PORTLAND, OR (BRAIN)—Yakima Product’s CEO Jerry Heinlen said Monday a lawsuit the company has filed against two ex-employees and two other men over bogus freight charges had no impact on freight charges paid by dealers.
“The billings in question were for inventory transfer shipments from Yakima’s (Tijuana) factory to its own distribution center. Budgets and expenses for these shipments are entirely separate from customer freight activities, so retailers were never affected,” Heinlen added.
Since Yakima sells direct to dealers, Heinlen said he was concerned that some dealers would think they might have been overcharged for freight as part of the scheme.
In the meantime, an amended complaint named another former Yakima employee and two South Carolina men as part of a scheme that allegedly defrauded Yakima of more than $4 million through phony invoices made out to fictitious freight companies.
The first suit was filed Feb. 26 in Portland’s U.S. District Court naming only Douglas T. Feller. But an amended complaint, filed April 26, added another ex-Yakima employee, Michael Tait, as well as Christopher A. Levato and Aram Mesardjian. Mesardjian and Levato allegedly set up the dummy companies with Feller.
Feller and Mesardjian allegedly set up the first dummy company, United Transportation Consultants, sending Yakima more than $200,000 in phony invoices.
According to the lawsuit, Christopher Levato, president and owner of Quality Logistics, a South Carolina trucking company, later joined Feller. They created two more bogus haulers, Cooper Enterprises and Southern Logistics and billed Yakima more than $3.8 million using Levato’s facilities to create the dummy invoices.
The lawsuit said Feller began the bogus billing in 2001. Feller’s job was to negotiate freight rates with third party vendors as an employee of Watermark Paddlesports, a company that bought Yakima. The company was renamed Yakima Products after selling off its paddlesports division. Feller later took over the same job as a consultant earning $90,000 a year.
At some point in 2002 Yakima employee, Michael Tait, allegedly joined the conspiracy. Tait had been manager at Yakima’s Chula Vista, California, warehouse and later transferred to South Carolina when Watermark bought the company. Tait allegedly learned about the operation between Feller and Levato and, rather than report it, demanded a share, the law suit claims.
Last December 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 complaint said.
Yakima officials then began a detailed review of freight invoices, dozens of which are part of the court record. In the process they discovered that Yakima had paid hundreds of bills to the dummy freight haulers sending the checks to a rented mailbox at a Mailboxes Etc./The UPS Store.
For more information, read the Aug. 15 edition of Bicycle Retailer & Industry News. -Marc Sani