A former Aurora, Mo. businessman was indicted Thursday by a federal grand jury for fraud schemes by which he is accused of stealing more than $26 million, as well as money laundering and other charges.
Tom Larson, Acting U.S. Attorney for the Western District of Missouri, announced last week that Russell Grundy, 48, was charged in a 30-count indictment returned by a federal grand jury in Springfield, Mo., on Tuesday, July 11.
Grundy was the owner of several companies that focused on advanced technologies, ranging from software development to computer security to addressing the software and hardware technological needs of its clientele. Grundy’s companies included Innovative Objects, LLC, PILR Technology, LLC, Choice Technologies, LLC, Wyerless, LLC, and Audio Input, LLC.
Grundy engaged Miami Nations Enterprise in negotiations to provide financial assistance in the form of loans and for Miami Nations Enterprise to purchase a controlling interest in all of Grundy’s technology-based companies.
According to the indictment, Grundy falsely told Miami Nations Enterprise that his companies had been awarded a $3.5 million contract from Wal-Mart Stores, Inc., to develop and provide information technology services. Grundy allegedly presented numerous e-mails, invoices, conditional award letters and other documents to support his false claims.
From May 19, 2014, to June 24, 2015, Miami Nations Enterprise loaned Grundy the money to cover the costs associated with software and hardware purchases and training necessary to obtain the $3.5 million Wal-Mart contract.
On Aug. 24, 2014, Miami Nations Enterprise paid an additional amount to purchase a 70 percent interest in Grundy’s companies.
Officials with Miami Nations Enterprise later discovered that neither Grundy nor any of his companies had been awarded any contract with Wal-Mart, and determined that the e-mails, conditional contract award, invoices and bank deposits Grundy had used to support his claims were fraudulently created.
The indictment charges Grundy with 10 counts of wire fraud related to a series of payments from May 19, 2014, to April 12, 2015, totaling $5,990,000.
Grundy (through his company Innovative Objects) was contracted by Land O’Lakes, Inc., and its subsidiary, Nutra Blend, LLC, from January 2004 to Sept. 27, 2015, to create propriety software to inventory, track, and coordinate the disbursement of products. Grundy also contracted with Land O’Lakes and Nutra Blend to provide equipment and technical support for the use, upkeep, and maintenance of the software.
The indictment alleges that Grundy falsely told Land O’Lakes and Nutra Blend that third party software programs were built into that proprietary software and were essential to the successful operation of the software. Grundy allegedly claimed that some of the payments made to Innovative Objects were remitted to third party license holders.
In reality, the indictment says, there were no third party licensee fees; instead, Grundy kept those payments for his personal or unrelated expenses.
The indictment charges Grundy with six counts of wire fraud related to a series of payments from August 2013 to April 2015, totaling $862,856.
In addition to the wire fraud schemes, the indictment charges Grundy with four counts of making a false statement on a loan application. Grundy applied for three loans from UMB Bank on Oct. 17, 2014, totaling $11,390,800. Grundy applied for a $1,850,000 loan from the People’s Bank of Seneca on Aug. 27, 2015.
Grundy allegedly made material false statements in each of those loan applications.
Grundy is also charged with 10 counts of money laundering.
The indictment also contains a forfeiture allegation, which would require Grundy to forfeit to the government any property obtained as a result of the alleged wire fraud violations, including a money judgment of at least $26,060,000.
Larson cautioned that the charges contained in this indictment are simply accusations and not evidence of guilt.
The case is being prosecuted by Assistant U.S. Attorneys Patrick Carney and Casey Clark. It was investigated by the FBI and IRS-Criminal Investigation.