Indictment — United States v. Hubert Ivan Ugarte and Ryan Lee Mower, District of Utah (Document 1)

Summary

A sealed indictment filed October 24, 2019 as Document 1 in United States v. Hubert Ivan Ugarte and Ryan Lee Mower, Case 2:19-cr-00393-DB, in the U.S. District Court for the District of Utah. It states Mower was Senior Linehaul Manager at the North Salt Lake hub of FedEx Ground and Ugarte controlled trucking companies that served as contract service providers. The grand jury charges that Ugarte paid Mower bribes in exchange for new assigned runs, concealment of Ugarte's ownership of several providers, underreported declinations and inflated mileage reports, and that Ugarte's companies received approximately $90 million in FedEx Ground revenue while Mower was paid at least $490,000. Counts 1-4 charge wire fraud under 18 U.S.C. §§ 1343 and 2, and Counts 5-10 charge money laundering under 18 U.S.C. §§ 1957 and 2. Forfeiture of real property is sought.

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“Indictment — United States v. Hubert Ivan Ugarte and Ryan Lee Mower, District of Utah (Document 1).” Original at archive.org. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/indictment-no-2-19-cr-00393-dkt-1-8f4223cb5f/, SHA-256 77fbd0ad8b65fedda98b0936c71a36a40569fad1acdfe5457ce08b5fc30740a6.

Full text

Case 2:19-cr-00393-DB Document 1 Filed 10/24/19 Page 1 of 12

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JOHN W. HUBER, United States Attorney (#7226) · ··). D sreJr~··P.,"
LAKE DISHMAN, Assistant United States Attorney (#l6~1J~ "'r - ' . 11'1r? T
KEVIN SUNDWALL, Assistant United States Attorney (#634q~, 2l1
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JAMIE Z. THOMA~, Assistant United ~tates Attorney (#94~Pi):;'/r·; d- <f J

Attorneys for the Umted States of America ·- 1
Office of the United States Attorney
111 South Main Street, Suite 1800
Salt Lake City, Utah 84111-2176 SEALED
Telephone: (801) 524-5682
Email: lake.dishman@usdoj.gov

IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH

UNITED STATES OF AMERICA, INDICTMENT

Plaintiff, VIOLATIONS:

vs. COUNTS 1-4: 18 U.S.C. § 1343
(Wire Fraud)
HUBERT IVAN UGARTE and RYAN
LEE MOWER, COUNTS 5-10: 18 U.S.C. § 1957
(Money Laundering)
Defendants.

Case: 2:19-cr-00393
The Grand Jury charges: Assigned To : Sam Da 'd
A ' ' VI
ss1gn. Date: 10/24/2019
Description:
BACKGROUND

At all times relevant to this Indictment:

1. FedEx Ground Package System, Inc., more commonly known as FedEx

Ground ("FXG"), was a package transportation and delivery company headquartered in

Pennsylvania. FXG operated throughout the United States, including Utah. It was a

subsidiary of FedEx Corp., headquartered in Tennessee.

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Case 2:19-cr-00393-DB Document 1 Filed 10/24/19 Page 2 of 12

2. To move packages across the country, FXG operated approximately thirty-

nine hubs, or distribution centers, across the United States.

3. One ofFXG's hubs was located in North Salt Lake, Davis County, Utah.

4. As part of its business model, FXG contracted with local trucking

companies, known as contract service providers ("CSPs"), to transport packages on behalf

ofFXG.

5. Defendant HUBERT IVAN UGARTE (UGARTE) is a resident of Salt Lake

County, Utah.

6. UGARTE owned, operated, and controlled the following trucking-related

companies: All My Daughters Trucking Inc., Arostegui Trucking, .Inc., Chasqui

Transportation Inc., Diamond Trucking Inc., Frisbu Trucking, Inc., I. & G. Ugarte

Trucking, Inc., I&W Diesel, Inc., My Daughters Trucking, Inc., Northern Star Trucking

Inc., Princess Transport, Inc., Princess Trucking Inc., Qori Transport Inc., Safe Trucking,

Inc., Stars and Stripes Trucking, Inc., Sumise Transport Inc., Transamerican Trucking,

Inc. and Ugarte Enterprises Inc.

7. Each ofUGARTE's companies are either FXG CSPs or supported and

serviced UGARTE's other companies engaged as CSPs.

8. MOWER was the Senior Linehaul Manager at the North Salt Lake FXG

hub. He was FXG's highest-ranking employee in Utah from at least 2008 to October

2019. His primary responsibilities included overseeing the FXG CSPs and ensuring each

complied with FXG policies and regulations.

