On Tuesday, a man described by authorities as a “recidivist fraudster” was sentenced to prison after pleading guilty to charges related to a $40 million trucking Ponzi scheme.
On November 28, Canton, Michigan, resident Franklin Ray was sentenced to more than 17 years in prison, according to the U.S. Attorney’s Office for the Southern District of New York.
Ray was also sentenced to to five years of supervised release and ordered to forfeit $42,128,912.00 and several assets, including a 1968 Chevy Camaro. He was additionally ordered to pay restitution in an amount yet to be determined.
Ray previously pled guilty to four counts of wire fraud and one count of aggravated identity theft.
“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. 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,” 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.