Ohio Man Pleads Not Guilty to Embezzling $880K, Spending It on Gambling

Article by : Erik Gibbs Oct 18, 2023

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Arthur Fayne allegedly misappropriated $885,000 earmarked for the construction of the New East Side Market, using it for gambling at a casino, according to federal prosecutors.

The funds were intended to address a food desert issue in Cleveland’s Glenville neighborhood, aiming to bring fresh food to the area after a decade without access to such provisions. The trial of Arthur Fayne, who oversaw the project as the founder of a real estate development company, commenced in a federal court in Cleveland.

Assistant US Attorney Brian McDonough, in his opening statements, highlighted the breach of trust in the case, accusing Fayne of initially building trust and then betraying it through dishonesty, deceit and the misappropriation of $885,000 from his victims.

The East Side Market, located at East 105th Street and St. Clair, opened in 2018 without a crucial component—the intended health clinic for daily medical care in an underserved city area.

Arthur Fayne, facing nine wire fraud charges, pleaded not guilty as his trial began before US District Judge Solomon Oliver. He declined a plea deal that could have resulted in a two-year prison term. If convicted, he might face a nearly six-year sentence.

Fayne’s attorney, Myron Watson, argued in his opening statement that Fayne hadn’t stolen funds and had compensated all project-related construction companies and vendors. Watson asserted that Fayne’s sole fault lay in poor bookkeeping.

Watson also pointed out that the companies labeled as victims by prosecutors eventually received payment, with some continuing to work with Fayne.

Watson stressed Fayne’s extensive history of community involvement, emphasizing his dedication to improving underprivileged neighborhoods lacking vital resources.

Fayne had previously served as an aide to the well-known Cleveland City Councilwoman Fannie Lewis, contributing to affordable housing efforts in the city.

Later, through his real estate development company, Business Development Concepts, Fayne aimed to address food deserts in the Glenville area by revitalizing the East Side Market, which had fallen into disrepair.

In 2019, Fayne pleaded guilty to misdemeanors, admitting to unauthorized property use and obstruction of official business in Cuyahoga County Common Pleas Court.

Fayne received a six-month probation and paid over $27,000 in restitution for scheming to acquire properties under pretenses.

The market revitalization project, initiated in 2015, involved collaboration with Northeast Ohio Neighborhood Health Services, aiming to create a comprehensive location with fresh food, a health clinic and cooking education.

Cleveland City Council supported it by leasing the property for a nominal fee and providing financial assistance. Cuyahoga County and a state grant also contributed funds.

Fayne was accused of embezzling money from the project between December 2016 and March 2018, causing delays due to unpaid contractors. He consolidated invoices from construction company AM Higley and created some fraudulent ones, forwarded them to NEON and Community Integrated Services, who sent the money back to Fayne.

Of the $2.6 million sent, only $1.87 million reached AM Higley. Fayne used embezzled funds for gambling and other personal expenses, losing $1.06 million at JACK Cleveland Casino.

He also paid Crescent Digital $251,000 for unfinished work, having the money deposited into his wife’s account. When Crescent Digital later invoiced the $251,000, Fayne claimed a lack of funds, all while attributing issues to Cleveland and construction cost increases.