Criminal Complaint - United States v. Maurice Fayne related docket PPP fraud case (2020-07-09)
- Issuer
- U.S. District Court for the Northern District of Georgia
- Document type
- Criminal Complaint
- Date
- 2020-07-09
- Case
- United States v. Maurice Fayne related docket
- Case number
- 1:20-cr-00228
Summary
A criminal complaint against Daniel Eric Jay, Case Number 1:20-mj-562-LTW, filed July 9, 2020 in the U.S. District Court for the Northern District of Georgia and docketed as Document 1 in Case 1:20-cr-00228-MHC-JKL. The complaint charges bank fraud under 18 U.S.C. § 1344 in connection with a PPP loan application submitted to United Community Bank, and was sworn by telephone before Magistrate Judge Linda T. Walker. The attached affidavit of a Special Agent of the SBA Office of Inspector General describes the June 24, 2020 indictment of Maurice Fayne, which alleges a PPP application for Flame Trucking Inc. seeking $3,725,500. The affidavit states that Jay helped prepare financial documents supporting that application and cites text messages and emails. It asks the court to issue a warrant for Jay's arrest. The document is 12 pages.
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Case 1:20-cr-00228-MHC-JKL Document 1 Filed 07/09/20 Page 1 of 12
FILED IN CHAMBERS
U.S.D.C ATLANTA
Jul 09 2020
Date: __________________________
United States District Court
NORTHERN DISTRICT OF GEORGIA JAMES N. HATTEN, Clerk
/s/Sonya Lee Coggins
By: ____________________________
UNITED STATES OF AMERICA Deputy Clerk
v. CRIMINAL COMPLAINT
Case Number: 1:20-mj-562-LTW
DANIEL ERIC JAY
I, the undersigned complainant being duly sworn, state the following is true and correct to the best of my
knowledge and belief. On or about April 24, 2020, in Gwinnett County, in the Northern District of
Georgia, the Defendant did
knowingly execute and attempt to execute a scheme and artifice to defraud United Community Bank, a
financial institution as defined in Title 18, United States Code, Section 20, and to obtain moneys and
funds owned by and under the custody and control of United Community Bank, by means of materially
false and fraudulent pretenses, representations, and promises, and by the omission of material facts,
in violation of Title 18, United States Code, Section 1344.
I further state that I am a Special Agent of the Small Business Administration-Office of Inspector General,
and that this complaint is based on the following facts:
PLEASE SEE ATTACHED AFFIDAVIT, WHICH IS INCORPORATED BY REFERENCE HEREIN.
Continued on the attached sheet and made a part hereof. Yes
Signature of Complainant
Sara Oliver
Based upon this complaint, this Court finds that there is probable cause to believe that an offense has
been committed and that the defendant has committed it. Sworn to before me by telephone pursuant to
Federal Rule of Criminal Procedure 4.1.
July 9, 2020 at Atlanta, Georgia
Date City and State
LINDA T. WALKER
UNITED STATES MAGISTRATE JUDGE
Name and Title of Judicial Officer Signature of Judicial Officer
AUSA Russell Phillips / 2020R00423 Issued pursuant to Federal Rule of Criminal
Procedure 4.1
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Affidavit
I, Sara Oliver, hereby depose and state under penalty of perjury that the
following is true and correct to the best of my knowledge and belief:
I am a Special Agent with the Small Business Administration, Office of
Inspector General (SBA-OIG), and I have been so employed since January
2020. Before that, from 2014 to 2019, I was a Special Agent with the
Department of Transportation, Office of Inspector General (DOT-OIG). I
am currently assigned to the SBA-OIG Atlanta field office, where I
investigate financial crimes, including wire fraud, mail fraud, and bank
fraud. I am a law enforcement officer of the United States within the
meaning of 18 U.S.C. § 2510(7), and I am empowered by law to conduct
investigations and to make arrests for federal felony offenses.
This affidavit is made in support of a Criminal Complaint charging Daniel
Eric Jay (Jay) with bank fraud, in violation of 18 U.S.C. § 1344.
This affidavit is based, in part, on my conversations with other law
enforcement agents and witnesses, and my review of bank records and
other documents. This affidavit does not include every fact known to the
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government, but only those facts necessary to support a finding of
probable cause to support the issuance of the requested arrest warrant.
Applicable Criminal Laws
The bank fraud statute, 18 U.S.C. § 1344, makes it a federal crime for
anyone to knowingly execute or attempt to execute a scheme and artifice
to defraud a financial institution, as defined in 18 U.S.C. § 20, or to obtain
moneys and funds owned by and under the custody and control of a
financial institution, by means of materially false and fraudulent pretenses,
representations, and promises, and by the omission of material facts.
The Paycheck Protection Program
United Community Bank is a financial institution as defined in Title 18,
United States Code, Section 20, and its headquarters is located in
Blairsville, Georgia, which is in the Northern District of Georgia.
