Aurora man indicted on federal fraud charges

Jeff Saunders

| Record-Courier

A federal grand jury in Toledo has indicted an Aurora man in connection with allegations that he engaged in two schemes to defraud businesses of more than $1 million, the U.S. Attorney’s Office for the Northern District of Ohio announced Friday.

Arthur Fayne, 58, is charged with nine counts of wire fraud in the indictment that was filed on Wednesday. The indictment alleges that Fayne used funds that businesses were defrauded of for personal use, including gambling at a Cleveland casino.

Fayne’s attorney did not immediately return a phone call seeking comment.

According to the indictment, Fayne was the owner of Business Development Concepts, an organization that provided training and business consultation services to start-up and existing companies, as well as management of construction projects and the purchase of equipment, supplies and inventory.

Fayne also served as vice president and a board member on an unnamed for-profit subsidiary of an unnamed nonprofit corporation that operated as a federally qualified health center network of community health centers and provided primary care medical services for adults and children in the Cleveland area. In this capacity, Fayne had the authority to enter into contracts on behalf of the nonprofit.

In June of 2016, an unnamed construction management and general contracting company headquartered in Cleveland entered into a contract with the nonprofit to serve as the construction manager and general contractor on a project to redevelop a vacant building in Cleveland into a grocery store and community center with health care offices.

Fayne executed this contract on behalf of the nonprofit and, under the terms of the contract, BDC and the for-profit subsidiary would serve as the nonprofit’s authorized representatives. In addition, the subsidiary and the nonprofit were to issue payments to BDC, which Fayne was to disburse to the construction management firm.

From December 2016 through March of 2018, Fayne had the nonprofit and subsidiary pay approximately $2.63 million to BDC to be disbursed to the construction management firm as compensation for work on the project. The indictment alleges that Fayne distributed only about $1.87 million to the company and diverted about $760,000 to BDC for his personal use. The indictment also alleges that to cover this up, Fayne falsified invoices created and submitted to the subsidiary and nonprofit.

The indictment states that from 2016 to 2018, the nonprofit separately made payments to BDC for services and expenses in overseeing this and other projects. The indictment alleges that Fayne accessed some funds from BDC at the casino and lost a total of approximately $1.06 million on separate occasions at the casino.

Additionally, the indictment alleges that Fayne devised a second scheme to defraud an audio-visual technology installation subcontractor on the redevelopment project. On or about June 28, 2018, Fayne had the subcontractor make an approximately $125,000 wire transfer to a bank account. These funds were allegedly used for personal use, which included gambling at the casino.

The U.S, Attorney’s Office said the Cleveland Division of the FBI investigated the case with the cooperation of the Cuyahoga County Prosecutor’s Office.

Reporter Jeff Saunders can be reached at [email protected] or @JeffSaunders_RP.

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