The former chief operations officer and the former controller of a cross-border trucking operation are expected to testify against the company’s CEO in a $26 million fraud case, according to court documents.
In exchange for their testimony, 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.
Aleman-Longoria is the former COO and Barbosa the former controller for USA Dry Van Logistics. The pair, along with the company’s owner and CEO, Lagos, were each charged with one count of conspiracy to commit wire fraud and five counts of wire fraud.
Federal prosecutors accused the men of cooking the books to ensure the flow of loan money. The scheme eventually racked up $26 million in losses for GE Capital Corp. – a subsidiary of General Electric – one of the world’s largest companies.
From March 2008 through January 2010, Lagos, Aleman and Barbosa “schemed to conceal” the company’s declining profits and financial performance from lender GECC. GECC subsequently loaned the company hundreds of thousands of dollars weekly through a line of revolving credit – including some money the company used to falsely represent its financial performance.
In January 2010, USA Dry Van Logistics had secured an increase of the line of credit to $38 million, and the three defendants allegedly submitted falsified “borrowing base certificates” to GECC that inflated the company’s actual accounts receivable numbers. Lagos, Aleman and Barbosa allegedly directed employees to doctor accounts receivable and forge invoices for dollar amounts that weren’t true.
When the truth about the company’s finances became public, USADV reorganized under Chapter 11 bankruptcy. It is now operating under new ownership.
Each count in the indictment carries a maximum penalty of 20 years in prison and a $250,000 fine.
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.
Land Line contributing writer Charlie Morasch contributed to this report.
Copyright © OOIDA