United Community Bank participated as a lender in the Paycheck
Protection Program (PPP), which was established by the CARES Act and
implemented by SBA to help small businesses survive the COVID–19
pandemic by providing qualifying businesses with funds to pay their
payroll costs, including benefits; interest on mortgages; rent; and utilities.
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To obtain a PPP loan, a business must submit a PPP loan application,
signed by an authorized representative of the business. The application
must state, among other things, the average monthly payroll expenses and
the number of employees of the business. These figures are used to
calculate the amount of money that the business is eligible to receive under
the PPP. In addition, the business must provide documentation of its
payroll expenses.
Indictment of Maurice Fayne, a/k/a Arkansas Mo
On June 24, 2020, a grand jury sitting in the Northern District of Georgia
returned an Indictment against Maurice Fayne, a/k/a Arkansas Mo
(Indictment No. 1:20-CR-288), charging him with wire fraud (18.U.S.C.
§ 1343); bank fraud (18.U.S.C. § 1344); making a false statement to a
federally-insured financial institution (18.U.S.C. § 1014); and two different
types of money laundering (18.U.S.C. §§ 1956(a)(1)(B)(i) and 1957).
With respect to the bank fraud charge, the Indictment alleges that, on April
15, 2020, Fayne, aided and abetted by others known and unknown to the
grand jury, submitted to United Community Bank a PPP loan application
in the name of Flame Trucking Inc., falsely stating that Flame Trucking Inc.
had 107 employees and an average monthly payroll of $1,490,200.
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In seeking a PPP loan in the amount of $3,725,500, Fayne certified that the
loan proceeds 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.”
United Community Bank’s records show that Fayne did not use any of the
PPP loan proceeds for lawful purposes. Instead, Fayne used the PPP loan
proceeds solely for unlawful purposes. Specifically, from April 23, 2020
through May 1, 2020, Fayne used the PPP loan proceeds to pay for the
following:
$40,000 in past-due child support;
$50,000 in restitution owed in a previous fraud case;
$65,000 in cash withdrawals;
$85,000 for custom-made jewelry;
$136,000 to lease a 2019 Rolls-Royce;
$230,000 to associates who helped him run a Ponzi scheme; and
$907,000 to help an associate start a new business.
Fayne’s use of the PPP loan proceeds raised red flags at United
Community Bank. When United Community Bank asked Fayne to provide
additional information about Flame Trucking’s finances, Fayne responded,
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on or about April 24, 2020, by emailing United Community Bank what he
falsely represented to be October, November, and December 2019 bank
statements for Flame Trucking’s account at Arvest Bank. As Fayne knew,
however, those bank statements were fraudulent, because Arvest Bank had
shut down Flame Trucking’s account in September 2019.
Jay’s Involvement in the Scheme to Defraud United Community Bank
On May 6, 2020, when federal law enforcement agents interviewed Fayne
concerning the PPP loan, Fayne stated that his accountant, C.C., who
resides in Pittsburgh, had helped him prepare the PPP loan application.
Fayne told the agents that C.C. had failed to include in the PPP loan
application the names of Flame Trucking’s part-time employees and
independent contractors, and that C.C. was working to correct that.
On May 14 and May 18, 2020, federal law enforcement agents interviewed
C.C., who stated as follows:
a. On or about April 3, 2020, Jay asked her to assist Fayne with a PPP
loan application.
b. C.C. had known Jay for over 20 years. Jay told C.C. that he worked in
capital investments and wealth management, and that he was a
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boxing promoter. C.C. knew that Jay did not work in the trucking
industry.
c. On or about April 24, 2020, Jay emailed C.C. and asked her to make
certain documents that were attached to that email “look more
presentable.” And Jay stated: “Time is of the essence if we wanna get
this submitted today.”
d. One of the documents attached to Jay’s email was a Business Financial
Statement for Flame Trucking, for January 1 – March 31, 2020, which
stated that Flame Trucking had $1,348,211 in its account at Arvest
Bank. We know that this was a false representation because, as noted
previously, Flame Trucking’s account at Arvest Bank was closed in
September 2019.
e. The other document attached to Jay’s email was a “Profit & Loss
Settlement [sic]” for Flame Trucking for January 1 – March 31, 2020. It
stated that Flame Trucking had a total of $6,544,731 in sales/income
and was spending $4,470,654 on salaries and wages. Those statements
were also false.
f. After United Community Bank froze Flame Trucking’s bank account
(that is, account # 1408, which held the remaining PPP loan proceeds),
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Jay and Fayne asked C.C. to write a letter to United Community Bank
requesting that the account be unfrozen. Jay and Fayne also asked
C.C. to include in that the letter a list of people who they said had
worked for Flame Trucking as independent contractors in 2019 and
the amount of wages allegedly paid to each. Jay and Fayne sent C.C. a
list of names of these alleged independent contractors and the amount
that each was supposedly paid by Flame Trucking in 2019, and Jay
and Fayne told C.C. to cut and paste that information into her letter to
United Community Bank.
