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Nearly five years after the high-profile collapse of his company, former Arrow Trucking Co. CEO James Douglas “Doug” Pielsticker has been indicted on bank and tax fraud charges and his former chief financial officer has pleaded guilty, records show.
Federal prosecutors unsealed a 23-count indictment in a Dallas courtroom Friday naming Pielsticker, 46, as part of a $24 million conspiracy to defraud the Internal Revenue Service and a Utah bank. The charges include bank fraud, tax fraud and tax evasion, with elements of the nearly year-long scheme dating to January 2009.
The collapse of Pielsticker’s Arrow Trucking Co. just days before Christmas five years ago left truckers across the country stranded without pay or a way to purchase fuel to get home.
Records indicate that the money helped fund Pielsticker’s lavish lifestyle, including Bentley and Maserati automobiles, jewelry, a mansion and a wedding.
He faces up to 30 years in prison and a fine of up to $1 million on each of the 15 bank fraud counts and up to five years in prison and a $250,000 fine on each of the tax fraud counts.
Danny Williams, U.S. attorney for the Northern District of Oklahoma, said Friday that the charges were several years in the making because investigators had to sift through volumes of paper and other evidence to piece together the case.
“There were a lot of moving parts to this investigation,” Williams said, noting that he believes the scheme went as deep as Pielsticker and a chief financial operator, meaning charges against other executives aren’t expected.
Arrow’s former CFO, Jonathan Leland Moore, 37, pleaded guilty Thursday to federal tax fraud and bank fraud charges involving the conspiracy, records unsealed Thursday show.
Pielsticker, who moved to Dallas after his company went bankrupt, was arrested there Thursday. He was booked into the Dallas County Jail on Thursday afternoon on a hold for the FBI and was released about 8 a.m. Friday to the custody of the FBI’s Oklahoma office, officials said.
Pielsticker was arraigned at a hearing in U.S. District Court for the Northern District of Texas on Friday afternoon and then released. Williams said Pielsticker, who isn’t cooperating with investigators, will be tried in Tulsa.
Williams said Pielsticker routinely would ask for tens of thousands of dollars in cash payments, as well as make employees cut checks for travel. Evidence shows that the CEO took a salary of about $1 million a year, Williams said, so pairing that income with the company’s losses indicates that he was spending “a tremendous amount of money” in a short time.
“Apparently he owned a Bentley and would have the Bentley towed to Dallas for service as opposed to having work done here and would have the company pay for that,” Williams said.
Investigators combed records beyond the period of the alleged scheme but found nothing to suggest that the fraud started earlier. Williams also noted that no illegal activities were uncovered in Texas, where Pielsticker apparently had entered the real estate business.
Williams said Arrow didn’t appear to be any different from other companies that struggled when the economy crumbled in 2008, when the company’s financial troubles arose. However, the actions of Pielsticker and Moore in looting Arrow during 2009 hastened the company’s demise as the year drew to a close, Williams said.
The alleged scheme affected the entire company, Williams said, including its several hundred employees, who all lost their jobs.
“As alleged in the indictment and information, Arrow Trucking withheld payroll taxes from employees’ wages. Beginning in 2009, Pielsticker and others conspired to defraud the United States by failing to account for and pay over Arrow Trucking employees’ payroll taxes and with respect to Pielsticker’s own income taxes,” a release by federal prosecutors says.
“Arrow Trucking failed to pay over approximately $5,000,000 in payroll taxes consisting of federal income taxes, Medicare taxes, and Social Security taxes. Also, Pielsticker attempted to evade his individual income taxes due and owed to the United States for the years 2007, 2008, and 2009,” the release states.
Records show that Pielsticker owed more than $400,000 in past-due child support and alimony to his ex-wife, Susan Pielsticker. A judgment was entered against him as part of his 2005 Tulsa County divorce case, and a warrant for his arrest was issued in August. It does not appear that the case is connected to his arrest in Dallas.
Pielsticker’s attorney could not be reached for comment Friday.
The CFO: Records show that Moore, Arrow’s former chief financial officer, signed a plea agreement with federal prosecutors in Oklahoma in October and pleaded guilty Thursday in Tulsa’s Northern District of Oklahoma federal court.
Moore stated in his plea that he, Pielsticker and other co-conspirators conspired to defraud the IRS and Transportation Alliance Bank of Utah.
He stated that he conspired with Pielsticker and others “known and unknown” to submit false invoices to the bank, divert company funds and keep payroll taxes that had been withheld from employees’ checks.
“As part of the conspiracy, payroll taxes were withheld from employees’ wages but no taxes were paid or turned over to the Internal Revenue Service as required by law,” Moore’s plea states.
“As part of the conspiracy, funds from Arrow Trucking were diverted from the company, in part, to pay for the personal expenses of James Douglas Pielsticker and others.”
Moore’s agreement states that he and Pielsticker “caused Arrow Trucking Company to submit fraudulent invoices to Transportation Alliance Bank to induce the bank to pay funds to Arrow Trucking Company that were not warranted.”
His agreement states that the loss to the IRS totaled more than $9 million while Transportation Alliance Bank’s loss totaled more than $15 million. The agreement is contingent upon Moore’s continued cooperation in the case.
Moore signed the agreement Oct. 8, and it remained sealed until Thursday, when it was signed by the U.S. Attorney’s Office.
Moore faces up to five years in prison for his role in the conspiracy and is scheduled to be sentenced on March 12, records show. He could receive leniency in return for any testimony he provides against Pielsticker or others in the case.
Stan Monroe, Moore’s attorney, said Moore also lives in Dallas and has been released pending further hearings in the case. He said the five-year criminal investigation involved prosecutors in Washington working with local prosecutors.
“He’s been around to take the medicine for his part in this thing since the beginning. We worked out an agreement,” Monroe said.
He said Moore is making restitution to Transportation Alliance Bank and “feels horrible” about the problems caused for employees after the company’s collapse.
“He wants to be able to support his family and pay off his restitution. … He feels horrible about it. It was never his intention to cause anybody any problems. He was acting under the direction of people above him,” he said.