SALT LAKE CITY – A federal complaint unsealed last week charges the owner of a Utah trucking company with submitting a fraudulent loan application to get a Paycheck Protection Program (PPP) loan of $210,000 through the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Hubert Ivan Ugarte, 52, of Draper, with the assistance of Lisa Bradshaw Rowberry, 49, of Provo, Utah, submitted a loan application to the Small Business Administration (SBA) to obtain the PPP loan, according to the complaint.

The CARES Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to millions of Americans suffering from the economic effects caused by the COVID-19 pandemic.  One source of relief provided by the CARES Act was the authorization of up to $249 billion in forgivable loans to small businesses for job retention and certain other expenses, through the PPP.  In April 2020, Congress authorized more than $300 billion in additional PPP funding.

The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1 percent.  PPP loan proceeds must be used by businesses on payroll costs, interest on mortgages, rent, and utilities.  The PPP allows the interest and principal on the PPP loan to be entirely forgiven if the business spends the loan proceeds on these expense items within a designated period of time after receiving the proceeds and uses a certain amount of the PPP loan proceeds on payroll expenses.

According to the complaint, Ugarte, with Rowberry’s assistance, answered “no” to questions on the application asking whether he was under formal criminal charges in any jurisdiction. His answer was false because he was under federal indictment in Utah when he answered the question, the complaint alleges.

On Oct. 24, 2019, a federal grand jury in Utah returned an indictment charging Ugarte and others following a multi-year wire fraud and bribery scheme investigation in which it is alleged Ugarte bribed employees at the Salt Lake City Hub of FedEx ground to obtain preferential treatment for his trucking companies.  Ugarte faces four counts of wire fraud and six counts of money laundering in the pending case.

In filling out PPP loan application documents, Ugarte also circled “no” when asked if he had ever been placed on pretrial diversion.  In fact, according to the complaint, he entered into a two-year pretrial diversion in 1988 to resolve a felony drug possession charge.

Before Ugarte and Rowberry completed the Borrower Certification for the PPP loan and submitted it to the SBA, Ugarte specifically agreed that at least 75 percent of the $210,000 loan would be used for payroll costs.

According to the complaint, the original PPP loan application was rejected or declined by two banks after they had discovered Ugarte was under federal indictment. The complaint alleges Rowberry told an individual she was going to go with a friend she knew in the banking industry to re-apply for the PPP loan. On May 14, 2020, Ugarte received $210,000 from Transportation Alliance Bank.

Instead of using at least 75 percent of the loan to pay payroll costs, including bounced payroll checks, Ugarte’s business account shows an automatic withdrawal to Kenworth Sales in the amount of $126,965.27 just four days after the loan was received.  The complaint alleges Ugarte’s company owed approximately $66,000 a month in lease or purchase payments to Kenworth for 13 tractors. Records show Kenworth received the money for truck payments and  small amount for various truck parts. The complaint alleges Ugarte used 60 percent of the loan to pay the past due truck payments – leaving 40 percent for payroll costs.

Ugarte and Rowberry are charged with conspiracy, removal of property to prevent seizure, loan application fraud, wire fraud, and money laundering in the complaint. The conspiracy and removal of property to prevent seizure counts each carry potential 5 years sentences.  Money laundering has a potential 10 year sentence and wire fraud is up to 20 years. The loan application fraud count is up to 30 years in prison and a $1 million fine.

The removal of property to prevent seizure count in the complaint alleges Ugarte received a payment of $60,957.82 for a wrecked tractor in Nevada after Rowberry submitted an insurance claim.  The check should have been turned over to the FBI subject to a seizure warrant in his FedEx fraud case. Rather than turn the money over to the FBI, the complaint alleges Rowberry deposited it into one of Ugarte’s accounts.  

Rowberry had an initial appearance last week in federal court and has been released on conditions of pretrial release.  A preliminary hearing for her is set for July 28, 2020, at 3 p.m.  before Magistrate Judge Daphne A. Oberg.  An initial appearance for Ugarte, who is in custody, is set for Tuesday (July 14, 2020) at 9 a.m. before Magistrate Oberg.

Complaints are not findings of guilt.  Individuals charged in complaints are presumed innocent unless or until proven guilty beyond a reasonable doubt in court.

Assistant U.S. Attorneys in the Utah U.S. Attorney’s Office are prosecuting the case.  FBI special agents are investigating the matter.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

 

SALT LAKE CITY – Four indictments unsealed in U.S. District Court Monday afternoon allege several trucking companies in Utah paid more than $1 million in bribes to the Utah FedEx Ground hub manager as a part of a scheme to exploit the employee’s position within FedEx Ground (FXG) to make the trucking businesses as lucrative as possible. Ten individuals are charged in the indictments.

