SALT LAKE CITY, Utah, April 6, 2021 (Gephardt Daily) – Hubert Ivan Ugarte, 52, of Draper, has pleaded guilty in federal court to his role in two separate fraud schemes.
- Ugarte initially pleaded guilty to charges related to a federal corruption case involving the acquisition of contracted shipping routes with FedEx Ground (FXG) worth $ 24 million in profits.
- Second, Ugarte pleaded guilty to fraudulently obtaining a federal paycheck protection program (P3) loan for other trucking companies.
In the corruption case, Ugarte was convicted of fraud and money laundering for his
participation in a pay-to-play trucking scheme in which prosecutors alleged Ugarte were 10 of ten defendants who paid roughly $ 1 million in bribes to Utah Director FXG Ground Hub in order to ” exploit the manager’s position with FedEx and do their trucking
as lucrative businesses as possible.
In the plea deal, Ugarte admitted to bribing FXG’s senior liner director Ryan
Lee Mower, with around $ 490,000 that brought Ugarte’s trucking companies over $ 24,000,000 over a seven-year period from 2012 to 2019.
In return for the bribe payments, the FXG Director granted Ugarte’s businesses several FXG delivery routes to which Ugarte would not have been entitled under established FXG policies.
“In order to bring the project to fruition, Ugarte and the director of FXG worked to obscure the
owned by Ugarte’s many trucking companies by filing false compliance reports with FXG in order to assign Ugarte more trucking routes than a business owner was entitled to under established FXG policies A statement from the Department of Justice, District of Utah.
“As a result, Ugarte was cleared to operate at least 45 trucking routes from the Salt Lake FXG hub, significantly exceeding the FXG limit of just 15 trucks for the Salt Lake City hub.
“This practice, known as ‘over-sizing’ in the contract transportation industry, along with paying bribes to the director of FXG, is said to have resulted in automation.
termination of Ugarte’s contracts if discovered by FXG authorities. “
Throughout the program, Ugarte’s companies received around $ 135 million in gross payments from FXG, resulting in net profits for its trucking companies of around $ 24 million.
In the second paycheck protection program (PPP) loan fraud case, Ugarte
pleaded guilty to submitting a fraudulent loan application to the Small Business Administration (SBA) through the CARES (Coronavirus Aid, Relief, and Economic Security) Act. Ugarte admitted that he fraudulently obtained $ 210,000 in P3 loans after failing to disclose that he was facing a federal indictment for his role in the fraudulent trucking scheme.
The CARES Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to millions of Americans suffering the economic effects of the COVID-19 pandemic. One of the sources of relief provided by the CARES Act was the
Use of up to $ 249 billion in forgivable loans to small businesses for job maintenance and certain other expenses under the P3. In April 2020, Congress authorized more than $ 300 billion in additional P3 funding.
The proceeds of PPP loans must be used by companies on salary costs, interest on mortgages,
rent and utilities. The PPP allows the interest and principal of the PPP loan to be fully
forgiven if the business spends the loan proceeds on these expense items within a specified period of time after receiving the proceeds and uses a certain amount of the PPP loan proceeds for payroll expenses.
On May 14, 2020, Ugarte received $ 210,000 from the Transportation Alliance Bank under
the PPP. Instead of using at least 75% of the loan to pay for wage costs, including bad paychecks, Ugarte used 60% of the loan to pay off payment arrears for trucks, leaving 40% for wage costs.
Sentencing is set for June 3, 2021, in both cases.