account #XXXXXXX540.
October 4, 2013 Blackburne transmitted $50,000 by wire transfer to Monarch Community
Bank account #XXXXXXX540.
October 30, 2013 DeMOSS transmitted $36,584.16 by wire transfer to Assured Title
Agency LLC from Chemical Bank account #XXXXXXX847.

18 U.S.C. § 1343
18 U.S.C. § 2

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COUNT 3
(Money Laundering)

33. Paragraphs 1 through 26 are incorporated by reference as if fully set forth herein.

34. On or about October 12, 2013, in Calhoun County, in the Southern Division of the

Western District of Michigan,

KELLY JANE DeMOSS

knowingly engaged in a monetary transaction, in and affecting interstate commerce, in criminally

derived property of a value greater than $10,000 that was derived from a specified unlawful

activity; namely, wire fraud (18 U.S.C. § 1343). Specifically, KELLY JANE DeMOSS conducted

a withdrawal transaction in the amount of $36,500 by check payable to BUCKHANNON drawn

on an account in the name of On Deck Sports Bar & Grill LLC at Comerica Bank, a financial

institution whose deposits were then insured by the Federal Deposit Insurance Corporation.

18 U.S.C. § 1957

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COUNT 4
(Money Laundering)

35. Paragraphs 1 through 26 are incorporated by reference as if fully set forth herein.

36. On or about October 12, 2013, in Calhoun County, in the Southern Division of the

Western District of Michigan,

ROBERT LYLE BUCKHANNON

knowingly engaged in a monetary transaction, in and affecting interstate commerce, in criminally

derived property of a value greater than $10,000 that was derived from a specified unlawful

activity; namely, wire fraud (18 U.S.C. § 1343). Specifically, ROBERT LYLE BUCKHANNON

conducted a deposit transaction at Comerica Bank, a financial institution whose deposits were then

insured by the Federal Deposit Insurance Corporation, in the net amount of $36,300 by depositing

a check that was payable to BUCKHANNON and drawn on an account in the name of On Deck

Sports Bar & Grill LLC at Comerica Bank, a financial institution whose deposits were then insured

by the Federal Deposit Insurance Corporation.

18 U.S.C. § 1957

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COUNT 5
(Money Laundering)

37. Paragraphs 1 through 26 are incorporated by reference as if fully set forth herein.

38. On or about October 15, 2013, in Calhoun County, in the Southern Division of the

Western District of Michigan,

ROBERT LYLE BUCKHANNON

knowingly engaged in a monetary transaction, in and affecting interstate commerce, in criminally

derived property of a value greater than $10,000 that was derived from a specified unlawful

activity; namely, wire fraud (18 U.S.C. § 1343). Specifically, ROBERT LYLE BUCKHANNON

conducted a withdrawal transaction at Comerica Bank, a financial institution whose deposits were

then insured by the Federal Deposit Insurance Corporation, in the amount of $36,010 to purchase

a Cashier’s Check in the amount of $36,000 payable to Kelly J DeMoss.

18 U.S.C. § 1957

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COUNT 6
(Money Laundering)

39. Paragraphs 1 through 26 are incorporated by reference as if fully set forth herein.

40. On or about October 15, 2013, in Calhoun County, in the Southern Division of the

Western District of Michigan,

KELLY JANE DeMOSS

knowingly engaged in a monetary transaction, in and affecting interstate commerce, in criminally

derived property of a value greater than $10,000 that was derived from a specified unlawful

activity; namely, wire fraud (18 U.S.C. § 1343). Specifically, KELLY JANE DeMOSS conducted

a deposit transaction at Chemical Bank, a financial institution whose deposits were then insured

by the Federal Deposit Insurance Corporation, in the amount of $36,000 by depositing a Cashier’s

Check payable to DeMOSS that was drawn on an account at Comerica Bank, a financial institution

whose deposits were then insured by the Federal Deposit Insurance Corporation.

18 U.S.C. § 1957

A TRUE BILL

_______________________________
GRAND JURY FOREPERSON

ANDREW BYERLY BIRGE

United States Attorney

____________________________
CHRISTOPHER M. O’CONNOR
Assistant United States Attorney

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