Owners and Operators of Choice One Delivery Indicted by Grand Jury for Fraud and False Statements

LawFuel.com –
DENVER – George Grunden, Sr., age 45, and his wife Renza Grunden, age 43, both of Arvada, Colorado, were indicted by a federal grand jury late Tuesday, March 23, 2010, on charges of fraud and making false statements. The charges related to a trucking company the couple owned named Choice One. Both surrendered this morning without incident. They appeared before a U.S. District Court Magistrate Judge where they were advised of the charges pending against them.

According to the indictment, George Grunden, Sr. and Renza Grunden owned a trucking company. In 2001 the company was named George and Renza Grunden. In 2003 the defendants changed their business name to Choice One Freight, LLC. In 2006 the defendants changed their business name to Colorado’s Choice One Delivery Service, LLC.

Beginning June 16, 2003, and continuing through May 22, 2009, the defendants allegedly knowingly and willfully devised a scheme to obtain money by means of false and fraudulent pretenses. George and Renza Grunden entered into contracts with the U.S. Postal Service to load and transport mail from the Denver Processing and Distribution Center, or from the Golden, Colorado post office to outlying post offices.

As part of the contract, the Postal Service calculates the monthly payments by dividing the annual amount by twelve. Payment is made through automatic electronic wire funds transfers to the defendants’ business account. These payments continue unless performance on the contracts stops or does not meet the standards required in the contracts. Also included in the contacts are the routes and schedules Choice One was required to perform. These schedules included starting and stopping points along designed routes; and specific arrival and departure times from each stopping point on the route. The schedules included the estimated annual miles to be driven and the estimated hours to complete the schedules per year.

The indictment alleges that the defendants submitted transportation related forms which contained materially false information. Further, based on records reviews, George and Renza Grunden were not paying the correct prevailing minimum wages as called for in Postal Service contracts.

The defendants also allegedly caused Choice One drivers to violate Department of Transportation Hours-of-Service rules. These violations include not allowing Choice One drivers to receive the required 10-hour break between shifts; and causing the drivers to exceed 70-hours working in any 8-day period without a 36-hour break. The Grundens also provided their drivers with sample driver daily logbook entries, which resulted in drivers failing to document all hours worked.

George and Renza Grunden were required to prepare two documents for the Department of Labor Wage and Hour Division. One document prepared by the defendants indicated each employee and the wages paid for the period January 16, 2006, through January 15, 2008.

The second document prepared by the defendants indicated what the defendants should have paid their drivers, if they followed the Wage Determination. The defendants provided these documents to the Department of Labor auditors and the second document had materially false information. They allegedly failed to pay their drivers $379,261.98 in wages for work performed on Postal Service contracts. Further, the defendants knowingly and willfully provided documents to the federal auditors that contained materially false information about the total number of hours Choice One drivers worked on Postal Service contracts.

“Not only did the defendants’ defraud the government and short-change their employees, they also jeopardized public safety by making their employees drive longer hours with less rest,” said U.S. Attorney David Gaouette.

“Schemes to defraud the Postal Service, such as those revealed in today’s indictment, not only negatively affect the Postal Service’s bottom line, but also impact contract employees through lost wages and unsafe work conditions. The Office of the Inspector General aggressively investigates these instances of contract fraud against the Postal Service and appreciates the prosecutive efforts of the U.S. Attorney’s Office,” said David C. Williams, Inspector General for the Postal Service.

Daniel R. Petrole, Deputy Inspector General, United States Department of Labor, stated: “The defendants allegedly provided false information to the Department of Labor to evade paying workers the wages and benefits to which they are entitled. We are committed to working closely with our law enforcement partners to investigate the abuse of workers in this country.”

“This investigation demonstrates our commitment to maintaining the safety and integrity of the nation’s public highways, which is a top priority for both the Office of Inspector General and the Department of Transportation,” said Max Smith, Special Agent in Charge, U.S. Department of Transportation Office of Inspector General. “Working with our law enforcement and prosecutorial colleagues, we will continue our vigorous efforts to protect the road traveling public from fraud, waste and abuse.”

Both defendants are charged with 9 counts of wire fraud, three counts of major fraud, 12 counts of making false statements and one count of obstruction of a federal audit. In addition, the indictment has a notice of asset forfeiture. Wire fraud carries a penalty of not more than 20 years in federal prison, and a fine of up to $250,000. Major fraud carries a penalty of not more than 10 years in federal prison, and a fine of up to $250,000. The penalty for making false statements and obstruction of a federal audit is not more than 5 years in federal prison, and a fine of up to $250,000.

This case was investigated by the Unites States Postal Service Office of the Inspector General, and the United States Department of Transportation, with substantial assistance from the Department of Labor’s Wage and Hour Division.

The Grundens are being prosecuted by Assistant U.S. Attorney Joseph Mackey.

The charges contained in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.

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