A former Aurora business owner pleaded guilty yesterday to conducting multiple multimillion-dollar fraud schemes.
Russell Grundy, 50, who’s now a resident of Hilton Head Island, South Carolina, admitted he was guilty of two counts of wire fraud, one count of making a false statement on a loan application and one count of money laundering, according to a news release from the office of Tim Garrison, U.S. attorney for the Western District of Missouri.
Grundy owned multiple technology companies working on software development, computer security, and addressing software and hardware needs. Those businesses included Innovative Objects LLC, PILR Technology LLC, Choice Technologies LLC, Wyerless LLC and Audio Input LLC.
Multiple fraud schemes involved Land O’Lakes Inc. and its subsidiary Nutra Blend LLC.
Through Innovative Objects, Grundy was contracted by Land O’Lakes and Nutra Blend between January 2004 and September 2015 to create propriety software to track and disburse products. He also had contracts in place with the companies to provide equipment and technical support for the software, according to the release.
Grundy admitted he falsely told Land O’Lakes and Nutra Blend that third-party programs were built into the software and were essential to its operation, thus requiring fees to third-party license holders. In reality, there were no third-party license fees. Grundy kept some $1.3 million in fraudulent license fees paid by Land O’Lakes and Nutra Blend between 2012 and 2015.
Grundy also contracted with Land O’Lakes on a warehouse lease. He fraudulently obtained a $5.5 million loan from UMB Bank by saying the lease agreement guaranteed him $18 million in future income. In reality, the Land O’Lakes lease only guaranteed him $540,000 in income, according to the release.
In a separate scheme, Grundy worked with Miami Nations Enterprise, a subsidiary of the Miami Nations Tribe. He sought loans and for Miami Nations to buy a controlling interest in all of his tech companies.
Grundy admitted he falsely told Miami Nations he was awarded a $3.5 million contract from Walmart Inc. for information technology services. He submitted fraudulent documents to support the claim. Miami Nations loaned him money to cover the costs associated with the contract, according to the release.
Additionally, Miami Nations paid $2 million to buy a 70% stake in Grundy’s companies, based on the false documentation.
Under federal statutes, Grundy could receive a sentence of up to 20 years in federal prison without parole on each of the wire fraud counts, up to 30 years on the false statements count and up to 10 years on the money laundering count, according to the release.
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