The owner of the New Jersey-based freight payment solutions provider TransVantage surrendered to authorities last week in the wake of allegations of financial malfeasance of more than $42 million, U.S. Attorney Paul J. Fishman said.
Shirley Sooy, 63, currently of Fort Smith, Ark., surrendered in Newark May 28 to inspectors of the U.S. Postal Inspection Service and special agents of IRS-Criminal Investigation on a criminal complaint charging her with wire fraud conspiracy, wire fraud, mail fraud, and transacting in criminal proceeds.
According to a criminal complaint
unsealed last week, Sooy is alleged to have run a collection of businesses under the umbrella of the “TransVantage Group” as a Ponzi scheme from 2003 through April 2013.
TransVantage, as the complaint notes, audited freight bills generated by common carriers and freight forwarders hired by its shipper customers. TransVantage was obligated to pay the audited and approved freight bills to the carriers from funds provided by those companies, and the funds were supposed to be held in trust by TransVantage until paid over to the carriers.
The U.S. Attorney’s office alleges that Sooy and others “comingled the funds from the victim companies – funds that were to have been paid to carriers – into two accounts and then misused those funds in various ways. They paid prior, unpaid carrier bills of particular victim companies using funds provided by other, unrelated victim companies; they funded TransVantage’s payroll obligations and they funded the obligations of various TransVantage subsidiaries.”
The funds with which TransVantage was entrusted were also allegedly used for personal expenditures.
“They also subsidized millions of dollars in personal expenses, including mortgage payments for personal properties owned by Sooy and others in Bloomsbury, N.J.; Phillipsburg, N.J.; Waretown, N.J.; and Palm Beach Gardens, Fla.; a 48-foot yacht purchased by Sooy with others; a $135,000 Maserati automobile purchased by a conspirator; payments for personal credit card charges incurred by Sooy and her family members; and payments for remodeling Sooy’s home,” the complaint alleges.
The counts of wire fraud conspiracy, wire fraud, and mail fraud with which Sooy is charged each carry a maximum potential penalty of 20 years in prison and a fine of up to $250,000, or twice the gain or loss from the offense, the U.S. Attorney said. The counts of transacting in criminal proceeds with which Sooy is charged each carry a maximum potential penalty of 10 years in prison and a fine of $250,000, or twice the gain or loss from the offense.
first reported on TransVantage’s problems in April 2013, when the shipper Johnson Controls filed a lawsuit
alleging the freight payment company had failed to make $17 million in payments to its vendors.
Ross Harris, chief executive officer at A3 Freight Payment, said the case, if true, represents “the highest betrayal of trust by a provider to its customers."
“The far greater damage is done in the form of long-term operational impairment at the shipper," he added. "The shippers victimized by these failures must contend with immediate and ongoing operational challenges even if they didn’t use the provider to make payments. Shippers can avoid all of the financial and operational damage of these incidents with a few simple initial and ongoing due-diligence steps.”
For more information on freight payment due diligence, see the June 2013 issue of American Shipper.