3 arrested by FBI in defense fraud scheme
LOUISVILLE, Ky. (WAVE) - A prominent Louisville businessman, known for a $95 million facility in Louisville, has been arrested by the FBI, WAVE Troubleshooters have learned.
According to records, Phil Pascoe, 60, of Floyds Knobs, Ind., was arrested November 9 and taken to the Oldham County Jail. Also facing charges are Monica Pascoe, 45, of Floyds Knobs; Scott Tubbs, 59, of Georgetown, Ky.; and Quadrant Magnetics LLC.
Each are charged with “wire fraud, violations of the Arms Export Control Act, and smuggling of goods for their roles in an illegal scheme to send export-controlled defense-related technical data to China and to unlawfully supply U.S. Department of Defense (DOD) with Chinese-origin rare earth magnets for aviation systems and military items.”
The federal indictment alleges that “between January 2012 and December 2018, the defendants conspired to send approximately 70 drawings containing export-controlled technical data to a company located in China without a license from the U.S. government, in violation of the Arms Export Control Act and the International Traffic in Arms Regulations.”
Pascoe is the president of Quadrant, a magnetic-technology based company whose operations were to be based in Louisville on Plantside Drive. Governor Andy Beshear made the announcement about the $95 million development in January. The project was expected to create roughly 200 jobs.
Governor Andy Beshear toured the facility the day WAVE News had cameras there, praising the companies innovative strategies.
Once aware of Quadrant’s indictment Wednesday, Beshear’s Communication Director Crystal Staley issued a statement saying:
“We fully support any and all efforts to protect our national security and are grateful for the hard work of the dedicated professionals in our federal law enforcement agencies. We just learned of the charges against this company and are actively reviewing them.”
The Cabinet for Economic Development also backed the company’s arrival in Louisville.
They also sent a statement Wednesday once they learned the news and said:
“We are just learning of these charges, however national security is the top priority for this administration. We recognize the severity of these charges and are awaiting more information on the situation. The state tax incentive agreement preliminarily approved through the Kentucky Business Investment program in January for the company’s proposed investment to manufacture rare-earth magnets in Kentucky are performance based in nature with no up-front money exchanged as part of the agreement. The agreement has not received final approval and no action has been taken by the company to claim tax incentives from the state. We will await further information as it becomes available and are prepared to support the federal government in their investigation.”
Both agencies said they’re prepared to support the federal government.
The Pascoes were expected to make their first federal court appearance later today.
We reached out to Quadrant Magnetics LLC for comment but have yet to hear back.
If convicted, the three could face up to 20 years in prison for each count of wire fraud, 20 years for each count of exporting technical data without a license and up to 10 years for smuggling goods from the U.S.
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