SPRINGFIELD, Mo. – A federal grand jury this week indicted a man who used to own a business in Aurora for fraud schemes and money laundering. Investigators believe he stole more than $26 million.
Russell Grundy, 48, of Hilton Head Island, S.C., is charged in a 30-count indictment returned by a federal grand jury in Springfield on Tuesday. Grundy was arrested on Thursday in Hilton Head Island.
Grundy owned 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, PILR Technology, Choice Technologies, Wyerless, and Audio Input.
Land O’Lakes/Nutra Blend Fraud Scheme
Grundy (through his company Innovative Objects) was contracted by Land O’Lakes, and its subsidiary, Nutra Blend, 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.
Investigators believe 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. They also believe Grundy claimed 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.
Miami Nations Enterprise Fraud Scheme
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 to develop and provide information technology services. Investigators believe Grundy presented numerous e-mail messages, 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.
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. Investigators believe Grundy made material false statements in each of those loan applications.
Grundy is also charged with 10 counts of money laundering.
If Grundy is convicted, he could receive prison sentences as long as 20 years for each of the 16 counts of wire fraud; up to 10 years for each of the 10 counts of money laundering; and up to 30 years for each of the four counts of making a false statement on a loan application.
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.
This case was investigated by the FBI and IRS-Criminal Investigation.