Trucking Company Owner Admits Role in $280M FedEx Pay-to-Play Scandal, PPP Fraud
Salt Lake City, UT – A Utah trucking company owner indicted in a $280 million pay-to-play bribery scheme and for defrauding the Paycheck Protection Program (PPP) has admitted his guilt.
According to the U.S. Department of Justice (DOJ), Hubert Ivan Ugarte, 52, of Draper, UT, pleaded guilty last week in federal court to a series of charges stemming from two investigations.
In the first guilty plea, Ugarte admitted his role in a $280 million federal bribery case involving the procurement of FedEx Ground (FXG) contract shipping routes.
Click HERE to read more about the ten executives indicted in this case.
According to court documents, Ugarte admitted to conspiring with a Utah FXG senior linehaul manager, Ryan Lee Mower, as a part of a bribery scheme to exploit Mower’s position within FXG to defraud his employer.
During a period between 2012 and 2019, Ugarte paid Mower $490,000 in exchange for Mower awarding Ugarte’s companies with several delivery routes from FXG that Ugarte would not have qualified for under FXG’s established policies.
As part of the scheme, DOJ prosecutors said Ugarte and Mower worked to obscure the ownership of Ugarte’s seventeen 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.
The scheme was lucrative for Ugarte as his companies received approximately $135 million in gross payments from FXG, resulting in net profits of approximately $24 million.
In the second case involving PPP loan fraud, Ugarte pleaded guilty to submitting a fraudulent loan application to the Small Business Administration through the Coronavirus Aid, Relief, and Economic Security Act.
Ugarte admitted that he fraudulently obtained $210,000 in PPP loans after failing to disclose that he was under federal indictment for his role in the fraudulent trucking scheme.
On May 14, 2020, Ugarte received the funds from Transportation Alliance Bank under the PPP.
Instead of using at least 75% of the loan to pay payroll costs, including bounced payroll checks, Ugarte used 60% of the loan to pay the past due truck payments – leaving 40% for payroll costs, court documents show.
His sentencing hearing in both cases is set for June 3, 2021.