James Keith Ivey, 51, and his wife, Melinda Kay Ivey, 42, both of Lebanon, and Paul Ray Hunting, 39, formerly of Lebanon, were charged in a 24-count indictment returned by a federal grand jury in Springfield.
Today’s indictment alleges that the three co-defendants devised 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 more than $850,000 to Tracker.
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 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 says, 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 miles 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, the indictment says, 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 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, the indictment says, not the number of miles for which J&M invoiced Tracker.
In addition to the fraud conspiracy, James and Melinda Ivey and Hunting 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.
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 make an income tax return for the calendar year 2007.
Phillips cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Assistant U.S. Attorney Steven M. Mohlhenrich. It was investigated by the FBI and IRS-Criminal Investigation.
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