ST. LOUIS-A federal grand jury has indicted the former president of a now-defunct St. Louis tire wholesaling company for allegedly defrauding his suppliers and partners out of more than $6 million. Donald E. Mathis, former president of Global Imports Ltd., has been charged with 14 felony counts relating to fraud-seven counts of wire fraud, six counts of interstate transportation of goods obtained by fraud and one count of bankruptcy fraud. If convicted, he faces a maximum five to 10 years in prison and a $250,000 fine for each count.
The grand jury alleged the 44-year-old Mr. Mathis falsified invoices to cover losses he had incurred after entering into a contract to become the exclusive worldwide sales representative for Boyd's Wheels Inc., according to a statement issued by the office of U.S. Attorney Edward L. Dowd Jr.
Global's other shareholders had voted against the Boyd contract and didn't know it existed.
As a result of that agreement, Mr. Mathis allegedly ended up with a large inventory of wheels he could not sell. ``In order to cover that loss, Mathis allegedly used Global funds and also enlisted the assistance of other Global customers in a false invoicing scheme,'' the attorney's office said.
Mr. Mathis allegedly sold goods at or below cost, according to the indictment.
The indictment also alleges some ``cooperating customers'' carried false invoices on their books in order to make it appear they owed the wholesaler money-thus falsely inflating Global's receivables. An attorney's office spokeswoman said she was unsure if further indictments were pending.
``Mathis also allegedly sold tires for cash, sold to unapproved customers and recorded them as approved customer sales, and even gave some customers funds to make payments when and as directed by Mathis,'' the attorney's office said in a statement.
As a result of those actions, the attorney's office said, Dunlop Tire Corp. allegedly lost $1.9 million; Uniroyal Goodrich Tire Co., $1.2 million; Toyo Tire (U.S.A.) Corp., $500,000; and Bridgestone/Firestone Inc., $314,000.
``Not only did existing suppliers rely on the accuracy of those financial statements, but new suppliers extended additional credit to Global based on those records,'' the attorney's office stated.
Mr. Mathis was arrested May 30 and released on bond. His case will be tried in U.S. District Court, Eastern District of Missouri.
Global Imports closed in November 1993, and was forced by its creditors to file for bankruptcy a month later. The firm also sold tires at retail through some Mark I Tire and Auto Service outlets.