g. On May 6, 2020—right after Fayne finished speaking with federal
agents—Jay emailed C.C. and instructed her to remove six names
from the list described above and replace them with the following
names: T.V., M.S., a second M.S., C.W., C.H., and Jay. With the
exception of the second M.S., all of these individuals illegally received
PPP loan proceeds from Flame Trucking’s United Community Bank
account # 1408. The investigation shows that none of those
individuals was ever employed by Flame Trucking.
h. C.C. followed the instructions she received from Jay and Fayne and
emailed the revised letter to Jay on May 7, 2020. Later that day, Fayne
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emailed that same letter to FBI Special Agent Paul Fike, falsely
claiming that the individuals on the list compiled by C.C. had worked
for Flame Trucking as independent contractors in 2019.
After she was interviewed by federal agents, C.C. provided federal agents
with copies of text messages that she had exchanged with Jay, which are
summarized as follows:
a. On or about April 1, 2020, Jay stated: “I have a client that’s a trucking
company [referring to Flame Trucking] they started in April of last
year and hasn’t filed yet. They have a huge contract and 1099 – 160
drivers. About to lose all these guys if he can’t pay them. What can be
done w him.” Jay’s statements were false. Flame Trucking did not
have a “huge contract” and did not employ 160 drivers or anywhere
near that number.
b. The following day, C.C. asked Jay: “Any w2s or all 1099s[?]” Jay
responded: “I think all 1099 cause this entity is essentially 1 contract
w one major retail company.” Later, Jay added: “Ok so my trucking
guy [i.e., Fayne] said he did all his 1099’s for 2019 but was advised to
put all those guys on as W-2’s in 2020 starting in January for the
upcoming contract.”
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c. Jay sent C.C. the EIN (employer identification number) for Flame
Trucking Inc.
d. Jay sent C.C. a screenshot showing that United Community Bank had
received Flame Trucking’s PPP loan application, and Jay told C.C.
that United Community Bank “may end up calling you to verify you
are a CPA or something lol[.]”
e. Jay later sent C.C. another screenshot showing that United
Community Bank had approved Flame Trucking’s PPP loan
application.
f. Jay told C.C. that Fayne had provided United Community Bank with
bank statements for the “last 3 months of 2019,” i.e., the fraudulent
bank statements for Flame Trucking’s account at Arvest Bank.
On May 11, 2020, federal agents searched Fayne’s residence, pursuant to a
search warrant issued in Case Number: 1:20-MC-833-CMS. During the
search, agents seized Fayne’s cellphone. Later, FBI agents examined
Fayne’s cellphone and found numerous text messages between Fayne and
Jay, including the following:
a. On March 2, 2020, Jay stated: “I’ve just had some physical threats
made to me from the loan shark I took money from so I was hoping to
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get that serious situation put to bed with that money from SunTrust. .
. . Guys come to my dads [sic] house twice. I’ve been staying [in
Pittsburgh] to avoid.”
b. As mentioned previously, Fayne’s Indictment includes wire fraud
charges. Specifically, the Indictment alleges that Fayne, aided and
abetted by a group of middlemen, including Jay, fraudulently took
more than $5 million from people who invested in Fayne’s trucking
business. The Indictment further alleges that Fayne used most of the
investor’s money to pay his personal debts and expenses. On March
29, 2020, Jay stated in a text to Fayne: “I’ve been talking to guys all
day who are familiar w SBA loans and what is possible. This is a
perfect opportunity for you to take advantage of these and do the
right thing by your investors. . . . 2.5 times monthly expenses. It’s
totally set up for you. I’m referring to the Stimulus Package just
signed.”
c. In other words, Jay suggested to Fayne that Fayne obtain a PPP loan
under false pretenses and use the loan proceeds for an illegal purpose,
namely, to make payments related to the Ponzi scheme. Fayne
responded: “Send info for the SBA loan.”
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d. Jay later said to Fayne: “Give me a shout. Trying to figure out the
documentation we will try to pass through to be able get you this
loan. Basically all that are giving is 2.5x monthly payroll.....if we can
somehow justify 100+ drivers on 1099 for Flame we have
something[.]”
Jay then helped Fayne create fraudulent documents to support the PPP
loan application, which Fayne signed and submitted to United
Community Bank.
On or about April 24, 2020, Fayne wire transferred $30,000 in PPP loan
proceeds from United Community Bank account #1408, held in the name
of Flame Trucking Inc., to JPMorgan Chase Bank, NA account #0180, held
in the name of Daniel Jay.
Conclusion
Based on my training and experience, and the information provided in this
affidavit, I respectfully submit that there is probable cause to believe that
Jay’s conduct, as described above, violated the bank fraud statute, 18
U.S.C.§ 1344, and I request that the Court issue a warrant for his arrest on
that charge.
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