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Case 2:19-cr-00393-DB Document 1 Filed 10/24/19 Page 3 of 12

SCHEME AND ARTIFICE TO DEFRAUD

9. The main object of the scheme and artifice to defraud FXG by UGARTE

and MOWER was to exploit MOWER's position within FedEx Ground in order to

unfairly grow, give undue preferential treatment to, and protect UGARTE's trucking

operations so as to make UGARTE's businesses as lucrative as possible thereby enriching

UGARTE and MOWER.

10. Sometime before January l, 2012, UGARTE began paying MOWER bribes.

In exchange, UGARTE asked for and received favors, preferential treatment, and

assistance in defrauding FXG.

11. FXG has a strict no bribery policy in order to promote a culture of honesty

and integrity. As part of the CSP agreement, FXG reserves the right to terminate a CSP's

contract ifthe CSP engages in bribery or corruption.

12. When UGARTE signed the contract with FXG, he agreed to conduct all

business activities with honesty and integrity, and to comply with all federal, state, and

local laws. He also agreed that FXG could terminate the contract if either he or the CSP

violated any of these provisions of the contract.

13. MOWER understood that accepting bribes would result in FXG terminating

his employment.

14. Since at least January 1, 2012, UGARTE and MOWER hid their corrupt

relationship from FXG.

15. In return for money, UGARTE exploited MOWER's position at FXG to

fraudulently grow and maintain his businesses in several ways.

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Case 2:19-cr-00393-DB Document 1 Filed 10/24/19 Page 4 of 12

Fraudulently Obtaining New Assigned Runs

16. First, UGARTE used MOWER's position to game FXG's process

governing the awarding of new runs to FXG CSPs.

17. A run is an overland trucking route between two or more places, between

which FXG needs packages transported by a CSP. Some runs exist only for a day. Others

are permanent due to the steady flow of packages between locations. A permanent run is

called an assigned run. As demand grows, FXG creates additional assigned runs. Once

created, FXG notifies CSPs that the assigned run is available for any CSP interested to

apply so the newly created run maybe assigned to a CSP.

18. The primary way a CSP grows its business with FXG is by obtaining more

runs. In every CSP contract, FXG and the CSP agree upon established rules and

procedures by which a new run will be awarded. This allows every CSP to expect the

same process every time FXG makes a new assigned run available.

19. Typically, the truck of a CSP that has the most points receives the assigned

run. Trucks earn a point each day. Trucks can also earn points for positive safety

inspections and during peak season. As such, the awarding of an assigned run should be

based on merit.

20. MOWER's responsibility as Senior Linehaul Manager was to announce and

award new assigned runs according to the process agreed upon by FXG and the CSPs as

well as ensure the fairness and integrity of the process.

21. Instead, MOWER ensured UGARTE's companies received the runs in at

least two different ways. First, MOWER disproportionately awarded UGARTE's

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Case 2:19-cr-00393-DB Document 1 Filed 10/24/19 Page 5 of 12

companies with new truck numbers, ultimately allowing those companies to qualify more

quickly for earning new assigned runs. Second, MOWER failed to announce newly

available assigned runs, instead giving UGARTE assigned runs without initiating through

the awarding procedure.

22. Without MOWER's assistance, UGARTE would not have been able to

obtain as many routes as he did.

Hiding the True Growth of the Businesses

23. Second, MOWER helped UGARTE grow his businesses larger than FXG

allowed by causing false information to be submitted to FXG.

24. Generally, FXG limits the number of semi-trucks ("tractors") a CSP owner

may have service runs originating from the same hub to fifteen. A CSP may seek an

exception to have more.

25. FXG does this for many reasons. It protects FXG from becoming too

dependent on one CSP in a given area. It allows FXG to spread opportunities available

among more local trucking companies. It grants FXG access to more trucking resources

that can support its transportation network.

26. FXG depends on its senior linehaul managers to prevent CSPs from growing

too large at a single hub. When a CSP gets too big at a particular hub, FXG refers to this

as overscale.

27. Rather than follow company protocol, MOWER and UGARTE regularly

and systematically concealed UGARTE's true ownership and control of several CSPs

from FXG by using another person to act as the owner of the CSP. By doing so,

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Case 2:19-cr-00393-DB Document 1 Filed 10/24/19 Page 6 of 12

UGARTE obtained and operated more than 40 tractors servicing the North Salt Lake FXG

hub.

Protecting the Business

28. Third, UGARTE was able to use MOWER's position to protect his

businesses.

29. When a CSP obtains an assigned run, it promises FXG it will complete a

certain percentage of the required trips. When a CSP cannot service the assigned run on a

given day, it is called a declination. As the number of declinations increases, the CSP's

rate of completion falls for that specific assigned run. If a CSP's rate of completion drops

below the promised completion rate, FXG will take away the assigned run and announce

its re-availability to the other CSPs.

30. MOWER, as Senior Linehaul Manager, oversaw the recording and reporting

of declinations for all North Salt Lake hub CSPs.

