Say it’s not Mo! Trucking Fraudsters Benefit From Deployment Of PPP

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While the Emergency Relief Program was designed to help struggling small businesses stay afloat during the global pandemic more than a year ago, federal investigators say fraudsters – including businesses linked to the trucking – took advantage of the chaotic launch of the US Small Business Administration to compete for billions in government-guaranteed forgivable loans.

Now, federal prosecutors are trying to claw back up to $ 70 billion in fraudulent and ineligible pandemic relief loans obtained through the SBA’s Paycheck Protection Program (P3).

A reality TV star and trucking company owner is the latest convicted in federal efforts to track down potential PPP loan fraud crooks.

Maurice Fayne, aka Arkansas Mo, 38, of Dacula, Georgia, who appeared on the VH1 reality show “Love & Hip Hop: Atlanta”, was sentenced to over 17 years in federal prison on the 14th. September, in connection with the $ 3.7 million PPP loan he received for his late trucking company, Flame Trucking, and to fund his long-standing Ponzi scheme.

“Fayne planned to use the P3 program as a cover for his long-standing Ponzi scheme,” Kurt R. Erskine, acting US attorney for the Northern District of Georgia, said in a statement. “The funds provided by the program are serving as a lifeline for many businesses desperately trying to stay afloat during the pandemic, and sadly, its fraud has helped deplete those precious dollars. ”

Investigators say Maurice Fayne, aka Arkansas Mo, used PPP funds to purchase a Rolex watch, a diamond bracelet and a 7.73-carat diamond ring. Photo: Court documents

Court documents alleged that he also defrauded more than 20 people out of millions of dollars in a Ponzi scheme that was to be invested in his trucking business from March 2013 to May 2020.

According to the initial complaint filed in May 2020, Fayne submitted a PPP loan application to United Community Bank (UCB), headquartered in Blairsville, Georgia, which is a US SBA lender.

In his request, Fayne said he has 107 employees and his average monthly payroll is almost $ 1.5 million. He also certified that the proceeds from the loan for Flame Trucking would be used to “retain workers and maintain payroll or make mortgage payments, lease payments, and utility payments specified under the program rule. pay check protection ”.

Instead, prosecutors said Fayne used P3 funds to buy expensive jewelry, pay back $ 40,000 in child support and rent a Rolls-Royce.

Federal government says it used investor money to pay debts and personal expenses and transferred more than $ 5 million to an Oklahoma casino to cover its gambling debt as part of the Ponzi scheme of seven years.

In addition to his prison term, a federal judge sentenced Fayne to five years on probation and ordered him to pay restitution of nearly $ 4.5 million to his victims.

Two days after her conviction, Fayne’s new attorney, Leigh Ann Webster of Atlanta-based law firm Strickland Webster LLC, filed a notice of appeal to the United States Court of Appeals for the 11th Circuit of ‘Atlanta.

Webster did not return FreightWaves’ request for comment regarding Fayne’s call.

The Fed cracked down on PPP fraud

Applicants depleted $ 349 billion within 13 days of the SBA’s initial deployment of funds through the CARES (Coronavirus Aid, Relief, and Economic Security) Act in March 2020. A total of $ 800 billion has been distributed in three waves to pandemic relief funds to help struggling businesses.

According to the SBA surveillance report released in October 2020.

“To speed up the process, the SBA” lowered the safeguards “or relaxed internal controls, which significantly increased the risk of program fraud,” the report said.

Instead, prosecutors allege that crooks quickly got to work forging documents and creating fake payroll numbers to apply for the loans before emergency relief funds ran out.

Since launching the PPP program, Joshua Stueve, senior communications adviser for the Department of Justice, told FreightWaves that lawyers in its fraud section have prosecuted more than 100 defendants in more than 70 criminal cases.

The fraud section also seized more than $ 65 million in cash from fraudulently obtained PPP funds, as well as numerous real estate and luxury items purchased with these products, Stueve said.

Pennsylvania-based towing company owner Tonye Johnson, 29, of Philadelphia, was sentenced to 18 months in jail in late July, three months after pleading guilty to conspiring to commit wire fraud in April .

Federal prosecutors have linked Johnson to a massive fraud ring attempting to secure $ 24 million in P3s loans that have attracted more than 11 people facing or pleading guilty to fraud charges. Prosecutors say the crooks have offered their services to help other bogus business owners apply for P3 loans, for a fee.

Investigators say the network used the same forged documents and bogus payroll numbers on the majority of fraudulent loan applications. If business owner PPP loans were repaid, crooks demanded bribes of up to 25% of the loan amount. Then the crooks urged these business owners to refer others to the program for reduced bribe payments if the loans were approved.

Johnson was originally charged with wire fraud, bank fraud and conspiracy to commit wire fraud and bank fraud in U.S. District Court for the Southern District of Florida in September 2020.

He admitted to obtaining a fraudulent PPP loan of $ 389,627 for his intrastate company, Synergy Towing & Transport LLC of Flourtown, Pa., Based on forged documents, provided by a network that helped him prepare the fake documents and submit their PPP request in exchange for a 25% bribe of the loan proceeds.

According to court documents, four confidential informants involved in the PPP fraud scheme have been cooperating with the FBI since late June 2020.

PPP funds spent on luxury cars, not salary expenses

The owner of an alleged California road maintenance company faces several charges after federal prosecutors claimed he stole hundreds of thousands of dollars, which he allegedly spent on luxury cars and cars. other expensive products, after obtaining more than $ 7.25 million in PPP funds.

Oumar Sissoko, 59, of Temecula, Calif., Was arrested by FBI agents in April after a grand jury charged him with four counts of wire fraud.

According to the indictment, Sissoko secured a $ 7.25 million loan for his company, Road Doctor California LLC, after submitting a PPP loan application to JPMorgan Chase Bank in April 2020, claiming that his company Pothole Repair Department was in the process of hiring 450 full-time employees. and would have average monthly payroll costs of $ 2.9 million.

Court documents say that when Sissoko applied for the loan, he acknowledged that the funds would be used to pay employees, mortgage interest, rent and utilities.

After JPMorgan approved his PPP loan in May 2020, prosecutors allege he embarked on a personal spending spree, buying a luxury car for more than $ 100,000, paying off the loan on another luxury car that he owned and spent $ 6,000 on a personal computer.

The unauthorized uses also included a non-refundable deposit of approximately $ 100,000 to purchase a company located in New Hampshire and the attempt to pass approximately $ 150,000 to accounts in the African nation of Mauritania associated with a company. mining exploration for which Sissoko claims to serve as CEO, ”the Justice Ministry said in a press release Wednesday.

The DOJ did not disclose what happened to the remainder of the $ 7.25 million PPP loan fund received by Sissoko.

According to a document filed with the California Secretary of State’s office, Sissoko registered Road Doctor California in December 2019. However, he used the address of a post office in Los Angeles as his corporate headquarters.

Sissoko claims he had 20 employees when he applied for the PPP loan, but there is no website or phone number listed for his pothole repair business. There is also no mention of owning Road Doctor California on Sissoko’s LinkedIn profile.

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