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Hugo Man Pleads Guilty to Embezzling More Than $1.3 Million from Employer

MINNEAPOLIS – A Hugo man has pleaded guilty to mail fraud after embezzling more than $1.3 million from his employer, announced U.S. Attorney Andrew M. Luger.

According to court documents, Leon Arthur Keener, 55, was employed as a service manager at an interstate trucking company ("Company A") from 2011 to 2022. In his role, Keener had managerial oversight for the financial operations at Company A's Inver Grove Heights location. Beginning in 2015 through 2022, Keener knowingly devised and participated in a scheme to embezzle $1,314,633 from the Company A.

In his position, Keener was responsible for providing vehicle owners and insurance companies with estimates on repair work costs on damaged vehicles. He also provided insurance companies with supplemental repair estimates discovered during the repair process, after the original estimate had already been provided. If the insurance company denied reimbursement of some portion of the claim, Company A would write off the repair cost as a loss. As manager, Keener had the authority to write off repairs and create purchase orders in Company A's accounts payable system. Keener used his managerial authority to embezzle funds from the company by misappropriating more than $562,000 in reimbursement checks from insurance companies to cover supplemental vehicle repair costs.

According to court documents, his scheme involved misappropriating insurance reimbursement checks for supplemental repairs by writing off the supplemental repair work as a loss, indicating in the accounts payable system that the insurance company had refused to reimburse the supplemental repair. Keener then deposited the insurance check into a personal bank account under his control. He concealed the embezzlement by directing his employees to provide him directly with any checks received from insurance companies, cutting out the administrative and accounting employees on staff at Company A.

Keener also embezzled $751,000 from the company by generating and submitting false vendor payment requests, which he diverted for his own use and benefit. Many of these bogus requests for vendor payments were for a shell company he created and controlled called "CR Services," which he added to Company A's accounts payable system in 2012, before the system required verified vendor identification.

All of the vendor and insurance reimbursement payments were facilitated using the mail. Keener used a bank account opened in the name of CR Services to pay personal expenses and transferred funds from the CR Services account into his personal bank account. He used the embezzled funds on gambling trips to Las Vegas, luxury cars, and a boat.

Keener pleaded guilty yesterday in U.S. District Court before Judge Ann D. Montgomery to one count of mail fraud. A sentencing hearing will be scheduled at a later time.

This case is the result of an investigation conducted by the FBI and the United States Postal Inspection Service.

Assistant U.S. Attorney Harry M. Jacobs is prosecuting the case.

 

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