PORTLAND, OR (BRAIN)--Yakima Products has sued a former employee and consultant alleging that he defrauded the company over a five-year period of $3.6 million through phony invoices made out to a fictitious freight company.
The lawsuit, filed in Portland’s U.S. District Court earlier in the year, claims that Douglas T. Feller, whose job was to negotiate freight rates with third party vendors, created a dummy company and sent bogus freight bills to Yakima for payment, which the company paid.
It wasn’t until last December that Yakima executives discovered what they have called a “fraudulent scheme.” A new employee, hired to replace Feller and take over freight negotiations, began preparing a 2007 budget. His projected budget was far less than what had been spent on freight over the last few years, the 16-page complaint said.
Yakima officials then began a detailed review of freight invoices. It found that products shipped from its Tijuana, Mexico, factory to a Memphis, Tennessee, warehouse were legitimate. But in the process they also discovered that Yakima had paid hundreds of bills to a company called Cooper Enterprises, a supposed freight hauler.
From September 2002 through May 2006, Yakima had paid Cooper Enterprises $3.6 million with the checks going to a rented mailbox at a Mailboxes Etc./The UPS Store, the suit said. Yakima ended its contract with Feller May 26, 2006. Feller, whose address is listed as Springfield, Missouri, funded a series of businesses with the money, the civil suit claims.
Those businesses included Midwest Auto Group, Paradise Sun Tanning, Platinum Rentals, Priority Towing Service, Rapid Recovery, RJP & Associates, Secure Financial Group, Sunrise Lawn Care, Transolutions and Uptown Shoes. He allegedly set up one company in Kouts, Indiana, and the rest in Springfield. Feller is listed as a principal in many of the companies, the lawsuit said.
A phone call and email sent to Feller’s attorney went unanswered. Yakima is seeking more than $40 million in damages plus the $3.6 million in phony freight bills. —Marc Sani