            Announcing the indictments today are U.S. Attorney for Utah John W. Huber, Special Agent in Charge Paul Haertel of the FBI’s Salt Lake City Field Office, Special Agent in Charge Tara Sullivan of IRS-Criminal Investigation, Special Agent in Charge Jeffrey Dubsick of the U.S. Department of Transportation Office of Inspector General, and Michael Mentavlos, Special Agent in Charge of the Defense Criminal Investigative Service’s Southwest Field Office. 

            According to charging documents, FXG operates approximately 39 hubs or distribution centers to move packages around the country. One of the hubs is located in North Salt Lake City in Utah. FXG contracts with local trucking companies to transport packages on behalf of the company. Ryan Lee Mower, age 47, of Bountiful, was FXG’s highest-ranking employee in Utah from at least 2008 to October 2019. His primary responsibilities included overseeing the FXG contract service providers and ensuring that each local trucking company complied with FXG policies and regulations.

            One of the four indictments, for example, alleges that by fraudulently obtaining runs, allowing unauthorized runs to continue, boosting miles and receiving payment for “ghost runs,” falsely reporting accidents, and falsely reporting miles to gain income – among other things, five co-conspirators received approximately $150 million in FedEx Ground revenue and paid $300,000 in bribes to Mower.             

            “Fair play, honest dealings, and transparency are core values in the American business landscape. Bribery and corrupt practices are not,” said U.S. Attorney John W. Huber. “The conduct alleged in the indictment not only runs counter to societal expectations for American business, it runs afoul of the laws of the United States. The alleged unjust enrichment comes at the expense of those who play by the rules in the market place.”

            "These individuals allegedly exchanged bribes for business opportunities, and, as a result, lined their pockets with hundreds of millions of dollars spent on property, luxury cars, and other extravagances," said Paul Haertel, Special Agent in Charge of the FBI's Salt Lake City Field Office.  "The FBI will never turn a blind eye to those who operate fraudulently because legitimate businesses should be allowed to compete on fair and level playing fields.  The FBI is thankful for the collaboration of our law enforcement partners and the cooperation of FedEx to secure these indictments and arrests."

            Tara Sullivan, Special Agent in Charge for IRS-Criminal Investigation said, “Ryan Mower allegedly received more than $1million in illegal income, which he did not claim on his tax returns, by taking bribes to provide an unfair advantage to other trucking companies. IRS Criminal Investigation is proud to assist its law enforcement partners in utilizing our unique financial investigative experience.”

            “Maintaining public safety on our nation’s highways is paramount to protecting our families our economy and our way of life,” stated Jeffrey Dubsick, regional Special Agent-in-Charge of the U.S. Department of Transportation Office of Inspector General. “Motorists expect and deserve the highest standards of safety from trucking companies whose business is transporting goods on taxpayer-funded roads.  The arrests in this case demonstrate our commitment to protecting the traveling public from commercial operators allegedly content with placing profit over public safety through actions that undermine important DOT regulations.”

"The Defense Criminal Investigative Service (DCIS) will aggressively pursue allegations of fraud and corruption impacting the Department of Defense (DoD)," stated Michael Mentavlos, Special Agent in Charge, Southwest Field Office.  "Along with our Law Enforcement partners, DCIS is committed to safeguarding the integrity of precious taxpayer resources and will exhaust all appropriate criminal, civil and administrative actions against those individuals that choose to defraud the government and the DoD." 

U.S. v Tuchinsky, Mower, et al

            Six individuals are charged in one indictment with 16-counts of wire fraud conspiracy, promotional money laundering, and money laundering in connection with a 10-year conspiracy the indictment alleges started in 2009.

            Charged in this indictment are Yevgeny Felix Tuchinsky, age 59, who has resides in Salt Lake City and San Diego, Alexsander Vasiliyevich Barsukov, age 52, of Salt Lake City, Konstantin Mikhaylovich Tomilin, age 50, who has homes in Salt Lake City and Pennsylvania, Leonid Isaakovich Teyf, age 58, of Raleigh, North Carolina, Felix Tsipelzon, age 48, of South Jordan, and Mower.    

            Five of the defendants were involved in some way with Salt Lake Trucking Group (SLTG).  SLTG Ground is comprised of several trucking companies that contract to carry packages for FedEx Ground. 

            The indictment alleges the co-conspirators used Mower’s position to game FXG’s process governing the awarding of new runs and that Mower helped the co-conspirators grow their business larger than FXG allowed by submitting false information to FXG. Using Mower’s position, the co-conspirators falsified mileage reports and, on occasion, Mower would inflate or boost the number of weekly miles driven by one or more of the co-conspirators’ companies.  Additionally, the trucking companies received payments from FXG for “ghost routes” never actually run by a trucking company, the indictment alleges. 