31. During several lengthy periods, UGARTE did not have enough truck drivers

employed to service all of his CSPs' assigned runs. Instead of documenting each of these

declinations and risk UGARTE losing assigned runs, MOWER underreported the true

number ofUGARTE's declinations. This prevented FXG from finding a more reliable

CSP for the assigned run and guaranteed that UGARTE would maintain the rights to some

of his assigned runs, and allowed him to continue earning money from those runs.

32. Despite the fact that UGARTE's companies could not adequately service all

of their existing assigned runs, UGARTE continued to press MOWER about obtaining

more assigned runs.

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Case 2:19-cr-00393-DB Document 1 Filed 10/24/19 Page 7 of 12

Boosting Miles

33. Using MOWER's position, UGARTE and MOWER falsified mileage

reports so that FXG paid UGARTE's companies more than they were entitled.

34. A CSP earns money by completing runs for FXG. The total weekly mileage

of the runs completed by a CSP is multiplied by a dollar amount per mile. Thus, the more

miles driven, the more money earned.

35. MOWER would regularly inflate, or boost, the number of weekly miles

driven by one or more ofUGARTE's companies and submit the boosted numbers to FXG,

causing FXG to overpay UGARTE.

Results of the Fraud

36. By fraudulently obtaining assigned runs, actively obscuring business

ownership and growth, covering up failed contractual performances, and falsely reporting

miles to gain unearned income, UGARTE's companies received approximately $90

million in FXG revenue over the past eight years. During that same period, UGARTE

paid MOWER at least $490,000.

COUNTS 1-4
18 U.S.C. §§ 1343 and 2
(Wire Fraud)

37. The allegations in the preceding paragraphs are incorporated by this

reference as though fully set forth herein.

38. On or about the dates listed below, in the District of Utah and elsewhere,

HUBERT IVAN UGARTE and RYAN MOWER,

7
Case 2:19-cr-00393-DB Document 1 Filed 10/24/19 Page 8 of 12

defendants herein, having devised and intending to devise a scheme and artifice to

defraud, and for obtaining money and property by means of false and fraudulent pretenses,

representations, and promises, and for the purpose of executing said scheme and artifice to

defraud, did cause to be transmitted in interstate commerce by means of wire

communication certain writings, signs and signals, each such use of wire communication

being a separate count of this Indictment; all in violation of 18 U.S.C. §§ 1343 and 2.

Count Date

and MOWER caused false shareholder information, namely
recording M.T. as the 100% owner of Stars and Stripes Trucking Inc., to
2 6/27/2018 be entered into FXG's CSP portal website namedMyGroundBizAccount,
which information was transmitted to and stored in a FXG server located
outside the state of Utah. --- ----------------·-·-------------------------·--·---------------------- ----------- - -----·----------
During Ugarte Enterprises Inc.' s annual compliance certification as a
FXG CSP, UGARTE and MOWER caused J.U. or someone purporting to
3 4/17/2019 be J. U. to electronically sign and affirm that the ownership information
recorded in Count 1 was still correct, which information was transmitted
and stored in a FXG server located outside the state of Utah.
Stars and Stripes Trucking Inc.'s annual compliance certification
as a FXG CSP, UGARTE and MOWER caused M.T. or someone
purporting to be M. T. to electronically sign and affirm that the ownership
4 411712019 1

i information recorded in Count 2 was still correct, which information was
transmitted to and stored in a FXG server located outside the state of
Utah.

COUNTS 5-10
18 U.S.C. §§ 1957 and 2
(Money Laundering)

39. The allegations in paragraphs 1through38 are incorporated by this

reference as though fully set forth herein.

8
Case 2:19-cr-00393-DB Document 1 Filed 10/24/19 Page 9 of 12

40. On or about the dates set forth below, in the District of Utah and elsewhere,

HUBERT IVAN UGARTE,

defendant herein, did knowingly engage and attempt to engage, in the following monetary

transactions by, through, and to a financial institution, affecting interstate and foreign

commerce, in criminally derived property of a value greater than $10,000, that is the

withdrawal, transfer, exchange of U.S. currency, and deposit of funds, such property

having been derived from a specified unlawful activity, that is, the proceeds of Wire

Fraud in violation of 18 U.S.C. § 1343; all in violation of Title 18 U.S.C. §§ 1957 and 2:

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' 5
I
==-==-~~~~~==-=-~=]
I Mountain A~erica Credit Union deposited a check wo~h
I 11117/2014 ! $22:19~.35 issued by .UGARTE from u~ Bank acc?unt !
I

I \ endmg m 5690, a busmess account of~nsbu Truckmg Inc.,

1--- -1
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--- -1t~~!~!~~~~~~!~~f~~!~~s;~:g,?
11/25/2015 i business account ofTransamerican Trucking, Inc., as
I
1
I i payment for renovations performed on a residence located
1-- -----··---------~---------- -lt~~~F~-~e~~!~le~-;:~~:~~~~~~~~tt~i6~oo-is~li-e<lby _________ J

