The world of small business lending is fraught with challenges, and fraud is among the most pressing. With the rise of Merchant Cash Advance (MCA) funding, the industry continuously tries to prevent attempts by unscrupulous individuals to exploit the system. MCA funders have always been on high alert, and the actions of six defendants in a case that has now secured guilty pleas underscore the importance of their vigilance.
It's worth noting that while the press release from the DOJ about the recent guilty pleas did not specify the name of the merchant cash advance funder involved, a review of court records identified the company as Caymus Funding, Inc.
According to the press release, the most recent defendant to plead guilty in this case is Ryan P. Mullen, a 42-year-old resident of Jayess, Mississippi, who admitted his guilt in a conspiracy to commit wire fraud and money laundering. The proceedings took place in the Eastern District of Louisiana before U.S. District Judge Jane Triche-Milazzo, as announced by U.S. Attorney Duane A. Evans.
The intricate plot involved Ryan P. Mullen conspiring with Duane Dufrene, Dillon Arceneaux, Lance Vallo, Grant Menard, and Zeb Sartin. They used multiple shell corporations based in Louisiana, which had no assets, to deceive Georgia-based Caymus Funding, Inc.
Mullen and Dufrene played pivotal roles in setting up Arceneaux, Vallo, Menard, and Sartin as the proprietors of these shell corporations. They then fabricated vendor accounts for these corporations and, with the assistance of another accomplice, produced counterfeit bank records. Posing under an alias, Mullen portrayed himself as a broker for these very shell corporations he had a hand in creating.
The scheme reached its climax when Mullen, with the help of another broker, presented the falsified vendor accounts and bank records to Caymus Funding, Inc. to secure funding. The company, deceived by the fraudulent documents, wired millions of dollars in advances to Arceneaux, Vallo, Menard, and Sartin. A portion of these funds was then laundered back to Mullen and Dufrene. The businesses, which were non-existent from the start, were then shut down, leaving Caymus Funding, Inc. with a staggering loss of approximately $6.4 million.
Arceneaux and Sartin have already pleaded guilty and will be sentenced on November 1, 2023. The sentencing for Dufrene is scheduled for January 17, 2024. They face potential imprisonment for up to five years on the wire fraud conspiracy charge and up to twenty years for the money laundering conspiracy. Fines could amount to $250,000 and $500,000 for the wire fraud and money laundering counts, respectively.
So when funders ask merchants for more information such as documents, to link their bank account, to get a site inspection, whether their broker coached them on anything, or anything else, this case is a shining example of why.
