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Moustapha Diakhate at a 2013 Ansonia City Hall press conference. Image taken from WTNH YouTube video.
ANSONIA — A businessman who promised to redevelop downtown Ansonia but never followed through was arrested Friday for allegedly scamming the government by using COVID-19 business relief funds for things like paying off and purchasing luxury automobiles.
Moustapha Diakhate, 45, of Stamford, took out roughly $2.9 million in loans from the federal paycheck protection program (PPP) through his various business entities, according to a press release issued Friday (May 7) by the U.S. Attorney’s Office.
The PPP loans were meant to keep businesses afloat and workers employed during the pandemic. Companies receiving the loans would have the interest and principal payments forgiven if a percentage of the money was used for payroll.
Diakhate “used a portion of the funds for various personal expenses, including to pay off a loan he had been provided to purchase a 2010 Porsche Panamera Turbo, and to purchase both a Mercedes and BMW,” according to the U.S. Attorney’s Office.
Prosecutors specifically accuse Diakhate of providing false information on his PPP loan applications, starting in May 2020. He’s been charged with “bank fraud and wire fraud offenses,” according to the government.
Ansonia Involvement
At a press conference in the Aldermanic Chambers of Ansonia City Hall hosted by then-Mayor James Della Volpe in 2013, Diakhate was introduced to the public as the new buyer of 398,107 square feet and almost nine acres of former Farrel company holdings straddling both sides of Main Street in downtown Ansonia. Diakhate’s company reportedly paid $1.9 million for the properties.
Diakhate said he planned mixed-use development for the properties — retail on the first floors and apartments on the upper floors.
Here’s a WTNH story from January 2013:
Construction was expected to start in 2014. Click here for a 2013 story from The Valley Indy.
In September 2013, the city’s former economic development director and Diakhate’s real estate agent talked about holding a meeting to talk about the development.
It never happened.
Ansonia Drama
By 2014, Ansonia city government was threatening Diakhate with blight fines for 501 E. Main St., the Farrel Corp.‘s former “Process Lab.”
“Nothing to worry about, this project is still going forward,” Diakhate wrote in an email to The Valley Indy in 2014.
By 2016, no development plans had been submitted, and Diakhate’s company was seeking bankruptcy protection after being sued by its mortgage lender.
Mayor David Cassetti’s administration got increasingly aggressive, and sought to push Diakhate out of the picture by threatening to take 501 E. Main St. by eminent domain.
Eventually the city took over 65 Main St., where a new police department is being constructed. The city approved plans for Shaw Growth Ventures Inc., an entity previously suing Diakhate, to redevelop 497 E. Main St., 153 Main St., and 160 Main St.
Federal Case Pending
In its statement Friday, the U.S. Attorney’s Office lists Diakhate’s Washington Management LLC (the company that initally purchased the Ansonia properties) and his Ansonia Developers, LLC as companies that Diakhate listed on his PPP loan applications.
The government’s criminal complaint against Diakhate wasn’t available online Sunday, but the statement notes that in addition to paying off or purchasing high-end vehicles, Diakhate allegedly “purchased a $50,000 certificate of deposit with PPP funds, and disbursed funds to various individuals unrelated to his business entities.”
“Congress authorized the Paycheck Protection Program to help small businesses and their employees withstand a devastating pandemic, not so individual recipients can illegally reap a financial windfall,” Acting U.S. Attorney Leonard C Boyle said in a press release. “The Justice Department and our federal law enforcement partners are actively working to identify those who are taking advantage of COVID relief programs to line their pockets in violation of the law, and we will ensure that wrongdoers are prosecuted in federal court.”
Diakhate’s companies are also involved in various civil lawsuits involving the properties he formally controlled in Ansonia.
