Facing $1M in Gambling Losses, Cleveland Developer Embezzles $885K, Feds Claim
Posted on: December 8, 2020, 08:14h.
Last updated on: December 8, 2020, 12:56h.
A Cleveland, Ohio real estate developer who lost over $1 million over a couple of years at a local casino was indicted recently for allegedly embezzling about $885,000. The funds were supposed to pay for a redevelopment project, federal officials said.
Following an FBI inquiry, it was revealed that Arthur Fayne, 58, lost over $1 million at an unnamed casino located in Cleveland between 2016 and 2018. In 2017 alone, his gambling losses totaled $550,000, and in 2018, they were $446,000, officials said. Fayne lives in Aurora, Ohio.
During the same time period, Fayne allegedly diverted funds earmarked for a non-profit redevelopment project and used them for personal expenses.
A grand jury sitting in Toledo recently heard evidence in the case. It approved an indictment last week, Ohio US Attorney Justin Herdman, announced.
Fayne now faces nine federal wire fraud charges, including using funds from his business at the casino. If convicted, a single federal wire fraud charge can lead to a maximum prison sentence of up to 20 years. Fines could also be imposed.
Fayne’s Business Scheme
Under the scheme, Fayne used his company, Business Development Concepts (BDC), which provides consulting services to start-ups and existing companies. It also manages construction projects, as well as purchases supplies and equipment for organizations.
Fayne also served as vice president and a board member for a for-profit subsidiary of an unnamed nonprofit corporation. The non-profit was engaged to be the construction manager and general contractor on the project to redevelop a vacant building in Cleveland.
The project was to open a grocery store and community center with health care services in the building. BDC and the for-profit subsidiary represented the non-profit in the redevelopment project.
BDC got paid $2.6 million by the non-profit and the subsidiary. That money was supposed to be correctly dispersed.
But Fayne only allegedly distributed about $1.9 million. “Instead of distributing the remaining [money] … the defendant is accused of diverting these funds to BDC for his personal use, which included gambling at a casino,” Herdman said in the statement.
Fayne also allegedly improperly took other money for his personal use under the scheme, Herdman claims.
Case is a Misunderstanding, Fayne’s Attorney Says
When reached for comment, Myron Watson, an attorney representing Fayne, told a reporter the federal wire fraud case against his client is a misunderstanding by the federal government, Cleveland.com, a regional Ohio news site, reported.
Fayne was upfront with nonprofit officials how the money was spent, and all contractors on the project were paid, Watson added and Cleveland.com reported.
Fayne Already Placed on Probation
In an unrelated case, in 2019 Fayne pleaded guilty to the unauthorized use of property and obstruction of official business, Cleveland.com further reported. He and two other men allegedly stole properties from the family of a homicide victim after forging documents, the report said.
To resolve that case, Fayne paid more than $27,000 in restitution, the report said. He was placed on probation, the report added.
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