United States v. Johnny Ho

CourtCourt of Appeals for the Sixth Circuit
DecidedMarch 4, 2024
Docket22-1968
StatusUnpublished

This text of United States v. Johnny Ho (United States v. Johnny Ho) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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United States v. Johnny Ho, (6th Cir. 2024).

Opinion

NOT RECOMMENDED FOR PUBLICATION File Name: 24a0094n.06

No. 22-1968

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT FILED Mar 04, 2024 ) KELLY L. STEPHENS, Clerk UNITED STATES OF AMERICA, ) Plaintiff-Appellee, ) ) ON APPEAL FROM THE v. ) UNITED STATES DISTRICT ) COURT FOR THE EASTERN JOHNNY HO, ) DISTRICT OF MICHIGAN Defendant-Appellant. ) ) OPINION )

Before: SUTTON, Chief Judge; WHITE and BUSH, Circuit Judges.

JOHN K. BUSH, Circuit Judge. A jury convicted Johnny Ho of wire-fraud conspiracy,

wire fraud, and money laundering. During jury selection, rather than requiring each member to

verbally answer each inquiry, the magistrate judge posed questions to the venire as a group and

asked them to raise their hands if they had a response. At trial, the district court excluded testimony

by Ho’s private investigator as inadmissible hearsay. Ho argues that the magistrate judge’s voir

dire and district court’s evidentiary ruling violated his Sixth Amendment right to a fair trial.

Because the magistrate judge did not abuse her discretion and any evidentiary error by the district

court was harmless, we AFFIRM Ho’s conviction.

I.

A. Government-Issued Loans During the COVID-19 Pandemic

In the early days of the COVID-19 pandemic, Congress passed the Coronavirus Aid,

Relief, and Economic Security Act (CARES Act), Pub. L. No. 116-136, 134 Stat. 281 (2020). No. 22-1968, United States v. Ho

Section 1102 of the Act added a new product, the “Paycheck Protection Program” (PPP), to the

loan program of the U.S. Small Business Administration (SBA). PPP loans, funded by the SBA

but administered by banks, were available until May 2021 to businesses with no more than 500

employees. Businesses that hired only independent contractors were not eligible to receive a PPP

loan. The program required applicants to submit information about their business income and

expenses, including payroll, with supporting documentation. These supporting documents could

either be payroll records or IRS Forms 940 or 941, which respectively document annual and

quarterly payroll expenses. The SBA mandated that PPP funds be used to retain workers and

maintain payroll, and to make mortgage, lease, and utility payments. Borrowers had to certify that

they understood the program rules, and those that followed the rules were eligible for loan

forgiveness.

The SBA also administers the Economic Injury Disaster Loan (EIDL) program, which

provides 30-year, low-interest loans up to $2 million to small businesses that experience

substantial economic injury from a disaster and are unable to obtain credit elsewhere. 15 U.S.C.

§ 636(b)(2). Only businesses with 500 or fewer employees qualify for the loan, and applicants

must have a credit score of at least 570. EIDL proceeds must be used for normal expenses, such

as fixed debts, payroll, and utilities, that cannot be paid due to the disaster’s economic impact. The

CARES Act authorized the SBA Administrator to waive the requirements that EIDL borrowers be

unable to obtain credit elsewhere and provide a personal guarantee on loans less than $200,000.

CARES Act § 1110(c). The SBA permitted businesses to collect both PPP and EIDL loans but

mandated that they could not use the proceeds for the same purposes.

-2- No. 22-1968, United States v. Ho

B. Ho’s Loan Applications

Johnny Ho owned Diva Nails & Spa in Northville, Michigan. In April 2020, after the salon

closed because of the pandemic, Ho made two PPP loan applications on behalf of Diva Nails to

JPMorgan Chase. The first, submitted April 11, asserted that the business had eight employees

and monthly payroll expenses of $20,000. The second, submitted April 23, listed ten employees

and monthly payroll expenses of $50,000. Both were denied because they did not include

supporting documents. Ho then met with his next-door neighbor, Antonio George, who owned

several businesses, including a logistics and transportation business called ATX. George had

successfully obtained a PPP loan for ATX, so Ho asked for his assistance with the Diva Nails

application. George agreed, and instructed Ho to open an account for Diva Nails at Citizens Bank.

That is where George’s and Ho’s stories diverge. By George’s account, in exchange for

10% of the loan proceeds, he agreed to falsify Diva Nails’s application by including IRS forms

completed with ATX’s payroll expenses. George testified that they planned for Ho to disburse the

loan proceeds to George as payroll to feign compliance with the program requirements and secure

loan forgiveness. George would keep 10% then wire the remainder back. [

Ho, on the other hand, testified that he provided George with Diva Nails’s 2019 tax returns

and Citizens Bank information, requesting that George “do [the PPP loan application] right.”

R. 60, PageID 1071. According to Ho, George independently prepared the tax forms and

submitted the loan application without Ho’s knowledge of its false contents. Ho did not deny that

he opened an account with Paychex, a payroll service, and distributed payroll to several companies

owned by or associated with George. But he maintained that he paid George for real work, such

as removing ventilation systems and shipping packages. And he did so through payroll because

that is what George requested.

-3- No. 22-1968, United States v. Ho

Regardless, Ho certified that the information in the Diva Nails PPP loan application and its

supporting documents was truthful. Consistent with George’s testimony, the application included

tax forms identical to those submitted by ATX: both companies reported that they had

42 employees and quarterly payroll expenses of $153,302.50. And, in contrast to the first two

Diva Nails applications, the third reported average monthly payroll expenses of $90,414Citizens

Bank received the application on May 12, 2020, and disbursed $193,700 to the Diva Nails account

six days later. Ho distributed $16,500 to eleven entities associated with George via Paychex on

June 8. But Citizens Bank froze Diva Nails’s PPP funds soon after, and no more disbursements

were made.

With the PPP funds frozen, Ho again approached George for help. George explained to

Ho that, of all his companies, only SFX Transportation, Inc. had not filed an EIDL loan application.

They agreed that Ho would file the EIDL application for SFX and, in return, George and his

business partner (the majority owner of SFX) would get 10% of the funds. Ho opened an account

under SFX’s name at JPMorgan Chase, listing himself as signatory. George provided Ho with the

information necessary to complete the application. Because Ho did not have the requisite credit

score for an EIDL loan, he enlisted his brother-in-law, Luan Pham, to cosign the application and

falsely reported that Pham owned SFX.

The EIDL application was approved and $149,900 was deposited to the SFX account on

August 4, 2020. That same day, Ho disbursed the funds to four of George’s businesses through

cashier’s checks. George returned a portion of that money to accounts controlled by Ho. At trial,

Ho admitted that he was not affiliated with SFX but, nevertheless, the company’s EIDL application

contained his information , and he opened the Chase account, wrote the checks to George, and

-4- No. 22-1968, United States v. Ho

received money back from George.

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