Missouri trucking company owners indicted for fraud

March 5, 2012

The owners of a Lebanon, MO, trucking company are accused in an $850,000 scheme to defraud Tracker Marine, a manufacturer of boats and trailers, by inflating billable miles on purchase orders and submitting more than 2,550 fraudulent invoices to the company from January 2006 to April 2009.

U.S. Attorney Beth Phillips told KOLR 10 Newsthat James Keith Ivey, 51, and his wife, Melinda Kay Ivey, 42, both of Lebanon, MO, and Paul Ray Hunting, 39, formerly of Lebanon, have been charged in the 24-count indictment. The Iveys owned and operated J&M Trucking in Lebanon. Hunting was promoted to transportation manager for Tracker in 2006.

According to the indictment, J&M’s compensation from Tracker was determined primarily by the distance its trucks traveled. Hunting allegedly 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, according to the indictment, James Ivey paid Hunting a total of $265,775.

At the beginning of the scheme, the indictment said, there was no set amount for Hunting’s increases to the billable miles on purchase orders. However, in April 2006, James Ivey and Hunting allegedly 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/mi., the result was an additional $300 per trip.

This amount, the indictment said, allowed for an even three-way split between Hunting, James Ivey and Melinda Ivey. The defendants allegedly continued the practice of inflating billable miles by 158 mi. per trip, even after the reimbursement rate was increased to $2.10/mi. in January 2007.

J&M paid its drivers for the actual miles they drove, the indictment said, not the number of miles for which J&M invoiced Tracker.

In addition to the fraud conspiracy, the three defendants are charged in a money-laundering conspiracy related to the cash payments to Hunting, which involved the proceeds of the alleged mail and wire fraud conspiracy. According to the indictment, 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 allegedly claimed some of those payments on his federal income tax return as income from a catering business, which was false. The Iveys allegedly 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, according to the indictment.

In addition to the fraud and money-laundering conspiracies, James and Melinda Ivey are charged together in nine counts of wire fraud, and they are each charged with one count of making false statements to federal agents. James Ivey is also charged with 10 additional counts of wire fraud. Hunting is also charged with one count of willful failure to file an income tax return for the calendar year 2007.

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