Three Ex-Executives of USA Dry Van Trucking Company Charged in Alleged $26 Million Fraud Scheme – 2 Agree to Plea Deal

USA-Dry-Van-LogoSergio Lagos, 44, Aurelio “Jim” Aleman, 59, and Oscar Barbosa, 50, have been arrested following the return of a six-count federal indictment charging wire fraud and conspiracy to commit wire fraud, announced United States Attorney Kenneth Magidson.

The sealed indictment, returned August 27, 2013, was unsealed following the arrest of the McAllen residents today. They are expected to make their initial appearances before U.S. Magistrate Judge Dorina Ramos this morning.

Lagos was the former CEO of USA Dry Van Logistics (USADV), a 48 state truckload carrier that also provides  cross-border trucking services to the maquiladora industry, while Aleman and Barbosa were the former chief operations officer and former controller, respectively.

The indictment alleges that from March 2008 through the end of January 2010, Lagos, Aleman, and Barbosa joined in a scheme to defraud and swindle GE Capital Corporation (GECC), a lending company that provided capital to USADV, fraudulently obtaining funds through a revolving line of credit. Lagos, Aleman, and Barbosa allegedly schemed to conceal from GECC the truth about USADV’s declining operating performance and financial results. Rather than reveal USADV’s true condition, Lagos, Aleman, and Barbosa allegedly misrepresented USADV’s true operating performance and financial results. According to the indictment, they misrepresenting to GECC the nature of the USADV’s accounts receivable, against which GECC was permitting USADV to borrow hundreds of thousands of dollars on a weekly basis. This caused USADV to appear to be operating more profitably that it actually was.

According to the Indictment, Lagos and Aleman entered into a financing agreement with GECC under which GECC would issue a revolving line of credit which was secured by USADV’s accounts receivables. By January 2010, the maximum borrowing limit under the agreement was increased to $38 million. Pursuant to the agreement, USADV allegedly justified advances on the line of credit by submitting “borrowing base certificates” to GECC. Lagos, Aleman, and Barbosa allegedly signed, prepared, and/or directed others to prepare certificates that falsely inflated the amount of the company’s accounts receivables and caused them to be submitted to GECC to enable USADV to obtain more funds than would otherwise would have been permitted. Lagos, Aleman, and Barbosa allegedly perpetuated and concealed the scheme to defraud GECC by directing other employees to manually invoice millions of dollars of fraudulent receivables to inflate the borrowing base and to create false and forged invoices and support documentation for accounts receivables that did not exist. Lagos, Aleman, and Barbosa also submitted false financial statements to auditors and GECC, according to the indictment.

When the truth about USADV’s operations and finances were revealed, USADV went into bankruptcy. The indictment alleges USADV successfully re-organized under Chapter 11 bankruptcy proceedings and is currently operating with new owners. Lagos, Aleman, and Barbosa are no longer affiliated with or employed by the company. According to the indictment, the amount of actual loss to GECC was more than $26 million.

On August 8, 2012 truckload carrier Celadon, agreed to purchase a portion of the operating equipment of USA Dry Van Logistics. At the time of the announcment, Paul Will, president and chief operating officer of Indianapolis-based Celadon said in a statement that “Their footprint has tremendous potential to supplement the existing cross-border expertise for which Celadon is known and further accelerates our overall growth plans. Our companies also share a very similar, overlapping customer account base.”

Each of the six counts of the indictment carries a maximum punishment of 20 years in prison and up to a $250,000 fine.

Two of three former USA Dry Van execs reach plea deals – Agree to testify against boss

According to court documents in the case, defendants Aurelio “Jim” Aleman-Longoria, 59, and Oscar Barbosa, 50, are expected to testify against their co-defendant, 44-year-old Sergio Lagos.

The guilty pleas were entered Sept. 16 in the Houston Division of U.S. District Court Southern District of Texas. Aleman-Longoria and Barbosa are scheduled to be sentenced on Dec. 9, at which time they face up 20 years in prison and up to a $250,000 fine.

According to a report in LandLineMag.com,

According to the plea agreement, Aleman-Longoria and Barbosa admitted that from March 2008 through the end of January 2010, they joined in a scheme to defraud and swindle GECC, by fraudulently obtaining funds through a revolving line of credit. Rather than reveal USADV’s true condition, Aleman-Longoria and Barbosa misrepresented USADV’s true operating performance and financial results to include the nature of the USADV’s accounts receivable, against which GECC was permitting USADV to borrow hundreds of thousands of dollars on a weekly basis. This caused USADV to appear to be operating more profitably that it actually was.

The co-defendants also signed, prepared or directed others to prepare certificates that falsely inflated the amount of the company’s accounts receivable, enabling USADV to obtain more funds than would otherwise have been permitted. Other employees were directed to manually invoice millions of dollars of fraudulent receivables to inflate the borrowing base and to create false and forged invoices and support documentation for accounts receivables that did not exist. Aleman-Longoria and Barbosa also admitted to submitting false financial statements to auditors and GECC.

Both Aleman and Barbosa also agreed to make monthly payments towards restitution to GECC prior to sentencing. In Aleman’s plea agreement, he further agreed to the imposition of a money judgment against him in the amount of $26,254,781, which was ordered to be forfeited to the United States.

It’s also worth mentioning that LandlineMag is erroneously reporting that USA Dry Van Logistics is a cross border trucking operation in an attempt to misinform their readers that the company is somehow in involved in the Cross Border Pilot Program with Mexico. As is true with many of OOIDA’s claims about Mexican trucking, this claim is absolutely devoid of facts.

USA Dry Van was a 48 state truckload carrier that offered service into Mexico just as many of the large well known carriers do today.

[ad]

One Comment