            The Salt Lake Trucking Group received about $150 million in FXG revenue during the approximate 10-year period of the conspiracy. During that same period, the indictment alleges the co-conspirators paid approximately $300,000 in bribes to Mower.           

US v Ugarte and Mower      

            Hubert Ivan Ugarte, age, 52, of Draper and Mower are charged with four counts of wire fraud and six counts of money laundering in connection with the alleged bribery scheme.  Ugarte owned and operated several trucking companies. 

            The indictment alleges that by fraudulently obtaining assigned runs, obscuring business ownership and growth, covering up failed contractual performances, and falsely reporting miles to gain unearned income, Ugarte’s companies received approximately $90 million in FXG revenue over the past eight years and paid Mower at least $490,000 in bribes, according to the indictment.   

US v Kovacevic, Mower, et al 

            Davor Kovacevic, age 41, and Zlate Balulovski, age, 41, of West Jordan and Mower are charged with seven counts of wire fraud and three counts of money laundering in an indictment alleging that around April 2012, Kovacevic and Balulovski began bribing Mower. In exchange, Kovacevic and Balulovski asked for and received favors, preferential treatment, and assistance in defrauding FXG.

            Kovacevic and Balulovski own and operate several trucking companies in Utah.

            According to the indictment, the defendants used Mower’s position to game FXG’s process governing the awarding of new truck routes to FXG contract service providers, to falsify or boost mileage reports so that FXG paid the defendants’ companies more than they were entitled to, and to receive payments for “ghost routes” or runs never actually run by a trucking company.

            As a result of the fraud, the indictment alleges the defendants’ companies received approximately $21,373,873 in FXG net revenue over the past seven and a half years and paid Mower approximately $165,000 in bribe payments. 

US v Murdock and Mower 

            William Shayne Murdock, age 42, of Providence, Utah, and Mower are charged in a 10-count indictment with wire fraud, promotional money laundering, concealment money laundering, and money laundering. Murdock owns several trucking companies in Utah. Sometime around February 2014, Murdock began paying Mower bribes. In exchange, Murdock asked for and received favors and assistance in defrauding FXG, according to the indictment.

            Fox example, at some time in 2014, one of Murdock’s trucking companies was awarded a FedEx freight run from Salt Lake City to Pennsylvania to Memphis.  The indictment alleges Mower determined that based on FXG policies, he should have posted this run as an assigned run so that other contracted service providers could compete for the run. Mower did not post the run.  He allowed Murdock trucking companies to operate the unauthorized assigned run for about five years.

            By fraudulently obtaining assigned runs, obscuring business ownership and growth, and falsely reporting miles to gain unearned income, Murdock’s companies received about $19 million in FXG revenue over the past five years.  During that period, Murdock paid bribes to Mower of at least $50,000.                

US v Mower 

            Mower is charged with five counts of filing false tax returns in a Felony Information unsealed Monday. The charges allege Mower failed to include income in individual income tax returns he filed for several tax years.  For example, in February 2016, he filed a return stating that his adjustable gross income for the 2015 tax year was $112,113, knowing he had received at least $223,088.54 in additional income.  In a return for tax year 2016, he reported income of $111,835 when he knew that he had received at least $348,877.85 in additional income.   

Seizures 

            In addition to the criminal charges, the United States obtained seizure warrants to deprive the defendants of the profits of their alleged criminal conduct by seizing 25 pieces of real property, 60 bank accounts, investments, cars, boats, snowmobiles, motorcycles, ATVs, trailers, jewelry and firearms. Items seized during a case are held while the case is litigated. The process is finalized with a forfeiture order signed by the Court.

Arrests/court hearings

            Balulovski, Kovacevic, Barsukov, Tsipelzon, Tomilin and Murdock were arrested Friday and have initial appearances Monday afternoon in federal court. An arrest warrant has been issued for Ugarte. Mower has been issued a summons for an initial appearance Wednesday.  Tuchinsky was arrested in San Diego Friday.  A detention hearing has been set for Tuesday at 9:45 a.m. in San Diego. Teyf is in federal custody in North Carolina in an unrelated case. 

            The potential maximum penalty for wire fraud conspiracy/wire fraud is 20 years in prison.  Promotional money laundering and concealment of money laundering counts each have potential 20-year sentences.  The potential sentence for money laundering is up to 10 years in prison. Filing a false tax return has a potential maximum sentence of three years per count.

            Indictments are not findings of guilt.  Defendants charged in indictments are presumed innocent unless or until proven guilty in court.