The former CEO and president of bankrupt US road haulage firm Arrow Trucking Company, James Douglas Pielsticker, has been sentenced to serve seven years in prison and ordered to pay US$21m in restitution for conspiracy to defraud the US, bank fraud, and tax evasion, in a multi-million dollar fraud that led to the collapse of the Tulsa, Oklahoma-based company, reports our sister publication Lloyds Loading List.
According to the plea agreement and other court records, in 2009 Pielsticker and others conspired to defraud the United States by failing to account for and pay federal withholding taxes on behalf of Arrow Trucking Company and by making payments to Pielsticker outside the payroll system. Pielsticker and others withheld Arrow Trucking Company employees’ federal income tax withholdings, Medicare and social security taxes, but did not report or pay over these taxes to the IRS, despite knowing they had a duty to do so.
The conspirators paid for Pielsticker’s personal expenses with money from Arrow Trucking Company and submitted fraudulent invoices to TAB to induce the bank to pay funds to Arrow Trucking Company that were not warranted. In total, the conspiracy caused a loss to the United States totaling more than $9.5m.
Pielsticker also tried to evade his and his wife’s 2009 income taxes by causing Arrow Trucking Company to pay personal expenses on his behalf, causing his employer to underreport his wages and other compensation on his W-2 form, and by preparing a fraudulent draft joint 2009 US Individual Income Tax Return.
The fraud is said to have led to the collapse in late 2009 of Arrow Trucking, which in its heyday was a regional transportation powerhouse, operating some 1,300 trucks and 2,500 trailers. Its collapse led to the loss of around 1,200 jobs.
Following the sentencing last week, Acting Assistant Attorney General Caroline Ciraolo of the Justice Department’s Tax Division said: “Corporate officers who willfully fail to report and pay over employment taxes and use that money for their own benefit are violating their obligations to their employees and the United States, stealing from the US Treasury, and giving their companies an unfair advantage over competitors that comply with the law.
“Today’s sentence is a warning to those individuals who refuse to carry out their fiduciary duties that the United States will investigate them, prosecute them, and seek lengthy prison sentences for their crimes.”
US Attorney Danny Williams Sr. of the Northern District of Oklahoma said Pielsticker had conspired to defraud millions of dollars in part for his personal benefit, including a wedding and Bentley and Maserati cars.
Pielsticker, formerly of Tulsa, Oklahoma, pleaded guilty earlier this year to a two‑count superseding information charging him with one count of a dual-object conspiracy to defraud the United States and to commit bank fraud and one count of willfully attempting to evade his individual income taxes for the year 2009.
Chief US District Court Judge Gregory Frizzell of the Northern District of Oklahoma also sentenced Pielsticker to serve three years of supervised release following his 90-month prison term and ordered him to pay $21m in restitution to the Internal Revenue Service (IRS) and the Transportation Alliance Bank (TAB).
FBI special agent in charge, Scott Cruse, said: “Mr Pielsticker abdicated his responsibility as the CEO of Arrow Trucking, and concocted a fraudulent scheme to mask his illegal activities. In doing so, Pielsticker chose his own personal extravagances over the needs of his employees, which ultimately led to Arrow Trucking closing its doors during the Christmas holidays, a time when all of us count on our paychecks the most.”