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Law360 (May 13, 2020, 9:19 PM EDT) -- Federal prosecutors accused a reality TV personality who stars in "Love & Hip Hop: Atlanta" of spending $1.5 million from a coronavirus small-business relief loan on a Rolls-Royce, jewelry and child support, charging him with federal bank fraud, but the reality star told Law360 on Wednesday he's "fighting them 100%."
The U.S. Department of Justice claims Georgia resident Maurice Fayne, aka Arkansas Mo, received a Paycheck Protection Program loan — made possible by the Coronavirus Aid, Relief, and Economic Security Act — for about $2 million and spent about $1.5 million of it maintaining his luxury lifestyle.
But Fayne told Law360 that the allegations are "false."
Fayne is accused of applying for a loan for his company, Flame Trucking LLC, on April 15, roughly two weeks after the passage of the CARES Act. The CARES Act provided authorization for up to $349 billion in forgivable loans to small businesses for job retention and related expenses through the Small Business Administration's Paycheck Protection Program. Congress has since authorized another $300 billion in additional funding.
Prosecutors say Fayne applied for the PPP loan — which allows small businesses to receive loans with a maturity of two years and an interest rate of 1% — in the name of Flame Trucking. His loan application states that his business had 107 employees and an average monthly payroll of almost $1.5 million, according to prosecutors.
United Community Bank funded the loan for a little over $2 million, the DOJ said.
Prosecutors believe Fayne spent more than $1.5 million of that $2 million loan in just a few days, purchasing $85,000 in jewelry, including a Rolex Presidential watch, a diamond bracelet and a 5.73-carat diamond ring for himself.
He also paid $40,000 in child support with the money, prosecutors said.
Federal agents confronted Fayne on May 6, but he denied misusing any of the loan proceeds. He said he used them to pay Flame Trucking's payroll and other business expenses, according to prosecutors.
Four days later, federal agents searched Fayne's residence near Atlanta where they seized the jewelry they believe he purchased with the loan funds, as well as about $80,000 in cash. Agents also discovered a 2019 Rolls-Royce Wraith with temporary dealer tags on it. The car's retail value is over $300,000.
Federal agents said they also seized about $503,000 in PPP funds from three of Fayne's bank accounts.
Fayne told Law360 in a phone interview Wednesday that he's fighting the charges and remains committed to the success of his business, which he says long preceded the COVID-19 pandemic.
Fayne also said the PPP guidelines "have caused considerable confusion for small-business owners across the county." In particular, he said, there is confusion around "whether business owners are permitted to pay themselves a salary or an owner's draw."
"I expect these issues to be fleshed out in the weeks and months to come," Fayne said.
Fayne declined to discuss the specific allegations brought by the government, telling Law360, "I will tell my side of the story when the time is right."
But federal officials and government prosecutors publicly railed against Fayne's alleged behavior.
Assistant Attorney General Brian A. Benczkowski said in a statement that Fayne "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."
In a similar DOJ case unsealed Wednesday, a Texas engineer is accused of using a fake company to file for more than $10 million in forgivable loans under the CARES Act that are meant to help small businesses during the pandemic.
A U.S. attorney's office spokesperson declined to comment Wednesday.
Maurice Fayne is represented by Tanya Miller of Dubose Miller.
The government is represented by Russell Phillips, Bernita Malloy and Michael J. Brown of the U.S. Attorney's Office for the Northern District of Georgia.
The case is U.S. v. Maurice Fayne, case number 1:20-mj-00370, in the U.S. District Court for the Northern District of Georgia.
--Editing by Orlando Lorenzo.
For a reprint of this article, please contact reprints@law360.com.
