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PPP-Loan Fraud: VH1 Reality Star Indicted for Claiming Fake Employees in $4 Million CARES Act Loan Application

A Love & Hip Hop: Atlanta cast member and TV personality was arrested and charged with federal bank fraud from a Paycheck Protection Program (PPP) loan that he applied for using the name of Flame Trucking, announced the Department of Justice.

Maurice Fayne, aka Arkansas Mo, 37, of Dacula, Georgia had his initial court appearance scheduled Wednesday May 13th for his bank fraud charge in connection with his application for the PPP loan under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

According to court documents, Fayne is the sole proprietor of a corporation registered in Georgia named Flame Trucking.  On April 15th of this year, Fayne signed and submitted to United Community Bank (UCB) a PPP loan application in the company’s name claiming that it had 107 employees with an average monthly payroll of almost $1,500,000.  In seeking a loan in the amount of just over $3.7 million, Fayne agreed that the proceeds from the loan would be used to “retain workers and maintain payroll or make mortgage interest payments, lease payments, and utility payments, as specified under the Paycheck Protection Program Rule.”

Ultimately, UCB funded the loan for just over $2 million.  Almost immediately, Fayne allegedly spent over $1.5 million of the proceeds from the PPP loan to buy $85,000 in jewelry, including a Rolex watch, a diamond bracelet, a ring with a 5.7 carat diamond for himself, and to pay off about $40,000 in child support.  These payments were not and are not authorized uses of PPP funds under the CARES Act.

On May 6th, federal agents interviewed Fayne during which he admitted that he submitted a PPP loan application on behalf of his company Flame Trucking.  Fayne also asserted that he used all the proceeds from the PPP loan on payroll and other business expenses incurred by Flame Trucking, while Fayne denied he used any proceeds from the PPP loan to fund personal expenses and debts.        

On May 11th, agents executed a search at Fayne’s residence during which agents seized approximately $80,000 in cash, including nearly $10,000 that Fayne had in his pockets, and the jewelry he purchased with the PPP funds. During the execution, the agents discovered a 2019 Rolls-Royce Wraith that still had a temporary dealer tag. The agents also seized approximately $503,000 in PPP funds after executing seizure warrants on three bank accounts either owned or controlled by Fayne.

“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,” announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division.  “The department will remain steadfast in our efforts to root out and prosecute frauds against the Paycheck Protection Program.”

“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,” stated 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.”

“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,” added Special Agent in Charge Chris Hacker of the FBI’s Atlanta Field Office. “The FBI and our federal partners remain vigilant during this Coronavirus pandemic to make sure funds provided by programs like PPP are used as intended.”

“The defendant allegedly egregiously sought personal gain from a program intended to assist hardworking Americans in this challenging time,” announced Special Agent in Charge Kevin Kupperbusch of the Small Business Association Office of Inspector General (SBA OIG) Eastern Region.  “SBA OIG and its law enforcement partners will aggressively pursue allegations of wrongdoing to maintain the integrity of SBA’s programs.  I want to thank the U.S. Attorney’s Office and our law enforcement partners for their dedication and pursuit of justice.”

 Enacted on March 29, 2020, the CARES Act is a federal law designed to provide emergency financial aid to Americans suffering the economic hardships caused by the COVID-19 pandemic.  One source of that aid was providing up to $349 billion in forgivable loans to small businesses through the PPP that would help with job retention and other expenses.  Congress authorized over an additional $300 billion in PPP funding in April 2020.

The PPP makes loans with a maturity of two years and an interest rate of 1 percent to qualifying small-businesses and other organizations. Businesses must use PPP loan proceeds on payroll costs, interest on mortgages, rent, and utilities.  If businesses spend the PPP loan proceeds on these listed expenses in eight weeks of receipt and spend at least 75 percent of the forgiven amount on payroll, then the PPP will let the interest and principal be forgiven.

If you, friends, coworkers, or a family member see any suspicious fraud related to COVID-19 involving

  • PPP loans applications,
  • Receipt of federal benefits under the CARES Act, or
  • Related to receipt of any other benefits under a government benefits program,

Please visit the website of the Department of Justice, federal investigators, or local law enforcement to report the activity and obtain more information. Be safe.

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