Trucking company owner indicted in $40 million truck investment Ponzi scheme
Authorities have announced charges against a “recidivist fraudster” who allegedly defrauded hundreds of investors with a Ponzi scheme.
On April 19, the U.S. Attorney’s Office for the Southern District of New York announced that Michigan resident Franklin Ray, 50, has been indicted on charges of 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.
Authorities say that Ray was previously convicted of wire fraud and released from prison in 2010.
Ray and co-defendant Michigan resident Joseph Winget, 70, were arrested in early March 2022.
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.”
Authorities say that starting in “at least” June 2021, Ray began to offer investors the opportunity to invest in CSA Business Solutions LLC.
From the U.S. Attorney’s Office:
“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.“
Additionally, Ray has been charged with scheming to fraudulently obtain $1.9 million in Small Business Administration (SBA) loans, which are government-guaranteed loans offered to small businesses during the pandemic. The loans were obtained on behalf of CSA Business LLC and another Michigan-based trucking company. Authorities say that Ray submitted false information and forged documents to the SBA and commercial lenders, claiming that the companies did more business and generated more revenue than they really did.
Co-defendant Winget is charged with scheming on behalf of CSA Business Solutions LLC, resulting in $1.1 million in fraudulently obtained loans.
Ray is also charged in connection with a separate scheme in which he allegedly fraudulently induced 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. 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, authorities say.
Following the March 2022 arrest of Ray and Winget, authorities seized a bank account associated with CSA Business Solutions LLC.
The U.S. Attorney’s Office asserts that Ray continued to operate the truck investment scheme after his arrest. “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,” authorities said in a news release.
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.”
Ray 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 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.
The FBI assisted in the investigation.
Anyone who believes they were a victim of these schemes is asked to 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.