33.2 C
New York

Michigan man pleads guilty in $40 million trucking Ponzi scheme

Published:

A man described by authorities as a “recidivist fraudster” has pleaded guilty to multiple charges in connection to several trucking related fraud schemes that duped investors and the U.S. government out of millions of dollars.

Canton, Michigan, resident Franklin Ray, 51, pleaded guilty on March 28 to four counts of wire fraud, including one count of wire fraud while released under conditions of bail and two counts of wire fraud affecting a financial institution, and one count of aggravated identity theft.

The charges were issued in connection with various fraud schemes relating to Ray’s operation of a trucking business known as CSA Business Solutions LLC and another Michigan-based trucking company, according to the U.S. Attorney’s Office for the Southern District of New York.

“As he admitted in court today, between June 2020 and April 2022, Franklin Ray engaged in four separate fraudulent schemes by lying about the business operations of his purported trucking companies, including two separate PPP frauds and a $40 million Ponzi scheme.  Ray continued his crime spree even after he was arrested by federal authorities in March 2022, brazenly defrauding investors in his fake trucking company of nearly $2 million while he was on bail following his arrest.  Thanks to the hard work of the FBI and this Office, he is being held accountable for his serial fraudulent conduct,” said U.S. Attorney Damian Williams.

According to the U.S. Attorney’s Office, starting “at least” in June 2021, Ray began to offer investors the opportunity to enter into a contract with CSA Business Solutions LLC. As part of the contract, Ray said that CSA Business Solutions LLC would procure and operate a truck in its trucking business for each $20,000 contributed by the investor.  

“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. In reality, 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,” officials said.

Ray ultimately caused 275 investors to invest at least $40 million and fraudulently claimed to have purchased over 2,000 trucks with the investments.

Ray also pleaded guilty to charges related to a fraudulent scheme to obtain $1.9 million in small business loans meant to provide relief during the COVID-19 pandemic for CSA Business Solutions LLC and another Michigan-based trucking company, even though both companies had minimal trucking operations and revenue.

Ray also pleaded guilty to inducing a New York City-based real estate company (to pay $175,000 in startup costs for a joint venture involving SA Business Solutions LLC. Officials say that Ray spent the $175,000 on personal expenses, including private airplane trips, and that the joint venture was never formed.

The U.S. Attorney’s Office also asserts that Ray continued operating the truck investment scheme after his arrest in early March 2022 and until his indictment in April 2022.

“Ray hid the fact of his arrest and the seizure of the bank account and lied to investors about why he did not make expected payments after his arrest.  During the period after his arrest, Ray opened new bank accounts on behalf of CSA Business Solutions LLC and continued to solicit and accept investor funds for trucks that did not exist.  In the post-arrest period alone, Ray defrauded investors into paying at least $1.9 million into his scheme,” officials said.

The charges of wire fraud while released under conditions of bail and wire fraud affecting a financial institution each carry a maximum sentence of 30 years in prison. The other charge of wire fraud carries a maximum sentence of 20 years in prison. Aggravated identity theft carries an additional mandatory two-year sentence, which must be imposed consecutively to any other sentence.

Ray has agreed to forfeit $42,128,912 and to pay the victims restitution.

JOIN OUR NEWSLETTER

Get the hottest daily trucking news

This Week in Trucking

Videos