Fraud Friday – Former Fraudster Pleads Guilty to SBA Loan Fraud & Ponzi Scheme

April 14, 2023

Delaney Sexton
Contributing Editor

Fraud Friday – Former Fraudster Pleads Guilty to SBA Loan Fraud & Ponzi Scheme

“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,” says U.S. Attorney Damian Williams.

Franklin Ray has a history of fraudulent activity, having served a prison sentence in 2010 after being convicted of fraud. Years later, the trucking and logistics company owner attempted to obtain over $1.9 million in government-guaranteed loans for two businesses. He submitted forged documents and false information to SBA lenders and commercial lenders. Although he claimed that his businesses were engaged in significant trucking activities, they earned minimal revenues.

In 2021, Ray started offering investors the opportunity to invest in his company. Approximately 275 people invested at least $40 million for the “purchase” of over 2,000 trucks. After entering a contract, he claimed that every $20,000 invested would help the company to procure and operate a truck. Investors were told that they would be entitled to 77% of the net income from the trucks. To make the scheme look valid, Ray sent falsified spreadsheets showing the performance of the trucks regularly.

Also, he induced a real estate company based in NYC to pay $175,000 in startup costs for a joint venture after misrepresenting his business experience. Instead, the funds were spent on personal expenses like private airplane trips.

Being arrested was not enough to put an end to his fraud. Franklin continued operating his investment scheme, hiding his arrest and his seized bank account from investors. During the post-arrest period, he defrauded an additional $1.9 million out of investors.

DOJ Press Release