A reality TV personality has been arrested and charged with fraud in connection with the Paycheck Protection Program (PPP) loan he obtained for a trucking company called Flame Trucking.
Maurice Fayne – aka Arkansas Mo, who stars in Love & Hip Hop: Atlanta – is alleged to have used the PPP funds to buy jewelry and pay child support, among other things.
“The defendant allegedly stole money meant to assist hard-hit employees and businesses during these difficult times, and instead greedily used the money to bankroll his lavish purchases of jewelry and other personal items,” Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division said in a press release announcing the case. “The department will remain steadfast in our efforts to root out and prosecute frauds against the Paycheck Protection Program.”
The same day the Fayne case was announced, the Justice Department filed charges against an engineer in the Eastern District of Texas for allegedly filing bank loan applications fraudulently seeking more than $10 million from PPP. Shashank Rai, 30, of Beaumont, Texas, allegedly sought millions of dollars in forgivable loans guaranteed by the SBA from two different banks by claiming to have 250 employees earning wages when, in fact, no employees worked for his purported business.
According to the charges and other information presented in court, the 37-year-old Georgia resident is the sole owner of a Georgia corporation called Flame Trucking. On April 15, 2020, Fayne signed and submitted to United Community Bank (UCB) a PPP loan application in the name of Flame Trucking stating that the business had 107 employees and an average monthly payroll of $1,490,200, seeking a loan in the amount of $3,725,500.
UCB ultimately funded the loan for $2,045,800. Within days, Fayne allegedly used more than $1.5 million of the PPP loan proceeds to buy $85,000 in jewelry, including a Rolex Presidential watch, a diamond bracelet, a 5.73 carat diamond ring for himself, and to pay $40,000 for child support.
On May 6, 2020, Fayne was interviewed by federal agents and admitted that he submitted a PPP loan application on behalf of Flame Trucking. Fayne claimed that he used all of the PPP loan proceeds to pay payroll and other business expenses incurred by Flame Trucking and denied using any of the PPP loan proceeds to pay his personal debts and expenses.
Five days later, agents executed a search at Fayne’s residence and seized $80,000 in cash, including $9,400 that Fayne had in his pockets, and the jewelry he purchased with the PPP funds. Agents further discovered a 2019 Rolls-Royce Wraith, which still had a temporary dealer tag on it, and executed warrants for three bank accounts that Fayne owned or controlled, seizing $503,000 in PPP funds.
“The defendant allegedly took advantage of the emergency lending provisions of the Paycheck Protection Program that were intended to assist employees and small businesses battered by the Coronavirus,” said U.S. Attorney Byung J. “BJay” Pak of the Northern District of Georgia. “We will investigate and charge anyone who inappropriately diverts these critical funds for their own personal gain.”
The charges are merely an allegation and the defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
“At a time when small businesses are struggling for survival, we cannot tolerate anyone driven by personal greed, who misdirects federal emergency assistance earmarked for keeping businesses afloat,” said Special Agent in Charge Chris Hacker of the FBI’s Atlanta Field Office.
The FBI and SBA Office of Inspector General (SBAOIG) are investigating the case.
Assistant Chief L. Rush Atkinson of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Russell Phillips, Bernita Malloy, and Michael J. Brown of the Northern District of Georgia are prosecuting the case.
“The defendant allegedly egregiously sought personal gain from a program intended to assist hardworking Americans in this challenging time,” Special Agent in Charge Kevin Kupperbusch of the SBAOIG Eastern Region said. “SBAOIG and its law enforcement partners will aggressively pursue allegations of wrongdoing to maintain the integrity of SBA’s programs.”
Rai, meanwhile, is charged by way of a federal criminal complaint with violations of wire fraud, bank fraud, false statements to a financial institution, and false statements to the SBA.
According to court documents unsealed in U.S. District Court in Beaumont, Rai allegedly made two fraudulent claims to two different lenders for seek loans guaranteed by the SBA for COVID-19 relief through the PPP. In the application submitted to the first lender, Rai allegedly sought $10 million in PPP loan proceeds by fraudulently claiming to have 250 employees with an average monthly payroll of $4 million. In the second application, Rai allegedly sought $3 million in PPP loan proceeds by fraudulently claiming to have 250 employees with an average monthly payroll of $1.2 million.
According to court documents, the Texas Workforce Commission provided information to investigators of having no records of employee wages having been paid in 2020 by Rai or his purported business, Rai Family LLC. In addition, the Texas Comptroller’s Office of Public Accounts reported to investigators that Rai Family LLC reported no revenues for the fourth quarter of 2019 or the first quarter of 2020.
According to court documents, materials recovered from the trash outside of Rai’s residence included handwritten notes that appear to reflect an investment strategy for the $3 million, which is the amount of money that Rai allegedly sought from the second lender.