Co-Defendant Charged in SBA Loan Fraud Scheme
Damian Williams, United States Attorney for the Southern District of New York, and Michael J. Driscoll, Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (FBI), announced the indictment of FRANKLIN RAY for conspiracy to commit wire fraud, wire fraud, and aggravated identity theft, in connection with various fraud schemes relating to his operation of a trucking business known as CSA Business Solutions LLC. RAY, who was previously convicted of wire fraud and bank fraud in the Eastern District of Michigan and was released from prison in 2010, and a co-defendant, JOSEPH WINGET, were arrested in connection with certain of these schemes pursuant to a criminal complaint in early March.
U.S. Attorney Damian Williams said: “We allege Ray used his purported trucking companies as vehicles for fraud, including by submitting fraudulent applications for small business loans during the Covid-19 pandemic, and by fleecing investors into giving him tens of millions of dollars to participate in a business that was a scam. Ray knew that his actions were illegal, having been convicted of similar crimes more than a decade ago. Ray may not learn a lesson from his latest actions, but he will face justice for them.”
FBI Assistant Director-in-Charge Michael J. Driscoll said: “As we allege today, Mr. Ray, who was previously convicted of federal wire and bank fraud charges, operated a Ponzi scheme that defrauded hundreds of investors of more than $40 million. Mr. Ray was even bold enough to continue his alleged activity subsequent to his most recent arrest. Today's charges will force him - yet again - to face the consequences of his illegal activity in the federal criminal justice system.”
As alleged in the Indictment and previously filed Complaint:[1]:
Beginning in at least June 2021, FRANKLIN RAY began to offer investors an opportunity to invest in his trucking and logistics company, CSA Business Solutions LLC (the “Truck Investment Scheme”). Specifically, RAY and the investors entered into contracts pursuant to which, for each $20,000 contributed by the investor, CSA Business Solutions LLC would procure and operate a truck in its trucking business. RAY told investors that the trucks would perform delivery services for a multinational e-commerce company and/or a multinational shipping company, and that the investors would be entitled to 77% of the net income of the trucks. After the investors purchased the rights to trucks from CSA Business Solutions LLC, RAY sent them falsified spreadsheets at regular intervals, purporting to show the performance of their trucks during the relevant period. In truth and fact, CSA Business Solutions LLC operated few trucks and had minimal revenues from trucking activities. Instead, investors in the Truck Investment Scheme received payments from new investments into the scheme or from other sources. RAY ultimately induced approximately 275 investors to purchase over 2,000 trucks, totaling at least $40 million in fraudulent investments.
RAY is also charged with carrying out fraudulent schemes to obtain over $1.9 million in government-guaranteed loans designed to provide relief to small businesses during the COVID-19 pandemic on behalf of CSA Business LLC and another Michigan-based trucking company (the “SBA Loan Fraud Schemes”). In connection with the SBA Loan Fraud Schemes, RAY submitted false information and forged documents to the SBA and commercial lenders. RAY claimed that these businesses engaged in significant trucking business, but they had minimal revenues and trucking activity. A co-defendant, JOSEPH WINGET, is charged with participating in one of the SBA Loan Fraud Schemes, on behalf of CSA Business Solutions LLC, resulting in $1.1 million in fraudulently obtained loans.
Finally, RAY is charged with fraudulently inducing a New York City based real estate company to pay a $175,000 deposit in order to pay for startup costs associated with setting up a joint venture between the company and CSA Business Solutions LLC (the “Joint Venture Fraud”). RAY induced the company to enter into the Joint Venture by misrepresenting CSA Business Solutions LLC and his own personal business experience. RAY spent the funds on personal expenses, including private airplane trips. The Joint Venture was never formed.
RAY and WINGET were arrested in early March 2022, and a CSA Business Solutions LLC bank account was seized at that time. After his arrest, RAY continued to operate the Truck Investment Scheme. RAY misled investors about why he did not make expected payments after his arrest and hid the fact of his arrest and the seizure of the bank account. During this period, RAY caused the opening of new bank accounts on behalf of CSA Business Solutions LLC and continued to solicit and accept investor funds for trucks that did not exist.
RAY, 50, of Canton, Michigan, is charged with conspiracy to commit wire fraud, four counts of wire fraud, and two counts of aggravated identity theft. The conspiracy to commit wire fraud and three counts of wire fraud each carry a maximum sentence of 20 years in prison. One of the wire fraud counts relates to a fraud affecting a financial institution, and therefore carries a maximum sentence of 30 years in prison. The charges for aggravated identity theft each carry an additional mandatory consecutive two-year sentence.
WINGET, 70, of Imlay City, Michigan, is charged with conspiracy to commit wire fraud and one count of wire fraud, each of which carries a maximum sentence of 20 years in prison, and one count of aggravated identity theft, which carries an additional mandatory consecutive two-year sentence.
Mr. Williams praised the outstanding investigative work of the FBI.
If you believe you have been a victim of the schemes described above, including a victim entitled to restitution, and you wish to provide information to law enforcement and/or receive notice of future developments in the case or additional information, please contact Wendy Olsen-Clancy, the Victim Witness Coordinator at the United States Attorney’s Office for the Southern District of New York, at 866-874-8900 or wendy.olsen@usdoj.gov.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and Complaint and the description of the Indictment and Complaint set forth in this release constitute only allegations, and every fact described should be treated as an allegation.
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