12.3 C
New York

Utah trucking co. owner admits to $24 MILLION FedEx bribe scheme, PPP fraud

Published:

A Utah man has admitted to participating in a “pay-to-play” trucking scheme in addition to PPP fraud, federal authorities said on Tuesday.

Hubert Ivan Ugarte, 52, has pleaded guilty to charges related to fraud in two separate incidents, according to a Tuesday news release from the U.S. Attorney’s Office District of Utah.

Ugarte owns multiple trucking companies.

Prosecutors say that Ugarte admitted to paying approximately $490,000 in bribes to Utah FedEx Ground (FXG) senior linehaul manager, Ryan Lee Mower in exchange for several delivery routes from FXG that Ugarte would not have qualified for under FXG’s established policies. The scheme allegedly netted Ugarte’s trucking companies $24 million dollars during a seven year period between 2012 and 2019.

Ugarte was allegedly one of ten defendants who paid a total of $1 million to Mower in the bribe scheme.

The U.S. Attorney’s Office details the scheme:

“In order to carry out the scheme, Ugarte and the FXG manager worked to obscure the ownership of Ugarte’s many trucking companies by filing false compliance reports with FXG in order to award Ugarte with more trucking routes than one business owner was entitled to under established FXG policies. As a result, Ugarte was allowed to operate at least 45 trucking routes originating from the Salt Lake FXG hub, greatly exceeding the FXG limit of only 15 trucks for the Salt Lake City hub. This practice, known as “over scaling” in the contract shipping industry, along with the payment of bribes to the FXG manager, would have resulted in the automatic termination of Ugarte’s contracts if discovered by authorities at FXG. Throughout the scheme, Ugarte’s companies received approximately $135,000,000 in gross payments from FXG, resulting in net profits to his trucking companies of approximately $24,000,000.

In a separate case, Ugarte also admitted to submitting a fraudulent loan application to the Small Business Administration (SBA) to obtain $210,000 in Paycheck Protection Program (PPP) loans. Ugarte says that he failed to disclose that he was under federal indictment for his role in the FedEx bribery scheme when he applied for the PPP loans. Additionally, “Instead of using at least 75 percent of the loan to pay payroll costs, including bounced payroll checks, Ugarte used 60 percent of the loan to pay the past due truck payments – leaving 40 percent for payroll costs,” the U.S. Attorney’s Office stated.

Sentencing in both cases is scheduled for June 3, 2021.

JOIN OUR NEWSLETTER

Get the hottest daily trucking news

This Week in Trucking

Videos