On Friday afternoon, Lipsey Logistics and Lipsey Trucking, two Chattanooga-based transportation and logistics firms caught up in their CEO’s cocaine distribution scandal, announced a change in the companies’ leadership.
Joseph Lipsey III will relinquish his management roles and take a leave of absence from both companies, according to the statement. Johnny Jones, the current President and Chief Operating Officer of Lipsey Logistics, has been appointed as the interim Chief Executive of Lipsey Logistics and Trucking. Jones has been with Lipsey in executive roles for nearly nine years; before Lipsey Jones served as Director of Business Development for Hub Group for three years, and worked in sales and marketing at U.S. Xpress for 12 years.
In October, John White, the current President of Lipsey Transport and former President of U.S. Xpress, will take over Jones’ current role as President of Lipsey Logistics.
“While these allegations relate to a personal matter, Lipsey Logistics and Lipsey Trucking want to assure the public that they will have no impact on business operations. Our customers remain our top priority and we are committed to delivering the high-quality service they expect and deserve,” the company said in a statement.
Joseph Lipsey III, his wife Shira, and son Joseph Lipsey IV were arrested earlier this week in Aspen, Colorado on a variety of drug charges, including distributing cocaine to minors. The Lipseys are alleged to have hosted drug-fueled parties for high schoolers at their home; cell phone videos and Snapchats from participating teens formed part of the basis of the evidence.
The Lipseys’ transportation businesses grew out of their provisioning of water and ice to logistics firms servicing federal government disaster relief contracts. Eventually, the Lipseys founded their own trucking company and brokerage with something of a specialization in cost-plus government contracts for federal and state agencies.
The federal government prefers not to award lucrative contracts to business owners indicted on major drug felonies.
Lipsey Trucking and Lipsey Logistics’ swift change in leadership seems intended to reassure its customers—both government and private sector shippers—that the companies’ operations will not be disrupted by the executive’s personal scandals. A state and potentially federal drug trial and their appeals could last for years, and all the while, customers have to grapple with uncertainty about the fate of the executive team, the company’s assets, and its ability to perform.
By quickly moving a seasoned company officer into the CEO role, Lipsey is trying to assuage those concerns. The change of leadership is welcome, but there has been no word on a material change of ownership that would affect control of the companies.