EVANSVILLE, IN (WFIE) - United States Attorney Josh J. Minkler announced Tuesday that a federal grand jury has indicted Kevin Kuhnash, 57, and Jason Jimerson, 44, formerly the Chief Executive Officer and Chief Operating Officer of Lucent Polymers, Inc., an Evansville-based plastics manufacturer.
The two men have been arrested by the FBI.
The indictment claims they committed fraud when they orchestrated the sale of Lucent to another company but concealed critical defects in Lucent’s business, including fraud that Lucent was committing on its customers.
The U.S. Securities and Exchange Commission announced that it also charged Kuhnash and Jimerson with fraud.
“Corporate officials who put deviousness over good faith degrade the integrity of our markets and impugn the reputation of American industry,” said Minkler. “This office will continue to prioritize the investigation and prosecution of corrupt corporate executives who enrich themselves through fraud and deception.”
Lucent’s customers included manufacturers and suppliers of automobiles, automobile air bags, electrical boxes, ceiling fans, kitchen appliances, and heating and air conditioning units. Their specifications often included the plastic’s flame resistance, color, strength and durability, and certification by Underwriter’s Laboratories (“UL”).
According to the indictment, Lucent’s internal testing showed that its low-cost products often did not meet its customers’ specifications or UL certification standards.
Officials say Lucent employees created false records stating that the internal testing confirmed that the products were within spec, when they were not.
The indictment says that in 2013, Kuhnash and Jimerson, as CEO and CFO, were involved in trying to sell Lucent’s business to another company.
They say Kuhnash and Jimerson both owned stock in Lucent and stood to receive hundreds of thousands of dollars’ worth of compensation when the sale was completed.
According to Assistant United States Attorneys Nicholas J. Linder and Steve DeBrota, who are prosecuting the case for the government, the defendants face possible sentences of up to between five and twenty years of imprisonment for each count.
This case is being jointly investigated by the Internal Revenue Service-Criminal Investigation Division and the Federal Bureau of Investigation.
Gabriel Grchan, Special Agent in Charge of IRS Criminal Investigation said, “Business executives that cheat, lie, and steal stain the fabric of the American economy. These Lucent executives filled their pockets through fraud and numerous acts of deceit. As in this case and countless others our agents will find corruption and bring it to justice.”
“These individuals learned of significant fraudulent practices at the company they led and let it continue. Even during and after the sale of the company, they chose not to reveal the fraud in order to enrich themselves from the sale of their stock,” said Grant Mendenhall, Special Agent in Charge of the FBI’s Indianapolis Division. “This case is a result of the strong partnership and working relationship between the FBI, federal prosecutors, and the IRS-Criminal Investigations Division to combat a significant fraud scheme impacting private and publicly-traded companies.”