HARRISONBURG, VA - An insurer for cabinet giant American Woodmark has asked a judge to issue a summary judgment - bypassing a trial in a multi-million lumber buying fraud case.
Scheduled to go to trial Feb. 13-14, 2012 in U.S. District Court in Harrisonburg, Virginia, the case was originally filed by the cabinetry firm's insurance firm, St. Paul Fire and Marine Insurance in Oct. 2010.
As discovery and pretrial actions stretched on for more a year, attorneys for St. Paul Fire and Marine Insurance Co. laid out its claims against Herbert Hoskins, his wife Melanie Ann, and son James Robert Hoskins.
A statement of "undisputed material facts" filed Nov. 18, 2011, obtained by Woodworking Network alleges that from 2002 to 2009 the Hoskins operated two bogus firms in Hazard, Kentucky. One, Kentucky Lumber Sales, sold lumber to American Woodmark at prices well above market rates; the other, Bluegrass Wood products, bought scrap lumber below cost.(Bluegrass paid $10 per ton for the wood scrap and sold it to P.J. Murphy Forest Products for $20 per ton, the statement says.
St. Paul Fire hopes to recover money it paid out in claims from 2009, when American Woodmark heard from an anonymous whileblower. It then analyzed its purchases and pricing, discovered its lumber manager had set up the firms, and fired him.
St. Paul Fire attorneys asked the court for $4.1 million in damages incurred by American Woodmark, telling the judge Hoskins breached his responsibility to his employer with his family's assistance.
"American Woodmark issued distinct corporate purchasing guidelines each month, which were calculated based on input from location buyers," it says. "These guidelines set an upper price limit which lumber plant managers may not surpass when buying lumber from suppliers. Despite the guidelines, Herbert Hoskins consistently purchased lumber from Kentucky Lumber that exceeded these guidelines."
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