June 21, 2024

Recidivist Fraudster Pleads Guilty To $40 Million Ponzi Scheme

Recidivist Fraudster Pleads Guilty To  Million Ponzi Scheme

Damian Williams, the United States Attorney for the Southern District of New York, announced that FRANKLIN RAY pled guilty today to four counts of wire fraud, including one count of wire fraud while released under conditions of bail, and one count of aggravated identity theft in connection with various fraud schemes relating to his operation of a trucking business known as CSA Business Solutions LLC and another Michigan-based trucking company.  RAY, who was previously convicted of wire fraud and bank fraud in the Eastern District of Michigan and was released from prison in 2010, pled guilty before United States District Judge Analisa Torres.

U.S. Attorney Damian Williams said: “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.”

As alleged in the previously filed Complaint and Indictment and other court documents:

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

RAY also pled guilty to 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 Solutions 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 Small Business Administration and commercial lenders.  RAY claimed that these businesses engaged in significant trucking business, but they had minimal revenues and trucking activity.

Finally, RAY pled guilty to fraudulently inducing a New York City-based real estate company (the “Company”) to pay $175,000 in startup costs for a joint venture (the “Join Venture”) between the Company and CSA Business Solutions LLC.  RAY misrepresented CSA Business Solutions LLC and his own personal business experience to the Company.  Rather than pay for startup costs, RAY spent the funds on personal expenses, including private airplane trips.  The Joint Venture was never formed.

RAY was arrested in early March 2022, and a CSA Business Solutions LLC bank account was seized at that time.  After his arrest, up until his Indictment in April 2022, RAY continued to operate the Truck Investment Scheme.  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.

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RAY, 51, of Canton, Michigan, pled guilty 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 counts 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 remaining count 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 also agreed to forfeit $42,128,912, including the funds on deposit at several bank accounts used in connection with the fraudulent schemes, including the primary CSA Business Solutions bank account.  RAY also agreed to pay restitution to the victims.

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  RAY is scheduled to be sentenced at 11:40 a.m. on July 25, 2023, by U.S. District Judge Analisa Torres.

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation.

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorney Matthew Weinberg is in charge of the prosecution.

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 [email protected].

Originally published at https://www.fbi.gov/contact-us/field-offices/newyork/news/recidivist-fraudster-pleads-guilty-to-40-million-ponzi-scheme