LOUISVILLE, Ky. (WDRB) -- Louisville-based Mercer Transportation is fighting the federal government's allegation that the trucking company participated in a bribery scheme which has already sent four people to prison.
At issue is whether Mercer -- one of the largest trucking companies in the country -- knew or should have known that one its drivers and a sales agent, according to the government, paid thousands of dollars in bribes to two former Department of Defense employees who funneled millions of dollars in “lucrative” shipping jobs to the company from 2006-2012.
The shipments, including cross-country trips of over 2,000 miles, emanated from a U.S. Marine Corps base in Albany, Georgia, where the two former Defense Department employees worked.
Mitchell Potts and Jeffrey Philpot, who worked for the Defense Logistics Agency at the Georgia base, pleaded guilty to taking the bribes in 2014, while former Mercer driver David Nelson and sales agent Ivan Brannan pled guilty in 2014 and 2016, respectively, to bribing Potts and Philpot.
All four men were sentenced to federal prison.
After a three-year investigation, the U.S. Department of Justice in October sued Mercer for unspecified damages from the “fraudulent scheme,” according to records in U.S. District Court in Albany, Georgia, where the case is pending.
In court filings, Mercer’s attorneys stress that Nelson and Brannan were independent contractors and deny the government’s contention that Mercer’s management knew about the bribes.
“Mercer is and has always been committed to acting in an honest and ethical manner, and it has done so here,” Louisville attorney Gregg Hovious, who represents the company, said in a brief interview last week. “(Mercer) has cooperated with the government investigation every step of the way, and it is working actively to resolve all issues with the government.”
The U.S. Attorney’s Office in Macon, Georgia, which is handling the case, declined to comment.
Mercer, which is privately owned, was founded in 1977 and has its corporate office in the Portland neighborhood. The company has 295 employees and generates annual revenue of $411 million, according to a federal contracting database.
The government’s complaint does not say specifically how much money the company generated through the alleged fraud.
But Mercer’s business from the Georgia Marine Corps base rose from $278,652 in 2006 to about $6.5 million in 2007 after the scheme was “fully implemented,” according to the complaint. Mercer received more than $23 million in jobs from the base from 2007-2012, according to the government.
The government alleges that two additional Mercer drivers, identified in court records only by their initials J.M. and M.H., were involved in the scheme.
Brannan, who was Mercer’s “exclusive agent” for procuring business at the Georgia base, admitted in his guilty plea that he mailed cash, paid for meals and provided cruise tickets to Potts, one of the former government employees, and his fiance, according to the complaint. In at least one instance, Brannan admitted to handing Potts “several hundred dollars in cash” under the table at a dinner.
Brannan, whom Mercer paid a commission for each shipping job, also admitted instructing Nelson, the former Mercer driver, to pay the government employees in cash upon picking up shipments at the military base, using code words such as “keep feeding them cheeseburgers.”
Three-fourths of the fee paid by the government to Mercer went to independent contractor driver on each trucking job, according to the government and Mercer.
When other Mercer drivers started complaining about Nelson and the two unnamed drivers getting all the work from the Georgia base, Mercer management in 2008 created the “Dedicated Driver Program” and designated the three truckers as the ones who got first dibs on any “sensitive freight” shipments from the base, according to the government.
The designated driver program allowed Mercer to “quiet internal suspicions” about the bribery scheme, according to the government. But Mercer says in court records that it was only responding to a request from Defense Department officials that the base have its own dedicated fleet of drivers.
The government also alleges Mercer management did not act on three anonymous emails complaining about the scheme in 2008, and that the company paid for a 2007 hunting trip for Potts, Brannan and a national sales representative for Mercer.
In court records, Mercer said the emails “speak for themselves” and denied the government’s allegations related to them.
The company admitted that it paid for the hunting trip but said the expense report was “inadvertently approved.”
The government alleges that Mercer’s bribery resulted not only in the company getting additional shipping jobs, but also in the government classifying those jobs in a way that would pay Mercer and its drivers “inflated” fees.
For example, in October 2011, Nelson hauled a 53-foot trailer from the Georgia base to three delivery sites in California and one in Nevada.
But it appeared from the government’s internal records as if he had made four separate trips instead of a single cross-country route with multiple stops, resulting in a fee of $26,562 instead of $7,084, according to the complaint.
Mercer says the way those jobs were paid does not violate government regulations, as the Department of Justice claims, and that the Defense Department chose to structure the jobs as such.
The civil case against Mercer began in 2013 when James Reeves, who was a national accounts manager in Mercer’s sales department until 2014, sued the company under the False Claims Act, a federal law that allows whistleblowers to recover some of the damages from frauds against the government.
An attorney for Reeves, a resident of Indiana, did not respond to a request for comment.