Blu Mitchell

Willie “Blu” Mitchell

HEBER-OVERGAARD — Willie “Blu” Mitchell was once hailed as a benevolent visionary who, as president of an innovative company called Sigma CUTS (C is for College, U for University, T for Trade and S for School, he explained to the Independent in June 2020) was developing a training facility and residence for homeless “selected apprentices” located at 1915 Chevlon in Heber-Overgaard.

But on Dec. 3 near Fort Worth, Texas, Mitchell was arrested and now faces six separate federal grand jury criminal indictments filed in the U.S. District Court for the District of Arizona in Phoenix. The government alleges a scheme whereby Mitchell and others netted millions of dollars through fraudulent claims to the federal Paycheck Protection Programs, or PPP, that was part of the COVID-19 handouts passed by Congress.

Essentially, the program called for the taxpayers to foot the bill for payroll so that workers would still get paid after public health authorities shut down the economy in an effort to keep people away from each other to stop the spread of infection.

The criminal charges

The indictments charge him and alleged accomplices with a total of 81 felony crimes including bank fraud, money laundering and conspiracy for allegedly scamming federal guaranteed loans for COVID-19 relief funds to the tune of about $8 million from Western State Bank, which agreed to participate in the PPP by providing the funds. Mitchell and his co-indictees are presumed by law to be innocent and the information set out below comes largely from federal court records and at this point are mere allegations. Each of the six indictments, which track the activities of six “companies,” charges at least one of the crimes mentioned.

Not much has happened regarding Mitchell, but federal criminal cases tend to move slowly. It has been learned that U.S. Magistrate Judge Michelle H. Burns held a release hearing in Mitchell’s case after he was returned to Arizona. According to her order, she found that the “defendant is a danger to the community and requires the detention of the defendant pending the trial in this case.” She also found Mitchell to be a “serious flight risk.” He remains in custody for the duration of the cases.

In short, the six separate indictments, which all include Mitchell, paint a picture of schemers who maybe didn’t have enough worldly business smarts to know that employee wages and taxes must be reported to Arizona’s Department of Economic Security and the glaring absence of any such reports on file there for other organizations connected to Mitchell like U.C.C.A.N!, Sigmas CUTS, The Lotto Club, Sigma CUTS Medical Training, Sigma CUTS School of Beauty and Red Pill raised flags too red to be ignored. Maybe Mitchell and his alleged accomplices also didn’t know that submitting a false IRS form to a government sister agency, the SBA, would be crossed checked.

Co-defendant pleads guilty

Co-defendant Darrell Lieteau’s guilty plea was filed in court on May 24 and the charge of conspiracy to commit bank fraud carries a maximum sentence of five years in prison, five years probation and a maximum fine of $250,000, according to the plea agreement. A crucial part of the agreement is the requirement that Leiteau “shall cooperate fully with the U.S. Probation Office ... (and) shall include complete and truthful responses to questions posed by the U.S. Probation Office.”

It’s reasonable to expect questions about the crime, and because the crime is one of conspiracy, the details of the conspiracy including the person with whom he conspired. That could be problematic for Mitchell.

The charge is in regard to Lieteau’s activities with the LLC called Red Pill Infosec, incorporated in November 2017 by Lieteau who was its managing member. Mitchell was Red Pill’s president. Like other PPP applications involved in other indictments, Red Pill said they had 92 employees working in cybersecurity and having a monthly payroll of $672,800.

The indictment stated that at the time, “Red Pill had no employees and no payroll,” but Western cut a check for $1,682,000. After the disbursement, Red Pill “for the first time” submitted “employee wage” submission records totaling $142,747. Mitchell and Lieteau were listed as employees but the indictment stated the “None of these employees actually worked for Red Pill.” This indictment also alleges a false IRS Form 940 in the amount of $8,073,607 that claimed that amount as having been paid to its employees. The IRS said that the form was not filed with the IRS.


Related to the plea, the government also won a forfeiture order on June 2 in connection with Lieteau’s case. That means the ill-gotten assets involved in the case can be forfeited to the government; in the June 2 order that means $850,256.18 in cash. The forfeiture procedure allows time for any “claimant” who believes they have a right to all or part of the cash can come forward and make their case in court. The order will become final one Lieteau is sentenced. The date for sentencing is not yet part of the electronic court record.

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