Last week, a Michigan man was found guilty of engaging in multiple frauds, including a $40 million pyramid scheme and defrauding a New York City-based real estate company of $175,000.
Franklin Ray, 52, of Canton, Michigan, was sentenced by U.S. District Judge Annalisa Torres to 212 months in prison, according to a press release from the U.S. Department of Justice.
Ray pled guilty to four counts of wire fraud and one count of aggravated identity theft, and admitted to participating in multiple fraudulent acts.
Ray deceived a New York City-based real estate company into paying $175,000 in start-up costs for a non-existent joint venture. He misled the company about his business experience and company operations and diverted the funds to personal expenses, including private air travel.
This was far from his greatest plan. It was a $40 million pyramid scheme called “Truck Investment Plan” targeting investors in his trucking and logistics company, CSA Business Solutions LLC.
Under false pretenses, Mr. Ray promised investors large profits from trucks purportedly providing delivery services to multinational e-commerce and transportation companies.
In reality, CSA Business Solutions operated a small fleet of trucks and generated minimal revenue from trucking. Ray falsified spreadsheets to deceive approximately 275 investors into contributing at least $40 million and falsely claiming that he had purchased more than 2,000 trucks.
Mr. Ray also pled guilty to COVID-19-related fraud and secured more than $1.9 million in government-backed loans to help small businesses during the pandemic. Those schemes involved CSA Business Solutions and another Michigan-based trucking company.
Ray misrepresented his substantial trucking business activities and submitted fabricated information and falsified documents to the Small Business Administration and lenders.
Despite his arrest in March 2022 and subsequent seizure of CSA Business Solutions’ bank accounts, Ray continued to operate the truck investment scheme, concealing the arrest and seizure of funds from investors. He opened new bank accounts and defrauded investors of an additional $1.9 million during this period following his arrest.
In addition to 212 months in prison, Ray faces five years of supervised release, forfeiture of $42 million, including a 1968 Chevrolet Camaro, and possible restitution to be determined.
Ray was convicted of bank fraud and wire fraud in the Eastern District of Michigan, served a two-year sentence, and was released in 2010.