Detroit-area man gets prison time for $40 million Ponzi scheme in New York
(CBS DETROIT) - A man from Metro Detroit was sentenced to 212 months in prison for his role in fraud schemes, including a $40 million Ponzi scheme and two COVID-19 loan fraud schemes.
Franklin Ray, 52, of Canton, had pled guilty to four counts of wire fraud and one count of aggravated identity theft.
In addition to the prison sentence, he also received five years of supervised release and was ordered to forfeit $42,128,912 and assets, including a 1968 Chevy Camaro.
According to court documents, beginning in at least June 2021, Ray started offering investors the ability to invest in his business, a trucking and logistics company called CSA Business Solutions LLC (the "Truck Investment Scheme").
He and these investors had contracts in which his business would operate a truck for each $20,000 that was given by an 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," according to Damian Williams, United States Attorney for the Southern District of New York.
But, what the business operated only a few trucks and had a small amount of revenue. Investors were receiving payments for new investments into the scheme.
When investors purchased rights to the truck, they were regularly sent fake spreadsheets meant to show them how the trucks were doing.
Officials say he ended up convincing 275 investors to contribute at least $40 million in this scheme and had told them he had bought over 2,000 trucks with the investments, which was not true.
In addition to this scheme, Ray received over $1.9 million in COVID-19 loans for small businesses. In connection to this scheme, he committed aggravated identity theft.
Officials say Ray also convinced a real estate company in New York City to pay $175,000 to cover startup costs for a joint venture between his business and the company. He spent the costs on personal expenses, which included private airplane rides.
Ray was arrested in March 2022 and the account for CSA Business account was seized. He operated the scheme until his indictment the following month. He also opened new bank accounts for the business during this time and continued to accept money from investors. He received $1.9 million during the time after his arrest.