Former Evansville Plastics Company Executives Sentenced for Securities Fraud Scheme
Former CEO and COO concealed critical defects of Lucent Polymers before selling company and receiving hundreds of thousands of dollars
EVANSVILLE – Acting U.S. Attorney John E. Childress announced today that Kevin Kuhnash, 59, of Ohio, and Jason Jimerson, 46, of Alabama, were sentenced to federal prison by U.S. District Judge Richard L. Young. Kuhnash received a 36-month prison sentence, and Jimerson received a 24-month sentence.
A federal grand jury indicted Kuhnash and Jimerson in December 2018, and both were later arrested by the FBI and IRS-Criminal Investigation. In mid-2020, both men pleaded guilty to charges of securities fraud and money laundering. Jimerson also pleaded guilty to lying to federal agents.
“Those who choose fraud over fair dealing must be held accountable,” said Childress. “That is particularly true for corporate leaders like Kuhnash and Jimerson whom society relies on to ensure the fairness and integrity of business and the marketplace.”
Both men admitted that they concealed critical defects in Lucent’s business when they orchestrated the sale of the company to a private equity firm in late 2013 for over $64 million. Kuhnash and Jimerson claimed that Lucent could produce specialized plastics products that consistently met or exceeded customer specs at very low prices by using low-cost, recycled materials.
Lucent’s internal testing showed that many of its most profitable products often failed to meet specifications. This information was hidden from customers and Lucent shipped the products with a fabricated set of test results that falsely claimed the product was within specifications.
Kuhnash and Jimerson became aware of all of this in the months leading up to the sale of the company. Both men admitted to being aware of an email from a whistleblower employee who disclosed what he described as “ethical/conscience issues” and “a level of dishonesty” at Lucent. The email described the fraud that Lucent was perpetrating on its customers, including the manipulated test results, and lying to customers. Jimerson agreed with Kuhnash to not forward the email or let anyone know they received it.
Kuhnash and Jimerson never disclosed the fraud during their company sales pitches or the due diligence process leading up to Lucent’s sale to the private equity firm. After the company was sold, both Kuhnash and Jimerson lied to the private equity firm’s outside auditor about whether they were aware of any fraud at Lucent.
As executives, both men owned stock in Lucent. From selling the company, Kuhnash personally received approximately $1,393,000 and Jimerson received approximately $632,000.
The private equity firm that bought Lucent later sold it to a publicly traded plastics company. Lucent’s fraud on its customers was later discovered by that publicly traded company. On the day that Lucent’s fraud was publicly disclosed to investors, the company’s stock price fell by over 20%, or over $175 million in shareholder value.
This investigation was a collaborative effort between the Federal Bureau of Investigation and Internal Revenue Service Criminal Investigation.
“These two men knew of the fraudulent practices at the company they led, but chose to let it continue out of sheer greed, going even further by remaining silent as the company was sold for the sole purpose of enriching themselves,” said FBI Indianapolis Special Agent in Charge Paul Keenan. “This case demonstrates the strong partnerships the FBI has and the diligent work of all involved to combat significant fraud schemes such as this.”
“Internal Revenue Service Criminal Investigation (IRS-CI) is relentless in unraveling the fraudulent actions of those, such as Kevin Kuhnash and Jason Jimerson, who schemed to defraud customers and potential future owners of their business,” said Acting Special Agent in Charge Tamera Cantu of IRS-CI’s Chicago Field Office. “Today’s sentencing is a reminder that there are detrimental consequences for this type of criminal behavior, and our Special Agents are determined in their efforts to uphold the justice system.”
According to Assistant United States Attorneys Nick Linder and Kyle Sawa, who prosecuted this case for the government, Kuhnash will also serve 1 year of supervised release following his imprisonment and pay a $10,000 fine. Jimerson will serve 2 years of supervised release following his imprisonment and pay a $10,000 fine.
In November of 2020, Acting United States Attorney John E. Childress renewed a Strategic Plan designed to shape and strengthen the District’s response to its most significant public safety challenges. This prosecution demonstrates the Office’s enduring commitment to investigating and prosecuting those who engage in fraud and money laundering. See United States Attorney’s Office, Southern District of Indiana Strategic Plan Section 5.1.