Mississippi trucking company, owner indicted on PPP fraud charges

A Mississippi trucking company and its owner have been indicted on charges they misused funds paid out through the Paycheck Protection Program.

Bailey’s Trucking LLC and its owner, Xavier Bailey, of Tallahatchie County, were charged last week with misuse of $143,738 in PPP funds after misrepresenting the size of the company’s payroll in the application. 

The name of the financial institution that issued the funds was not disclosed in the indictment. Companies that sought loans through PPP, designed to help businesses during the COVID-19 pandemic, would apply through banks or other financial institutions.

Bailey’s got its loan in early April 2021, relatively late in the PPP process. The first extension in the program was to end March 31, 2021, but it was extended two months after that to bring the program to a close. 

That money was disbursed, according to the indictment, “based upon misrepresentations in a loan application.”

Specifically, the indictment said, Bailey’s Trucking and its owner “misrepresented its payroll costs, which were used in calculating the maximum loan amount for which [Bailey’s] was eligible. This misrepresentation caused defendants to receive loan proceeds well in excess of what it would be entitled, if any at all.”

Proceeds from the loan were used for “unauthorized purposes,” the indictment said, though it did not offer specifics.

The unnamed financial institution received a payment of 5% of the loan amount. 

About a year later, on March 18, Bailey’s reportedly had a visitor at its office in Oxford, Mississippi: an investigator from the U.S. Attorney’s Office for the Northern District of Mississippi, which ultimately brought the indictment. 

According to the indictment, Bailey told the investigator several things about his company:

  • He “purported” to operate a general freight trucking business under the NAICS code of 484122, which is for long-distance LTL carriers.
  • He had nine employees. The company had not been registered with the Mississippi secretary of state until December 2020, just a few months before Bailey’s received the PPP loan.  
  • A loan that size would have required the company to have eligible payroll costs of $689,000 for the 12 months before the loan was disbursed. “Bailey had no such eligible payroll costs,” the indictment said. He reportedly told the U.S. attorney’s office that he used independent contractors, described in the indictment as “1099 workers.” Using independent contractors as the basis for a PPP loan is “clearly in violation of the loan eligibility criteria.” 
  • When he got the money, “Bailey did not use the funds as required by law,” according to the indictment.

“These false statements in the loan application and forgiveness application were material to the payment of money,” the indictment said.

The indictment has four counts: two under the False Claims Act, one for unjust enrichment and one for payment by mistake. 

Bailey’s loan was bigger than most that fell under the LTL category. Federal data shows that 11,759 loans were paid out in the NAICS code, with the average loan being $47,210.

Federal data also shows that the biggest loan paid out in that category went to Central Freight Lines, which received the maximum payout of $10 million. It closed its doors in December. 

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Source: freightwaves - Mississippi trucking company, owner indicted on PPP fraud charges
Editor: John Kingston