Utah trucking company owner faces PPP fraud charges

Company received $210,000 loan in mid-May

Clarissa Hawes

4 years ago

The owner of a Utah trucking company is facing multiple charges after federal prosecutors allege he submitted a fraudulent loan application to obtain funds through the U.S. Small Business Administration’s Paycheck Protection Program (PPP).

Hubert Ivan Ugarte, 52, of Draper, Utah, owner of Frisbu Trucking Inc., is currently in federal custody. Prosecutors also allege Lisa Bradshaw Rowberry, 49, of Provo, Utah, controller of Frisbu, helped him apply for a PPP loan through the CARES Act, which was signed into law by President Donald Trump and was designed to help businesses stay afloat during the COVID-19 pandemic.

Ugarte, who is already under indictment in another federal case involving a $280 million pay-to-play FedEx Ground bribery scheme, received a $210,000 loan through the PPP in mid-May. The forgivable loan program was enacted to help struggling businesses pay employees, interest on mortgages, rent and utilities.

According to court documents, Ugarte and Rowberry, who handled the finances for Frisbu, falsely answered no when asked if Ugarte was under formal criminal charges in any jurisdiction when filling out the PPP loan application. Ugarte also answered no when asked if he had been placed on pretrial diversion, which federal prosecutors also say is false because he entered into a two-year pretrial diversion to resolve a felony drug possession charge in 1988.

Court filings state Ugarte’s PPP loan application was rejected or denied by two banks after they discovered he was under federal indictment in the FedEx bribery case, but that Rowberry reached out to a “friend she knew in the banking industry to reapply for a PPP loan.”

On Ugarte and Rowberry’s third try submitting its PPP application, Frisbu Trucking received a $210,000 loan from the Transportation Alliance Bank (TAB) of Ogden, Utah, on May 14. As part of the PPP borrower’s terms, Ugarte and Rowberry agreed that 75% of the loan amount would be used for payroll costs.

Former employee tips off feds

Prior to receiving the PPP money, a former trucking company employee, who wasn’t named in court documents, claims Ugarte’s company was in financial trouble and had bounced payroll checks five times over a 90-day period.

Instead of using 75% of the PPP money to pay employees, Ugarte used nearly $127,000 of the money to make past-due lease payments on 13 Kenworth trucks, as well as various truck parts.

Federal investigators claim Ugarte violated the PPP agreement by using 60% of the loan amount to pay Kenworth for the leased trucks, leaving only 40% of the funds for payroll.

The former Frisbu employee also claims that Ugarte and Rowberry deposited a nearly $61,000 insurance check for a wrecked 2016 Freightliner Cascadia into the trucking company’s bank account.

However, that money was supposed to be turned over to the FBI as part of the seizure warrant in the FedEx case, according to court filings. In November 2019, former Chief Magistrate Judge Paul M. Warner issued a warrant authorizing the seizure of 41 of Ugarte’s trucks, but the 2016 Freightliner and a few others were missing.

Court filings state the 2016 Freightliner had been involved in an October 2019 crash in Nevada and had been stored there since the accident. After paying storage fees, Ugarte and Rowberry were instructed to turn over the remaining insurance money to the FBI, but that didn’t happen.

According to a U.S. Department of Justice statement, Rowberry, who is out on bail, has a preliminary hearing set for July 28.

She has also been ordered to surrender the power of attorney authority as to Ugarte’s involvement in multiple trucking companies. Court filings claim Ugarte gave Rowberry a power of attorney to run his companies in case he was forced to flee the country to avoid going to prison in the FedEx fraud case.

An initial appearance for Ugarte, who remains in custody, is set for Tuesday before Magistrate Daphne A. Oberg.

Ugarte and Rowberry are charged with conspiracy, removal of property to prevent seizure, loan application fraud, wire fraud and money laundering, according to court documents. The conspiracy and removal of property to prevent seizure counts each carry up to five-year sentences. Money laundering has a potential 10-year sentence and wire fraud is up to 20 years. The loan application fraud count is up to 30 years in prison and a $1 million fine, according to the DOJ statement.

FedEx Ground pay-to-play case

Prosecutors indicted Ugarte, along with several other trucking company executives, in an alleged “pay-to-play” bribery scheme involving a former FedEx Ground (FXG) manager, Ryan Lee Mower, of Bountiful, Utah, in exchange for lucrative contracts in October 2019.

FXG is a subsidiary of Memphis, Tennessee-based shipping and logistics giant FedEx Corp. (NYSE: FDX).

Mower is accused of conspiring with Ugarte, who has been charged with four counts of wire fraud and six counts of money laundering in the alleged bribery scheme. Ugarte owned and operated several trucking companies that contracted with FedEx Ground. Prosecutors allege he received around $90 million in revenue over an eight-year period because of FXG contracts and paid Mower approximately $490,000 in bribes.

Mower has been named in five federal indictments and faces 51 counts for allegedly “exploiting his position for financial gain.” He was the highest-ranking executive at the FXG hub in Utah from 2008 to October 2019 and was responsible for overseeing the shipping giant’s contract service providers. Part of his job was to ensure “that each local trucking company complied with FXG policies and regulations,” according to the United States Attorney’s Office for the District of Utah.

Prosecutors claim the trucking companies involved in the scheme with Mower raked in more than $280 million over a 10-year period.