United States of America v. Lola Shalewa Barbara Kasali

Houston, Texas criminal defense lawyer represented the Defendant charged with four counts of faurd based on her submission of two federal loan applications.

Congress authorized the temporary Paycheck Protection Program ("PPP”) to provide forgivable loan assistance to small businesses that suffered during the COVID-19 pandemic. Coronavirus Aid, Relief, and Economic Security Act, Pub. L. No. 116-136, § 1102, 134 Stat. 281, 286–94 (2020) (codified as amended at 15 U.S.C. § 636(a)(36)). Businesses could apply for a PPP loan from participating lenders who, upon approval of their application by the Small Business Administration ("SBA”), would fund the loans.1 13 C.F.R. §§ 120.190–192; see generally 15 U.S.C. § 636(a)(36). The SBA fully guaranteed the loans and reimbursed the lenders if a borrowing business defaulted. 15 U.S.C. § 636(a)(2)(F), (36)(B). As part of their applications, businesses were required to state their average 2019 monthly payroll expenses and the number of employees. PPP First Draw Borrower Application Form, supra note 1; see also § 636(a)(36)(D)(i), (E), (G). This information was then used to calculate the size of their PPP loan. § 636(a)(36)(E). In June 2020, Kasali submitted two PPP loan applications for the two businesses she operated: Lola's Level and Charm Hair Extensions. According to the indictment, Kasali in her applications "knowingly misrepresented the number of employees and payroll expenses” of eachbusiness and "made numerous other false and misleading statements.” Kasali requested $1,937,500 for Lola's Level and $1,875,944 for Charm Hair Extensions, but she could not provide any IRS records, bank statements, or employment records to support the information provided in her applications. As a result, one application was denied, and the approved funds from the other were frozen and seized before Kasali obtained the money.In 2022, Kasali was convicted of two counts of making false statements to a financial institution in violation of 18 U.S.C. § 1014 and two counts of bank fraud in violation of 18 U.S.C. § 1344. During the course of the prosecution, Kasali was represented by five separate attorneys. Kasali's first two attorneys had only limited roles. Kasali's attorney-client conflicts began when her third attorney was appointed. Kasali's third attorney moved to withdraw after six months, stating the attorney-client relationship deteriorated and Kasali refused to assist him in preparing a defense. The district court granted the motion and appointed a fourth attorney for Kasali. That attorney represented Kasali for two months before she moved to withdraw as counsel because of lack of trust, attorney-client relationship deterioration, and an inability to communicate with Kasali regarding her case. The district court granted the motion.Kasali's fifth appointed attorney was James Stafford, who requested appointment of a female co-counsel to protect himself against Kasali's potential allegations and to help in trial preparation. The district court appointed Kasali's fourth attorney, Ashley Kaper, as co-counsel. Several problems then arose. Kasali objected to Kaper as her counsel and testified at a motion hearing that Kaper was withholding emails, refusing to obtain evidence, and questioning Kasali about things an "attorney should know.” The district court then questioned Kasali on whether it was true that she refused to discuss the case and provide needed information to attain relevantevidence. Kasali would not answer the questions but argued Stafford and Kaper were not her attorneys because she had retained a different attorney. The district court described Kasali's testimony as "frivolous and fanciful” and stated that Kasali's failure "to even assist [her] counsel [was] not a basis for disqualifying [said] counsel.”Kasali was then ordered to attend a meeting only with Stafford toreview case documents and answer questions for her defense in an effort to balance her mistrust of Kaper. Stafford presented Kasali with a plea offer and attempted to discuss the evidence, but Kasali "refused to review any discovery, refused to listen to [phone] recordings, proclaimed that [Stafford] was not her attorney,” and ended the meeting. When asked by the district court if this was true, Kasali testified that Stafford said he would have her convicted and that her motion to disqualify counsel was meritless. Kasali continued to argue with the district court during the hearing. The court described Kasali as "very difficult to deal with” and explained that she could be removed if her conduct persisted. The district court then denied Kasali's renewed motion to substitute counsel.On December 6, 2021, the district court announced prior to jury selection that Kasali refused to change out of her jail clothes into street clothes and participate because she did not accept Stafford as her counsel. Stafford suggested the district court bring Kasali in before the start of trial and outside the presence of potential jurors so she could state on the record that she refused to be in the courtroom during trial. Stafford stated he hoped Kasali did not want to be present, expressing concern about the possibility of her "act[ing] up” in front of the jury. Once in the courtroom, Kasali insisted that Stafford and Kaper were not her attorneys.



The district court repeatedly asked Kasali to choose between changing into street clothes or remaining in a holding cell. Kasali responded each time the issue was not her clothes, but her attorneys. Stafford then stated they would "select the jury without [Kasali] being present.” The district court determined it would likely be prejudicial for Kasali to remain in jail clothes in No. 21-206815 front of the jury and there was a possibility she would "act out during voir dire.” Kasali was therefore ordered to listen to the voir dire from a law clerk's office.Upon completion of voir dire, Stafford and the district court again questioned Kasali on whether she would dress in street clothes and participate in trial. Kasali avoided the question and repeatedly renewed her objections to her attorneys. The district court determined Kasali had waived her right to be present at trial and would remain outside the courtroom. Kasali responded that she did "not waive [her] appearance,” but she remained in a private room outside the courtroom listening to the first-day proceedings.



Another discussion about Kasali changing into street clothes and participating occurred the morning of the second day of trial. Kasali stated she would change into street clothes but was entitled to her attorney of choice. The district court deemed Kasali's answers nonresponsive and again concluded she voluntarily waived her right to be present at trial in street clothes. After being assured her participation in the trial did not waive her ability to appeal, Kasali changed into street clothes and participated in the remainder of the trial.

he jury found Kasali guilty on all four counts of the indictment. Once the district court accepted the verdict, the Government sought clarification on the district court’s conclusion that Kasali had voluntarily waived her right to be present. The district court explained Kasali was present by audio on the first day but “not in the courtroom physically . . . because of her desire not to dress out and not to be present.”



Affirmed on appeal.