Fraud Friday – Business Owner Pleads Guilty to $ 26 Million Dollar Fraud Scheme
February 7, 2020
By Caity Witucki
Contributing Editor, Fraud Friday
Fraud Friday – Business Owner Pleads Guilty to $ 26 Million Dollar Fraud Scheme
On January 30, 2020, Russell Grundy, a former Aurora, Missouri, business owner pleaded guilty in federal court to a series of multi-million dollar fraud schemes. The allegations brought against Grundy include wire fraud, making a false statement on a loan application, and money laundering.
In 2004, Grundy was contracted by Land O’Lakes to create propriety software that would be used to inventory, track, and coordinate the disbursement of products. Grundy falsely told the company that third party software programs were built into his proprietary software so some of their payments would be remitted to third party license holders. In reality, Land O’ Lakes paid more than $1.3 million in license fees which Grundy kept for his personal or unrelated expenses.
While Grundy was still working with Land O’Lakes in 2014, he applied for three loans at UMB Bank. He falsely claimed on the loan applications that Land O’Lakes had agreed to a 20-year lease for a warehouse space that would be built using the loans. Based on lease agreements provided to UMB, Grundy claimed he would receive $18 million in future income as a result of building the warehouse space. In reality, Land O’Lakes had signed two lease agreements, one for three years and one that was “month-to-month.” The true leases signed and approved by Land O’Lakes only guaranteed Grundy $540,000 in income. As a result of Grundy’s fraud scheme, UMB Bank disbursed $5.5 million in loans.
Gundy was indicted and arrested on July 13, 2017. Under federal statutes, he is facing a maximum sentence of 20 years in federal prison without parole on each count of the wire fraud, up to 30 years on the false statements count, and up to 10 years on the money laundering count. Grundy’s final sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
Department of Justice – Former Aurora Business Owner Indicted for $26 Million Fraud Schemes