[Kevin Henry-Seacoast]

Know you customers, Know your referral sources, Know your sources of capital.....


Delaney Sexton
Contributing Editor

An 18-Year Sentence was Delivered for an SBA Fraud Scheme, Ponzi Scheme, & More




“In the span of less than two years, Franklin Ray engaged in four separate fraudulent schemes, including a $40 million Ponzi scheme that victimized hundreds of people and schemes that stole funds intended for those in need during the COVID-19 pandemic,” says U.S. Attorney Damian Williams. “Ray even had the audacity to continue his Ponzi scheme while on pretrial release after his arrest in March 2022, stealing approximately $2 million from unsuspecting victims after he was charged with federal crimes. Today’s sentence shows that engaging in fraudulent conduct will have severe consequences.”

Starting in 2021, Ray began offering investors the opportunity to invest in his trucking and logistics company, CSA Business Solutions LLC. According to the contracts, every $20,000 that was contributed by an investor would result in the procurement and operation of a truck for the trucking business. He claimed that the trucks would perform delivery services for multinational e-commerce companies and/or multinational shipping companies. The investors were also under the belief that they would be entitled to 77% of the net income of the trucks. After the investors purchased the rights to trucks, Ray would send them falsified spreadsheets at regular intervals to show the performance of their trucks during that period. The reality was that the trucking company operated few trucks and produced minimal revenues from trucking activity. Investors received payments from new investments in the scheme or from other sources.

In total, Ray managed to secure 275 investors and at least $40 million in investments. He claimed that the company purchased more than 2,000 trucks with those investments.

His fraudulent endeavors did not end with the Ponzi scheme, and he obtained $1.9 million in SBA loans for his trucking company and a second trucking company. Ray submitted forged documents and false information inflating his revenues and trucking activity. While taking advantage of SBA funding, he also committed aggravated identity theft during this scheme.

In another facet of the fraud, he induced a real estate company to pay $175,000 in startup costs for a joint venture with CSA Business Solutions LLC. That money was instead used on personal expenses like private airplane trips, and the joint venture never came to fruition.

After being arrested in 2022, the CSA Business Solutions LLC bank account was seized, but he continued to operate the Ponzi scheme. Ray concealed his arrest and the business’s seized bank account, and he lied to the investors about why he was not making payments. On behalf of the business, he opened bank accounts and continued soliciting and accepting investor funds. He defrauded investors out of another $1.9 million.

This was not his first fraud scheme, nor will it be his first time serving time in prison. Franklin Ray previously pled guilty to bank fraud and wire fraud. After serving two years in prison, he was released in 2010. Now, Franklin Ray was sentenced to exactly 212 months in prison for four counts of wire fraud and one count of aggravated identity theft. The judge also ordered him to forfeit more than $43 million along with other assets such as a 1968 Chevy Camaro. His restitution has yet to be determined.

Source:
U.S. Attorney’s Office

[Kevin Henry-Seacoast]

Looks like they got PPP from Fountainhead.