Canton, MI

Michigan Man Sentenced to 212 Months in Prison for $40 Million Ponzi Scheme and COVID-19 Loan Fraud

Desiree Haros
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New York, NY - Franklin Ray, a 52-year-old resident of Canton, Michigan, was sentenced to 212 months in prison by U.S. District Judge Analisa Torres for his involvement in multiple fraudulent schemes, including a $40 million Ponzi scheme and two COVID-19 loan fraud schemes. The announcement was made by U.S. Attorney Damian Williams for the Southern District of New York.

Ray, who had previously pleaded guilty to four counts of wire fraud and one count of aggravated identity theft, orchestrated a complex web of deceit, victimizing hundreds of people over less than two years. His schemes included defrauding investors through a trucking and logistics company, CSA Business Solutions LLC, perpetrating a $40 million Ponzi scheme, and executing two COVID-19 relief loan fraud schemes.

U.S. Attorney Damian Williams condemned Ray's audacity, noting that he continued his Ponzi scheme even while on pretrial release after his arrest in March 2022, stealing approximately $2 million from unsuspecting victims. Williams emphasized that today's sentence underscores the severe consequences of engaging in fraudulent conduct.

Details of the Schemes:

1. Truck Investment Scheme: Ray attracted investors by offering opportunities to invest in his trucking and logistics company. Operating under CSA Business Solutions LLC, Ray claimed investors would receive 77% of the net income of trucks used for delivery services. In reality, the company had minimal trucking activities and revenue. Approximately 275 investors were defrauded, contributing at least $40 million.

2. SBA Loan Fraud Schemes: Ray fraudulently obtained over $1.9 million in government-guaranteed loans intended for small businesses during the COVID-19 pandemic. He submitted false information and forged documents to the Small Business Administration and commercial lenders, falsely claiming significant trucking business activity.

3. Joint Venture Fraud: Ray deceived a New York City-based real estate company into paying $175,000 for a joint venture that was never formed. Instead of using the funds for startup costs, he spent the money on personal expenses, including private airplane trips.

Despite being arrested in March 2022, Ray continued to operate the Truck Investment Scheme, concealing his arrest and the seizure of a CSA Business Solutions LLC bank account. He opened new bank accounts, solicited investor funds, and defrauded investors of at least $1.9 million in the post-arrest period alone.

In addition to the 212-month prison term, Ray was sentenced to five years of supervised release and ordered to forfeit $42,128,912.00, along with several assets, including a 1968 Chevy Camaro. The court also ordered restitution in an amount to be determined.

The sentencing sends a strong message about the serious repercussions individuals face for engaging in fraudulent activities, particularly schemes that exploit financial vulnerabilities and crises such as the COVID-19 pandemic.

SOURCE


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