Two Sentenced in Carpet Yarn Kickback Scheme

Dalton, GA, April 16, 2009--Two men were sentenced to prison on a charge of conspiracy to commit interstate transportation of property obtained by fraud in a case involving carpet yarn.

Johnny Lamar Smith, 54, of Bridgeport, Ala., was sentenced to 2 years, 6 months in prison to be followed by 3 years of supervised release, and ordered to pay restitution in the amount of $2,499,999.

William J. Percy, 65, of Dalton, Ga., was sentenced to 1 year, 3 months in prison to be followed by 3 years of supervised release, and ordered to pay restitution in the amount of $2,499,999.

According to court records, Smith was a long time employee of Beaulieu Carpets, holding the position of Quality Assurance Manager at the Bridgeport plant. Smith's wife also worked at the plant in the accounting department.

Percy owned Glenwood Tufters, a carpet processing company in Dalton.

From 2001 through 2003, using his wife's password, Smith manipulated Beaulieu's computer system and diverted more than 3,931,000 pounds of first-quality yarn. He then sold the yarn as second-quality yarn at a price of 20 cents per pound to Percy, when the yarn was in fact worth over 80 cents per pound. Percy paid Smith more than $289,000 in kickbacks.

Beaulieu sustained a loss of almost $2.5 million. When Beaulieu discovered the loss, the company fired Smith, and Smith's wife resigned from Beaulieu.

Related Topics:Beaulieu International Group