The Chapter 7 Trustee appointed in the TransVantage Solutions, Inc. bankruptcy case ground the gears of the nation’s trucking industry this past April when he filed over 500 adversary complaints against common carriers, shippers and customers of the bankrupt company.
In one of the more unusual bankruptcy cases to come down the pike in quite a while, TransVantage was a New Jersey-based company, founded in 1964, that provided freight audit and payment services on behalf of its manufacturing customers to ensure that the auditing and payment of freight invoices were both accurate and timely. TransVantage would receive and review invoices from the freight carriers of its customers and, if the invoices were accurate, instruct its customers to forward funds to pay the approved invoices. The customers would send the requested funds, in trust, to TransVantage for payment to the approved carrier.
That is how the business was supposed to work. However, the Trustee, as well as the Federal government, have alleged that for a number of years customers’ funds earmarked for payment to specific carriers became commingled with the advances made by other customers. Further, trust funds were alleged to have been misappropriated by TransVantage to pay its payroll and operating expenses and sizeable sums were embezzled by its principal, Shirley Sooy, for personal gain. The Trustee asserts that, over the course of time, new funds remitted by customers became insufficient to pay the outstanding freight bills of other customers. TransVantage filed for bankruptcy in 2013 following an audit conducted by a customer who had advanced funds without its carriers receiving payment. At the time of the bankruptcy filing, there was an approximate shortfall of $40 million in funds required to pay customer freight bills. Sooy is currently under Federal indictment for conspiracy to commit wire fraud for the alleged diversion of customer funds for the payment of mortgages on personal properties owned by Sooy in New Jersey and Florida, to acquire a 48-foot yacht and a $135,000 Maserati, to pay personal credit card charges incurred by Sooy and family members, as well as to pay for the remodeling of her home.
In recent years, the use of freight auditing and payment companies has proliferated as manufacturers have outsourced such functions seeking expertise and convenience. The breakdown in the internal controls of TransVantage has sent a chill throughout this burgeoning industry which is dependent on the confidence and trust of its customer base that the huge sums of advanced money will be appropriately handled.
The Trustee...
