Cleveland developer embezzled $ 885,000 from Eastside Market project in bad casino losing streak, federal government says | ExBulletin
Monday 7th December 2020
CLEVELAND, Ohio A Cleveland developer who found himself more than a million dollars in the casino hole embezzled hundreds of thousands of dollars from a project to bring groceries and health services to the community of Glenville, the US Attorneys Office said.
Arthur Fayne, 58, faces nine counts of wire fraud following an indictment that a grand jury in Toledo handed over last week. Prosecutors said Fayne stole more than $ 885,000 destined for a construction management contractor and audiovisual technology installation contractor because his company was being used as a middleman for payments made by an organization for profit. non-profit behind the project. At the same time, Fayne was using his company's money to gamble, losing large sums between 2016 and 2018, according to the FBI.
The seven-page indictment does not name the project or the non-profit organization. However, the descriptions match the Eastside Market grocery store at East 105th Street and St. Clair Avenue in Glenville.
The new Eastside Market, which operates a city-owned building that was previously a vendor market, opened last year after five years of planning and a $ 6.7 million investment. It was remarkable because it was the first full-service grocery store in the area in decades. The non-profit association Northeast Ohio Neighborhood Health Services participated in the project and plans to add a wellness center, community hall and other services.
This isn't the first time Fayne, who lives in Aurora, has found himself in legal trouble in recent years. He pleaded guilty last year to misdemeanor charges of unauthorized use of property and obstruction of official business. Cuyahoga County prosecutors charged him and others in a ploy, two properties belonging to the family of a homicide victim. Fayne served six months of probation and paid over $ 27,000 in restitution.
Fayne did not return a message left on Monday. His lawyer Myron Watson said the case stems from a misunderstanding of the situation by the government.
Watson said all contractors associated with the project were paid and that Fayne was upfront with the nonprofit about how the money was being handled.
Fayne is the owner of Business Development Concepts, which provides training and advice to startups and existing businesses, oversees projects, and purchases supplies for them. He was also vice president and board member of a for-profit subsidiary of the non-profit organization involved in the project and was authorized to enter into contracts on his behalf.
Business Development Concepts and the non-profit affiliate acted as representatives of the non-profit organizations. The nonprofit paid Fayne $ 15,000 a month for his work between 2016 and 2018, according to the indictment.
On August 30, 2017, Fayne provided a certification stating that the total project funding was over $ 6.1 million. That year and 2018, Fayne was behind falsified invoices to the nonprofit and its affiliate for money owed to the entrepreneur, officials said.
The nonprofit and its affiliate issued payments to Business Development Concepts, which Fayne was supposed to pay to the entrepreneur. Meanwhile, prosecutors said Fayne embezzled the money.
He asked the nonprofit and its subsidiary to donate $ 2.63 million to Business Development Concepts to pay the entrepreneur. The Faynes company only paid $ 1.87 million, taking the remaining $ 759,000 for itself, according to the indictment.
Fayne used some of that money to play the game and had a bad losing streak, according to the indictment. In 2016, he took money from his business and gambled over $ 65,000. The following year he lost $ 550,000 and in 2018 nearly $ 446,000, prosecutors said.
Separately, federal prosecutors said Fayne had the contractor's money for his own services transferred to his wife's bank account. He told the subcontractor that he would keep the money until the subcontractor finished their work. Instead, he also stole that money, authorities said.
He asked the non-profit organization to apply for and receive an equipment loan worth more than $ 469,000 from PNC Bank in June 2018, according to the indictment. The bank transferred over $ 250,000 to the subcontractor's bank account, and Faynes' wife then sent the subcontractor her bank details. The subcontractor then transferred $ 125,923.86 to Faynes' wife's bank account.
Like the other money he stole, Fayne used the loan money in his wife's account for personal purposes, including gambling, prosecutors said.
Northeast Ohio Neighborhood Health Services President and CEO Willie Austin did not return a phone call.
Watson said the case was not about (Faynes) spending habits, but whether anyone had been defrauded. He said the evidence will show that no one in the case was a victim of fraud.
City Councilor Kevin Conwell, whose neighborhood includes Glenville, said he didn't want to comment on the indictment but would follow up on the case as it progressed. He said he was concerned about how the missing money could affect the Northeastern Ohio Neighborhood Health Services, which provide medical services to people in his community.