The owner of a Utah trucking company pleaded guilty to his role in two separate fraud schemes last week in federal court.
Hubert Ivan Ugarte, 52, of Draper, Utah, initially pleaded guilty to a federal corruption case involving the acquisition of shipping routes under contract with FedEx Ground worth $ 24 million of dollars. Ugarte also pleaded guilty to fraudulently obtaining a federal loan from the Paycheck Protection Program for other trucking companies, according to a press release federal prosecutors.
Sentencing is set for June 3 in both cases.
In the corruption case, Ugarte was convicted of fraud and money laundering for his involvement in a pay-to-play trucking scheme involving 10 defendants who paid around $ 1 million in bribes to the director of the Utah FedEx Ground Hub in order to exploit the director’s position. with FedEx and make their trucking operations as lucrative as possible.
In the plea deal, Ugarte admitted to bribing FedEx Ground senior liner director Ryan Lee Mower with around $ 490,000.
This brought Ugarte’s trucking companies more than $ 24 million over a seven-year period between 2012 and 2019.
In return for the bribe payments, Mower granted Ugarte’s businesses several delivery routes that Ugarte could not have qualified for under established FedEx Ground policies.
In order to carry out the program, Ugarte and Mower worked to obscure the ownership of Ugarte’s many trucking companies by filing false compliance reports with FedEx Ground in order to give Ugarte more trucking routes than a business owner was only entitled under established policies. As a result, Ugarte was cleared to operate at least 45 trucking routes from the Salt Lake hub, significantly exceeding the limit of just 15 trucks for the Salt Lake City hub.
“This practice, known as ‘on-scale’ in the contract transportation industry, along with paying bribes to the director of FXG, would have resulted in the automatic termination of Ugarte’s contracts.” they were discovered by FXG authorities, ”the press release said.
Throughout the program, Ugarte’s businesses received around $ 135 million in gross payments from FedEx Ground, resulting in net profits for its trucking businesses of around $ 24 million, the press release says. .
In the second paycheck protection program loan fraud case, Ugarte pleaded guilty to submitting a fraudulent loan application to the Small Business Administration through the Help, Relief and Relief Act. economic security of the coronavirus. 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 salary costs, including bad paychecks, Ugarte used 60% of the loan to pay overdue truck payments – leaving 40% for salary costs. LL