The IRS has executed a warrant issued by the U.S. District Court for the Middle District of North Carolina to seize select funds from a Triad general contractor, alleging probable cause of wire and/or bank fraud involving PPP funds obtained by the company’s president.
U.S. Magistrate Judge Joe Webster issued the warrant on Jan. 6 and the IRS on Jan. 13 executed the order to seize from Hayco Construction LLC of Pilot Mountain and/or owner Travis Hayes all funds in a specific Pinnacle Bank account connected to PPP loans Hayes applied for in the company’s name.
The seizure warrant also authorized seizure of all equity, debt or any other financial interest in Canadian life sciences company Universal Ibogaine Inc. that were acquired in the names of Hayco Construction LLC and/or Travis Hayes with funds from that Pinnacle account.
UPDATE: IRS, U.S. attorney end investigation of Hayco Construction, Travis Hayes with no charges filed
According to its website, Universal Ibogaine, based in Vancouver, British Columbia, Canada, plans to clinically develop ibogaine, a natural plant substance, as an authorized addiction interruption medicine for the treatment of opioid use disorder. According to an affidavit submitted with the warrant, as well as published reports, Universal Ibogaine, founded as a private company in 2018, was in 2020 raising money through a private placement, completing a first closing of $2.3 million in November 2020.
Travis Hayes is listed on Hayco’s website as founder, owner and president, and he has identified himself with those roles on multiple occasions in Triad Business Journal news coverage. The company’s 2021 annual filing with the Secretary of State identifies Travis Hayes as registered agent and managing member. No other managing members were listed in that most recent filing, submitted March 4, 2021.
Hayco had ranked among the Triad’s fastest-growing private companies as recently as 2019, ranking No. 23 in the Fast 50 awards that year based on its revenue growth between 2017 and 2018. The company was also in 2019 recognized as a Best Place to Work and in August 2020 received a Family Business Award. The company was in 2020 a finalist in general contractor category for TBJ’s Commercial Real Estate Awards.
In the affidavit submitted in support of the warrant, Brison A. Lyons II, a special agent with the Internal Revenue Service, alleges probable cause “to believe that Hayes engaged in a scheme to fraudulently obtain Covid-19 relief funds through the Paycheck Protection Program (“PPP”) and to conceal the improper use of these funds by making materially false and fraudulent representations to federally insured financial institutions and the Small Business Administration (“SBA”) regarding his intended and actual use of PPP funds.”
The warrant states that agents, after speaking with Hayes by phone, faxed him a copy of the warrant on Jan. 13 because he was in Mexico when they attempted to execute the seizure at the company’s headquarters at 129 Carson St., Suite C, Pilot Mountain.
Triad Business Journal reached Hayes via email on Feb. 23. Hayes said he wanted to confer with counsel before making any comment. Since then, Hayes has not responded to multiple attempts by email or phone seeking comment. As of March 10, Hayes had not responded to several TBJ messages.
Joe Bass, a spokesman for Pinnacle Bank, told TBJ the bank had been made aware of the warrant. He said Pinnacle followed the guidelines for PPP loans.
The U.S. attorney for the Middle District declined comment. Messages to Universal Ibogaine were not returned by press time.
The Coronavirus Aid, Relief and Economic Security (CARES) Act enacted in March 2020 provided forgivable loans under PPP to small businesses for specific uses: paying employees, protecting their jobs, and certain other expenses. Proceeds could be used only to retain workers, maintain payroll, make mortgage or lease payments, or to pay utilities. The loans were forgivable if the business sent funds accordingly within a window of time, usually 24 weeks, and used at least 60 percent on worker payroll. In applying, businesses must affirm their understanding of the program rules. Recipients are also required to affirm eligibility when applying for forgiveness for the loans. In January 2021, a second round of PPP funding was made available for certain businesses, and those applications also required affirmation from applicants of understanding and eligibility.
The affidavit describes Hayco’s use of an account with Allegacy Federal Credit Union dating back to May 2018 for business operations. It states that in April 2020, Travis Hayes opened a business checking account in Hayco’s name with Pinnacle Bank, with him as the sole signatory in that account. The affidavit said that when Pinnacle required Hayco to have two corporate officials sign a Limited Liability Company Authorization Resolution authorizing Hayes to be the sole signatory on the account, “the second signature appears to be consistent with Hayes’ wife’s name, Dusty Shay Hayes (listed as “attest by one other manager or designated member”); however, at the time of the LLCAR was completed, there was no public record of Dusty Shay Hayes having a role of manager or member at Hayco.”
Efforts to reach Dusty Shay Hayes by phone and email were unsuccessful.
In the affidavit, Lyons reports that Travis Hayes, who stated he had 90% ownership in Hayco, applied for $273,025 and was approved in April 2020 for that amount in PPP funds for Hayco. The funds were deposited in the account at Pinnacle.
The affidavit alleges that Hayes authorized wire transfers of $71,950.73 on April 30, 2020: $35,498.75 on May 15, 2020, and $94,355 on Oct. 28, 2020, from the Pinnacle account to purchase shares of Universal Ibogaine at 10 cents per share, with $71,030.52 remaining in the account at year-end 2020. It also states that Hayes earlier in October 2020 applied for forgiveness of the initial PPP loan, and that he on or about Jan. 29, 2021, applied for a second draw of $273,025 from PPP funds, with those funds deposited that day in the Pinnacle account.
“However, $201,844.48 from PPP Loan 1 had been used for personal investment purposes and not permissible expenses,” the affidavit alleges.
The affidavit continues that records from Pinnacle Bank and Allegacy Federal Credit Union show that Hayes paid his payroll obligations with funds from his business checking account at Allegacy.
The affidavit states that records as of Sept. 30, 2021, showed $344,055.52 was left in the Pinnacle account, representing funds left from the initial loan and the second draw.
Hayes lists himself as an investor and member of “Universal Ibogaine’s Board of Advisors” on his LinkedIn page. Documents on the company’s website do not identify a board of advisers. He is not among the board of directors identified on the company’s website.
Universal Ibogaine was approved Feb. 28, 2022, for its common shares to be traded on the OTCQB Venture Market (OTCQB) under the ticker IBOGF, with the company continuing to trade in Canada on the TSX Venture Exchange under the ticker IBO.
While the affidavit in support of the application for the warrant lays out timing and certain details, the IRS agent stipulated that “because this affidavit is being submitted for the limited purpose of establishing probable cause for issuance of warrants, I have not included each and every fact known to me concerning this investigation. Rather, I have set forth only the facts that I believe are necessary to establish the requisite foundation for a probable cause finding.”
Hayco, founded in 2009, had talked with TBJ in 2019 about plans to convert the former Pilot Hosiery Mills facility at 224 E. Main St. in downtown Pilot Mountain into the company’s office, but the company’s website and public filings still list its offices a half mile away on Carson Street. Hayes’ development projects include construction of 44 condos in downtown Winston-Salem through a venture named BayFront Development LLC.
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