Ex-CEO of McAllen-Based Trucking Company Convicted in $26 Million Fraud Scheme
HOUSTON—Sergio Lagos, 45, has been convicted of conspiracy to commit wire fraud and six counts of wire fraud, announced U.S. Attorney Kenneth Magidson. Lagos was the former CEO of USA Dry Van Logistics (USADV), a cross-border trucking company that services the maquiladora industry. Aurelio “Jim” Aleman and Oscar Barbosa, former chief operations officer and former controller for the company, respectively, previously pleaded guilty to conspiracy to commit wire fraud on Sept. 16, 2013.
According to records, Aleman and Lagos entered into a financing agreement with GE Capital Corporation (GECC) under which GECC would issue a revolving line of credit which was secured by USADV’s accounts receivables. By January 2010, the maximum borrowing limit under the agreement was increased to $38 million. Pursuant to the agreement, USADV justified advances on the line of credit by submitting “borrowing base certificates” to GECC.
Lagos admitted that from March 2008 through the end of January 2010, he joined in a scheme to defraud and swindle GECC, a lending company that provided capital to USADV, fraudulently obtaining funds through a revolving line of credit. At the plea hearing, Lagos admitted he schemed to conceal from GECC the truth about USADV’s declining operating performance and financial results. Rather than reveal USADV’s true condition, Lagos and his co-defendants 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.
Lagos signed, prepared and/or directed others to prepare certificates that falsely inflated the amount of the company’s accounts receivables and caused them to be submitted to GECC to enable USADV to obtain more funds than would otherwise have been permitted. Lagos perpetuated and concealed the scheme to defraud GECC by directing other employees 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. Lagos also admitted to submitting false financial statements to auditors and GECC.
When the truth about USADV’s operations and finances were revealed, USADV went into bankruptcy. USADV successfully re-organized under Chapter 11 bankruptcy proceedings and is currently operating with new owners. Lagos, Aleman and Barbosa are no longer affiliated with or employed by the company.
The government alleges the estimated loss to GECC is more than $26 million. U.S. District Judge Kenneth M. Hoyt, who accepted the guilty plea today, will make a final determination of that loss at the time Lagos is sentenced. At that time, he also faces up 20 years in federal prison and a possible $250,000 fine. The hearing has been scheduled for April 13, 2015.
The investigation was conducted by Homeland Security Investigations and the FBI. Assistant U.S. Attorneys Casey N. MacDonald and Grady J. Leupold are prosecuting the case.