Jury awards S.C. Johnson $147 million in Freight Fraud Case
The former transportation director of S.C. Johnson & Son Inc. has been sentenced to eight years in prison for defrauding the company of millions of dollars in inflated transportation charges.
Federal prosecution of a scam targeting SC Johnson came closer to a conclusion on Wednesday with the sentencing of two former SC Johnson employees who were involved.
Milton Morris and Katherine Scheller were part of a scheme in which confederates billed SC Johnson at inflated rates to move goods and then returned part of the money to Morris, then the company's transporation director, in the form of kickbacks. He bought gifts for Scheller, one of his employees. Morris was convicted of mail fraud and filing a false tax return. Scheller was convicted of making false statements to a postal inspector.
Federal Judge Charles Clevert sentenced Morris to eight years and one month in prison to be followed by three years of supervised release. Clevert sentenced Scheller to 3 years in prison to be followed by one year of supervised release. Morris remains responsible for $20 million in restitution payments to SC Johnson, with $5.4 million of responsibility shared with his co-defendants.
Morris had worked for the company for 46 years. Scheller was also a longtime employee and was set to succeed Morris when he retired. Both were fired in October 2004. The company started investigating the two in early 2004.
The men who set up the fraudulent transportation firms and paid the kickbacks to Morris also have pleaded guilty to federal crimes and are awaiting sentencing.
For each of the defendants, the jury set the following amounts of liability, which do not equal the $147 million cap in the case. What portion of the damages each defendant will ultimately pay will be determined at a later date.
Milton E. Morris, $58 million
Katherine M. Scheller, $2.2 million
Thomas H. Buske and his companies, $52.9 million
Tom Russell and his companies, $17.9 million
The jury set damages at $131 million as the result of a conspiracy among Morris, Scheller, Buske and Russell.
The jury further set damages of $70.26 million for Morris and defendants All Modes Inc., David Eggleston and Bay Darnell. A separate trial for All Modes, Eggleston and Darnell is expected.
The jury also set damages of $61.7 million for Morris and defendants Vantraxx Inc. and Peter O'Malley. O'Malley and his company had previously reached a settlement with S.C. Johnson.
With Wednesday's hearings past there remains only one federal criminal case, and that is against Thomas Buske who owned a trucking brokerage company and was allegedly part of the scheme.
In a prepared statement, SC Johnson said it is pleased that justice was served when Milton E. Morris and Katherine M. Scheller were sentenced today to eight and three years in prison, respectively.
"These individuals admitted to their crimes in plea agreements signed in December 2008, in which they acknowledged their involvement in a scheme to defraud SC Johnson by submitting inflated invoices for transportation services. In delivering the sentences, Chief Judge Charles N. Clevert, Jr. commented on the breaches of fiduciary responsibility and trust committed by these individuals.
"The company believes that justice has prevailed today and this sentence is a strong statement that fraud, greed and deceit have no place in our society. SC Johnson appreciates the work of the court, and we look forward to when all parties involved in this fraudulent scheme are held accountable for their acts."
Please feel free to comment to any of the posts on this blog. The intent is to start discussions on the subject content. If you have articles for post or comments about the blog in general please contact: Thank you Preferred Logistics----------- www.preferredlogistics.biz
The former transportation director of S.C. Johnson & Son Inc. has been sentenced to eight years in prison for defrauding the company of millions of dollars in inflated transportation charges.
Federal prosecution of a scam targeting SC Johnson came closer to a conclusion on Wednesday with the sentencing of two former SC Johnson employees who were involved.
Milton Morris and Katherine Scheller were part of a scheme in which confederates billed SC Johnson at inflated rates to move goods and then returned part of the money to Morris, then the company's transporation director, in the form of kickbacks. He bought gifts for Scheller, one of his employees. Morris was convicted of mail fraud and filing a false tax return. Scheller was convicted of making false statements to a postal inspector.
Federal Judge Charles Clevert sentenced Morris to eight years and one month in prison to be followed by three years of supervised release. Clevert sentenced Scheller to 3 years in prison to be followed by one year of supervised release. Morris remains responsible for $20 million in restitution payments to SC Johnson, with $5.4 million of responsibility shared with his co-defendants.
Morris had worked for the company for 46 years. Scheller was also a longtime employee and was set to succeed Morris when he retired. Both were fired in October 2004. The company started investigating the two in early 2004.
The men who set up the fraudulent transportation firms and paid the kickbacks to Morris also have pleaded guilty to federal crimes and are awaiting sentencing.
For each of the defendants, the jury set the following amounts of liability, which do not equal the $147 million cap in the case. What portion of the damages each defendant will ultimately pay will be determined at a later date.
Milton E. Morris, $58 million
Katherine M. Scheller, $2.2 million
Thomas H. Buske and his companies, $52.9 million
Tom Russell and his companies, $17.9 million
The jury set damages at $131 million as the result of a conspiracy among Morris, Scheller, Buske and Russell.
The jury further set damages of $70.26 million for Morris and defendants All Modes Inc., David Eggleston and Bay Darnell. A separate trial for All Modes, Eggleston and Darnell is expected.
The jury also set damages of $61.7 million for Morris and defendants Vantraxx Inc. and Peter O'Malley. O'Malley and his company had previously reached a settlement with S.C. Johnson.
With Wednesday's hearings past there remains only one federal criminal case, and that is against Thomas Buske who owned a trucking brokerage company and was allegedly part of the scheme.
In a prepared statement, SC Johnson said it is pleased that justice was served when Milton E. Morris and Katherine M. Scheller were sentenced today to eight and three years in prison, respectively.
"These individuals admitted to their crimes in plea agreements signed in December 2008, in which they acknowledged their involvement in a scheme to defraud SC Johnson by submitting inflated invoices for transportation services. In delivering the sentences, Chief Judge Charles N. Clevert, Jr. commented on the breaches of fiduciary responsibility and trust committed by these individuals.
"The company believes that justice has prevailed today and this sentence is a strong statement that fraud, greed and deceit have no place in our society. SC Johnson appreciates the work of the court, and we look forward to when all parties involved in this fraudulent scheme are held accountable for their acts."
Please feel free to comment to any of the posts on this blog. The intent is to start discussions on the subject content. If you have articles for post or comments about the blog in general please contact: Thank you Preferred Logistics----------- www.preferredlogistics.biz
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