According to the U.S. Attorney’s Office for the Northern District of Georgia, Fayne is the sole owner of a Georgia corporation called Flame Trucking that received a $2 million bank loan through the SBA’s relief package for small businesses, the Paycheck Protection Program.
On May 13 Fayne was arrested and then charged with bank fraud. Prosecutors alleged he used more than $1.5 million on unauthorized purchases including the car, jewelry and child support.
“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. “We will investigate and charge anyone who inappropriately diverts these critical funds for their own personal gain.”
Fayne appeared in federal court on the day of his arrest in front of magistrate judge Justin S. Anand of the U.S. District Court for the Northern District of Georgia.
Fayne’s lawyer, Atlanta attorney Tanya Miller, says he will fight the charges. She issued a statement to The Post saying that she would not try the case through the media and that the government needed to clear up confusion about the stimulus program’s rules.
“We will provide the appropriate response in the proper forum once all the information has been provided to us,” said Miller in the statement. “There has been considerable confusion among small business owners about PPP guidelines — particularly around the question of whether and how business owners are permitted to pay themselves a salary or owner’s draw. This ambiguity and confusion for business owners need to be addressed immediately as the PPP program is still in its infancy.”
Although some PPP applicants have had difficulty navigating the program’s rules and some larger employers have decided to return funds, Fayne is charged with using the money for much different purposes than he allegedly stated on his application.
According to the U.S. attorney’s office, Fayne, 37, stated on a loan application to United Community Bank that his trucking company had 107 employees and a monthly payroll of $1.5 million. He allegedly 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.”
The FBI assisted with the investigation, along with the SBA’s Office of Inspector General. Agents searched Fayne’s home in Dacula, outside Atlanta, on May 11 and seized “approximately $80,000 in cash, including $9,400 that Fayne had in his pockets.” They also used seizure warrants to take control of approximately $503,000 of remaining PPP funds from three of Fayne’s bank accounts, according to the a.
“The defendant allegedly egregiously sought personal gain from a program intended to assist hard-working Americans in this challenging time,” said Special Agent-in-Charge Kevin Kupperbusch of the SBA’s Office of Inspector General.
Fayne, known as “Arkansas Mo” on the show, is one of the only people to be charged with a crime for misuse of funds from the SBA program.
Treasury Secretary Steven Mnuchin and SBA Administrator Jovita Carranza have heralded PPP as a success, as more than 4.2 million businesses and nonprofit organizations have received a total of more than $531 billion in funding for the program through May, according to recent data.
The SBA has so far refused to release the names of companies that have received PPP loans. The Washington Post and several other news organizations have filed a lawsuit against the SBA for access to these records.
SBA officials say they rely on the good faith of applicants to self-certify that they are in need of the funds because of uncertainty created by the coronavirus, though officials plan to audit loans of more than $2 million. Loans will be forgiven so long as they are used appropriately.
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