The saga of the elaborate loan scheme that defrauded commercial lenders and a merchant cash advance company, Caymus Funding, has finally reached its conclusion. Indicted in October 2020, Ryan P. Mullen, 43, a resident of Jayess, Mississippi, was sentenced on March 20th to 160 months in prison for his leading role in the multi-million dollar conspiracy. Duane A. Dufrene, age 56, of Destrehan, LA., was sentenced on March 27, 2024, to 24 months in prison for his role in the 2 separate fraud cases.
They both were ordered to pay $6,401,385.96 in restitution and will serve an additional 3 years of supervised release.
As you might recall from our previous articles, this case involved a group of individuals who used fabricated documents, like fake tax returns and phony financial statements, to secure loans to buy multiple properties including The Briars (pictured below), Hotel Vue (pictured above), and take out merchant cash advances from Caymus Funding. This ring, which Mullen spearheaded, targeted traditional banks, a credit union, out-of-state lenders, and Caymus.
Mullen, acting as a broker for shell companies with no real assets, presented Caymus Funding with falsified vendor accounts and bank records he obtained from Dufrene, who was paid for his actions. This elaborate scheme allowed the group to secure over $6 million in funding for various fake entities, which they then diverted for personal gain, including the purchase of luxury vehicles.
While some members of the conspiracy, like Dillon Arceneaux and Zeb Sartin, had already pleaded guilty and received their sentences, Mullen's sentencing was the most important as his prison sentence sends a strong message to other would-be criminals out there.
"The sales of The Briars and the two hotels were premised upon not only false information prepared by Dufrene and given to the financial institutions by Mullen, but also on inflated appraisals stemming from side sales agreements between Mullen and Dufrene", according to the DOJ press release. Keesler Federal Credit Union, which provided funds for Mullen’s purchase of The Briars, has foreclosed on that property and taken possession of it. Red Oak Capital Group LLC, which loaned Mullen the funds for the purchase of Hotel Vue and Super 8 Motel in Natchez, has foreclosed on those properties.
Per the DOJ press release, "The crimes committed by the two defendants lost legitimate lenders’ money by receiving loans for fraudulently overvalued properties and nonexistent businesses,” said Lisa Fontanette, Assistant Special Agent in Charge, IRS Criminal Investigation, Atlanta Field Office. “IRS Criminal Investigation special agents and their law enforcement partners will continue to investigate and bring to justice those who engage in financial fraud schemes.”
The story of Ryan P. Mullen and his co-conspirators may be almost over, besides additional restitution orders, but its lessons serve as a valuable cautionary tale for the entire financial services industry. By prioritizing robust due diligence practices, lenders and cash advance providers can help ensure that their services are used for legitimate business purposes by legitimate companies. When brokers push back at MCA Funders' stringent onboarding processes, this case should be at the forefront of why they have the process in place.