Made in America? 5 charged with fraud in alleged boot scheme

Executives and employees at an East Tennessee defense contractor for years assured the U.S. military that the boots they made for soldiers came from America when in fact they'd been shipped from China, the U.S. government alleges.

Five employees and principals of the former Wellco Enterprises Inc. were indicted this week in U.S. District Court in Greeneville. They appeared Thursday before U.S. Magistrate Judge Clifton Corker, pleading not guilty.

The defendants: Vincent L. Ferguson, 65, of Knoxville; Matthew L. Ferguson, 40, of Lenoir City; Kerry J. Ferguson, 35, of Houston; Matthew H. Martland, 32, of Knoxville; and Stephanie L. Kaemmerer, 44, of Knoxville.

The five are free on bond pending trial. Counts against them include wire fraud, major fraud against the United States and smuggling goods into the U.S.

The charges allege the defendants conspired from December 2008 to August 2012 in a scheme to sell thousands of bogus boots to the U.S. government for troops. From 2006 through 2012, the Defense Department paid Wellco more than $138 million for military footware, according to the indictment.

Defense Department agencies sought American-made products for soldiers under a federal law. Wellco principals assured its customers it turned out boots made right here in the United States, according to the government.

The company, which started in Waynesville, N.C., had a decades-old reputation for its boots, recognized for a patent on molding and attaching a rubber sole to a shoe upper in a single operation. During the Vietnam War, according to the government, the Army used Wellco's technology to make a hot-weather boot that came to be known as the "jungle boot."

In 2007, the company was acquired by investment firms from Boston and San Francisco, the indictment states. Wellco went private.

In November 2009, Wellco opened a large manufacturing plant in Morristown, and it also shifted its headquarters to Knoxville from Waynesville. It later moved its headquarters to Morristown.

Vincent Ferguson was president and CEO from 2006 to 2012, according to the government. Matthew Ferguson was senior vice president of sales.  Kerry Ferguson was marketing director. Martland was director of distribution and logistics. Kaemmerer was inside sales manager and operations manager at Wellco.

According to government prosecutors, the defendants "conspired from December 2008 through August 2012 to defraud the United States government and other purchasers through a scheme to fraudulently import military-style boots that were made in China into the United States and then deceptively market and sell those boots to the United States Armed Forces, government contractors and the general public as "Made in the USA..."

Two years ago Wellco and its holding company sought protection from its creditors.


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