Tammy Dickinson, U.S. Attorney for the Western District of Missouri, announced that the owners of a Lebanon, MO, trucking company have been sentenced for their roles in a conspiracy to defraud Tracker Marine, a Springfield, MO.-based manufacturer of boats and trailers sold throughout North America.
James Keith Ivey, 53, and his wife, Melinda Kay Ivey, 43, both of Lebanon, were sentenced by U.S. District Judge Gary A. Fenner on Friday, May 10, 2013. James Ivey was sentenced to five years and 10 months in federal prison without parole. Melinda Ivey was sentenced to two years and six months in federal prison without parole. The Iveys are jointly and severally liable to pay $797,325 in restitution, according to a press release from Dickinson’s office.
On Aug. 15, 2012, the Iveys and co-defendant Paul Ray Hunting, 40, of Paso Robles, CA, were found guilty following a bench trial before U.S. District Judge Richard E. Dorr of devising a scheme to defraud Tracker Marine, LLC, from January 2006 to April 2009 by inflating purchase orders and shipping invoices.
During that time, the Iveys and Hunting caused more than 2,550 fraudulent invoices to be submitted to Tracker, which created a total loss of at least $797,325 to Tracker, the press release stated.
The Iveys owned and operated J&M Trucking, Inc., in Lebanon. Tracker contracted with J&M to transport boats and trailers to Tracker’s dealers located throughout North America. Hunting, formerly of Laclede County, MO, was promoted to transportation manager for Tracker in 2006.
Hunting pleaded guilty to his role in both a wire fraud conspiracy and a money-laundering conspiracy as well as to failing to file an income tax return. Hunting, who was sentenced to one year and one day in federal prison, was ordered to pay $294,496 in restitution.
J&M’s compensation from Tracker was determined primarily by the distance its trucks traveled. Hunting caused Tracker to make payments to J&M in excess of the contract amount by listing an inflated and false number of billable miles on purchase orders. In exchange, James Ivey paid Hunting a portion of the revenue generated by the fraudulently increased billable miles, in cash. From 2006 to 2008, James Ivey paid Hunting a total of $265,775, the release stated.
At the beginning of the scheme there was no set amount for Hunting’s increases to the billable miles on purchase orders. However, in April 2006, James Ivey and Hunting agreed on a set amount of 158 mi. as being the amount Hunting would add to each purchase order, because when multiplied by the then-applicable reimbursement rate of $1.90 per mile, the result was an additional $300 per trip.
This amount allowed for an even three-way split between Hunting, James Ivey and Melinda Ivey. The defendants continued the practice of inflating billable miles by 158 miles per trip, even after the reimbursement rate was increased to $2.10 per mile in January 2007. However, J&M paid its drivers for the actual miles they drove, not the number of miles for which J&M invoiced Tracker.
In addition to the fraud conspiracy, James and Melinda Ivey were found guilty of a money-laundering conspiracy related to the cash payments to Hunting, which involved the proceeds of the mail and wire fraud conspiracy. Approximately every two weeks James Ivey, often accompanied by Melinda Ivey, met Hunting (usually in a parking lot in Lebanon) and paid Hunting his share of the proceeds generated from the fraudulent invoices, in cash.
Hunting claimed some of those payments on his federal income tax return as income from a catering business, which was false. The Iveys claimed the payments represented a percentage of revenue generated by two trucks they claimed Hunting owned and was leasing to J&M, which was also false.
In addition to the fraud and money-laundering conspiracies, James and Melinda Ivey were convicted together in nine counts of wire fraud and James Ivey was convicted of 10 additional counts of wire fraud. The Iveys were each convicted of one count of making false statements to federal agents.
This case was prosecuted by Assistant U.S. Attorney Steven M. Mohlhenrich. It was investigated by the FBI and IRS-Criminal Investigation.