Three former executives with USA Dry Van have been arrested and indicted by the FBI in an alleged scheme to defraud a lender.
Sergio Lagos, Aurelio “Jim” Aleman, and Oscar Barbosa were arrested following the return of a six-count federal indictment charging wire fraud and conspiracy to commit wire fraud, according to the FBI and the U.S. Attorney’s Office, Southern District of Texas.
Lagos was the former CEO of USA Dry Van Logistics, a cross-border trucking company based in McAllen, Texas, that services the maquiladora industry (manufacturing operations in the free-trade zone). Aleman and Barbosa were the former chief operations officer and former controller, respectively.
The indictment alleges that from March 2008 through the end of January 2010, Lagos, Aleman, and Barbosa joined in a scheme to defraud and swindle GE Capital Corp., a lending company that provided capital to the fleet, by fraudulently obtaining funds through a revolving line of credit.
Lagos, Aleman, and Barbosa allegedly schemed to conceal from GE Capital the truth about USA Dry Van Logistics' declining operating performance and financial results.
According to the indictment, the three misrepresented the nature of the company's accounts receivable, against which GE Capital was permitting the company to borrow hundreds of thousands of dollars on a weekly basis. This caused USA Dry Van Logistics to appear to be operating more profitably that it actually was.
Lagos and Aleman entered into a financing agreement with GE Capital under which it would issue a revolving line of credit which was secured by USA Dry Van Logistics accounts receivables, according to the indictment. By January 2010, the maximum borrowing limit under the agreement was increased to $38 million.
The company allegedly justified advances on the line of credit by submitting “borrowing base certificates” to GE Capital. Lagos, Aleman, and Barbosa allegedly signed, prepared, and/or directed others to prepare certificates that falsely inflated the amount of the company’s accounts receivables. Those were submitted to GE Capital to enable USA Dry Van Logistics to obtain more funds than would otherwise would have been permitted, alleges the indictment.
They also allegedly had employees manually invoice millions of dollars of fraudulent receivables to inflate the borrowing base. False and forged invoices and support documentation were allegedly created for accounts receivables that did not exist, along with false financial statements submitted to auditors and GE Capital, according to the indictment.
The FBI says when the truth about USA Dry Van Logistics operations and finances were revealed the company went into bankruptcy. The indictment says the company successfully re-organized under Chapter 11 bankruptcy proceedings and is currently operating with new owners. (Last year the company sold some of its equipment assets to Celadon.)
Lagos, Aleman, and Barbosa are no longer affiliated with or employed by the company. According to the indictment, the amount of actual loss to GE Capital was more than $26 million.
Each of the six counts of the indictment carries a maximum punishment of 20 years in prison and up to a $250,000 fine.