Knoxville man pleads guilty to $8.1M "Made in the USA" military scheme

GREENEVILLE, Tenn. (WVLT) -- A Knoxville man has pleaded guilty to conspiracy to commit fraud in connection an $8.1 million marketing scheme.

Vincent Ferguson, 66, became president and CEO of Wellco Enterprises, Inc., in 2006. At that time, Ferguson allegedly made plans to increase sales for the company and "aggressively pursue" sales to the government.

Some of the combats boots the company reportedly "Made in the U.S.A." between 2006 and 2012 were actually manufactured in China. The Department of Defense is not allowed to buy clothing that isn't grown, reprocessed, reused or produced in America, according to the Berry Amendment and the Trade Agreements Act.

In 2008, the company allegedly began sourcing certain military boot models and insoles in China, and requested the foreign facility include the American flag or "USA" on the boots' labels. The U.S. Department of Homeland Security intercepted and seized two of these shipments, and afterward the Chinese facility was instructed to stitch on tear-away "Made in China" labels, which were later torn out in a Morristown facility and replaced with "Made in the U.S.A."

In total, at least $8.1 million of fraudulent boots were sold to the DOD and other agencies.

Along with Ferguson, company officials Matthew Ferguson, 41, and Jerry Ferguson, 36, pleaded guilty to conspiracy to commit wire fraud as well. Neil Streeter, 55, and Stephanie Ferguson Kaemmerer, 45, pleaded guilty to smuggling goods into the United States.

Sentencing for Vincent Ferguson, Matthew Ferguson and Kerry Ferguson is set for June 6, with Neil Streeter and Stephanie Kaemmerer going before a judge for sentencing later on June 11. Both conspiracy to commit wire fraud and smuggling goods into the United States have a maximum penalty of 20 years in prison and up to $20,000 in fines.