I[ \ UG~TE from US Bank account endin? in 3950, a
7 31212017
1 busmess account of I & G Ugarte Truckmg, Inc., as a
I I
,_______________ ----- - _L________ -- -i-·P:t:i:.~h~~-~P~2:'~~!1.:!L<2~il-~QJ_ZE<?rd ~~ll.Q: - -- -------------·· --- --1·
I J.S.C. deposited a check worth $50,662.14 issued by
1

1
I UGARTE from US Bank account ending in 1120, a !
8 : 3/10/2017 I business account of Arostegui Trucking, Inc., as a purchase [

Jpa~ment~or-a2017~~iUa:~sca~dc~-- ...
1

J _ _ ------ _
! UGARTE ":ire~ $37,832.46 from his personal US Bank
1 [
i account endmg m 3777, to an a~count at KeyBank for F.M., !
1

I
9 101412017
I I as a mortgage payment for a residence located at 322 E
__ __ _____ -···· __ J ________________ l1__M2:t:i:!?-l_~i!1.:_l?~~!.Y.!?!::_PI~.P~!~_1T!~h~~Q~Q:__ _____________________ 1
! I S.L.V.A. deposited a check worth $23,500.00 issued by I
I UG:ARTE from US Bank account endin? in 3950, a I
10 1112912018

________________ L__________ ···-······---! ~~;~h;;~-~~~;~~~~-~~~~~~~~;~~~~;~~~~~~~~~:-~~a----------·· I
9
Case 2:19-cr-00393-DB Document 1 Filed 10/24/19 Page 10 of 12

NOTICE OF INTENT TO SEEK FORFEITURE

41. Pursuant to 18 U.S.C. § 981(a)(l)(C) and 28 U.S.C. § 246l(c), upon

conviction of any offense in violation of 18 U.S.C. § 1343, as set forth in this Indictment,

the defendant shall forfeit to the United States of America any property, real or personal,

that constitutes or is derived from proceeds traceable to the scheme to defraud. The

property to be forfeited includes, but is not limited to, the following:

a. Real property located at:

1. 338 E Dairy Lane, Draper, Utah;

ii. 1237 W 2285 S, Woods Cross, Utah;

111. 322 E Mountain Berry Dr., Draper, Utah;

1v. 201 E. 13560 S, Draper, Utah;

v. 301 E State Route 115, Herscher, Illinois, 60941 (a 4.92%

interest in this property including rents attributable to such interest); and

vi. 1401 Windy Lane, Jerseyville, IL, 62052 (an 18.93% interest

in this property including rents attributable to such interest).

b. A money judgment equal to the value of any property, real or

personal, constituting or derived from proceeds traceable to the scheme to defraud

and not available for forfeiture as a result of any act or omission of the

defendant(s) for one or more of the reasons listed in 21 U.S.C. § 853(p); and

c. Substitute property as allowed by 21 U.S.C. § 853(p) via 28 U.S.C. §

2461(c).

10
Case 2:19-cr-00393-DB Document 1 Filed 10/24/19 Page 11 of 12

42. Pursuant to 18 U.S.C. § 982(a)(l), upon conviction of any offense in

violation of 18 U.S.C. §§ 1956 and/or 1957, the defendants shall forfeit to the United

States of America any property, real or personal, involved in such violations, and any

property traceable to such property. The property to be forfeited includes, but is not

limited to the following:

a. A money judgment equal to the value of all property involved in the

money laundering and any property traceable to such property and not available

for forfeiture as a result of any act or omission of the defendant(s) for one or more

of the reasons listed in 21 U.S.C. § 853(p); and

b. Substitute property as allowed by 21 U.S.C. § 853(p) via 18 U.S.C. §

982(b).

GRAND JURY'S PROBABLE CAUSE FINDING REGARDING FORFEITURE

43. The grand jury finds probable cause to believe that

a. Hubert Ivan Ugarte has committed the crimes specified in the above

forfeiture notice;

b. that the following assests are constituted or derived from proceeds

traceable to the wire fraud scheme; and

c. that such assets would be subject to forfeiture in the event of

UGARTE's conviction:

11
Case 2:19-cr-00393-DB Document 1 Filed 10/24/19 Page 12 of 12

L A 4.92% interest in real property located at 301 E State Route

115, Herscher, Illinois, 60941 (including rents attributable to such interest)

and

11. An 18.93% interest in real property located at 1401 Windy

Lane, Jerseyville, IL, 62052 (including rents attributable to such interest).

A TRUE BILL:

JOHN W. HUBER
United States Attorney

LAX~~-=
Assistant United States Attorney

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