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A Utah man pleaded guilty to paying $ 490,000 in bribes between 2012 and 2019 in order to direct $ 24 million in business to the trucking operations he founded.
Hubert Ugarte, 52, of Draper, Utah, also earlier this month, pleaded guilty to fraudulently obtaining a federal loan from the Paycheck Protection Program for some of his other trucking companies.
In the corruption case, prosecutors said Ugarte was convicted of fraud and money laundering for his involvement in a pay-to-play scheme in which prosecutors alleged Ugarte was one of the 10 defendants who collectively paid around $ 1 million in bribes to FedEx Ground senior. Ryan Mower, Line Transportation Manager, to direct shipments to their businesses. According to his plea, Ugarte alone was responsible for about half of that total.
Ugarte also pleaded guilty earlier this month to fraudulently obtaining a federal loan from the Paycheck Protection Program for some of his other trucking companies. (Kameleon007 / Getty Images)
In a statement in response to the plea deal, a FedEx Ground spokesperson said, “FedEx Ground does not condone illegal activity and expects all employees and service providers to act according to the highest ethical standards. more stringent. We have fully cooperated with the authorities in their investigation into this matter. “
During the transaction, Ugarte’s businesses received around $ 135 million in gross payments, resulting in net profits of around $ 24 million, according to an April 6 press. release by the United States Attorney’s Office for the District of Utah.
To complete the scheme, Ugarte and Mower went to great lengths to disguise ownership of Ugarte’s many companies by filing false compliance reports with FedEx Ground. In doing so, they were able to assign Ugarte more trucking routes than a business owner was entitled to under established FedEx Ground policies, prosecutors said.
As a result, Ugarte was cleared to operate at least 45 trucking routes from the FedEx Ground hub in Salt Lake City, exceeding the company’s limit of just 15 trucks for the hub.
Prosecutors said the practice – known as “oversizing” in the contract transportation industry – along with paying bribes to Mower would have resulted in the automatic termination of Ugarte’s contracts if they were discovered by FedEx Ground authorities.
As a result of his plea deal, Ugarte confiscated from the federal government 14 of his businesses, 35 trucks, more than $ 261,000 in bank accounts, six properties, four other vehicles and $ 684,000 in foreign currency seized from a company that was building the one of his residences.
The investigation was conducted by agents from the FBI, IRS and the Office of the Inspector General of the US Department of Transportation.
Ugarte was the first person named in a series of unsealed indictments in October 2019, alleging that 10 people participated in the decadelong program to bribe Mower to direct business to program participants, earning them hundreds of millions dollars in fraudulent and unauthorized contracts.
2019 charges allege Mower, 49, of Bountiful, Utah, allowed his co-conspirators to obtain unauthorized races, increase miles, receive payments for “ghost races” they never did and falsely report accidents, all to earn income.
In PPP loan fraud, Ugarte pleaded guilty to submitting a fraudulent loan application to the Small Business Administration through the Coronavirus Help, Relief and Economic Security Act. Ugarte admitted that he fraudulently obtained $ 210,000 in P3 loans after failing to disclose that he was facing a federal indictment for his role in the fraudulent trucking scheme.
On May 14, 2020, Ugarte received $ 210,000 from the Transportation Alliance Bank as part of the PPP. Instead of using at least 75% of the loan to pay for wage costs, including bad paychecks, Ugarte used 60% of the loan to pay off payment arrears for trucks, leaving 40% for wage costs.
The CARES Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to millions of Americans suffering the economic effects of the COVID-19 pandemic. One of the sources of relief under the CARES Act was the authorization of up to $ 249 billion in forgivable loans to small businesses for job maintenance and certain other expenses. Ugarte’s sentence in both cases is set for June 3, 2021.
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