Five executives sentenced in 'Made in USA' scheme

Matthew Lane • Jun 11, 2018 at 8:30 PM

GREENEVILLE — Five executives involved in a “Made in the USA” scheme have been sentenced on federal fraud and smuggling charges. For nearly four years these executives guided the sale of more than $8 million of China-made boots to the U.S. military, claiming the footwear was made at the company’s Morristown-based facility.

The executives were the management team of Wellco Enterprises, a one-time leading manufacturer of boots for the U.S. military. Here’s who was charged in the case and what they pleaded guilty to in January:

— Vincent Lee Ferguson of Knoxville, the former president and CEO of Wellco and Tactical Holdings Operations, conspiracy to commit wire fraud.

— Matthew Lee Ferguson of Geneva, Ill., the former senior vice president of sales, conspiracy to commit wire fraud.

— Kerry Joseph Ferguson of Houston, Texas, the former director of marketing and communications, conspiracy to commit wire fraud.

— Neil Streeter of Warren, Mass., the former vice president of government contracting, smuggling goods into the United States.

— Stephanie Lynn (Ferguson) Kaemmerer of Knoxville, the former operations manager, smuggling goods into the United States.

— Matthew Harrison Martland, the former director of distribution and logistics, aiding and abetting the altering of country of origin marks.


Last week, Martland was sentenced to six months probation. On Monday, four other defendants were sentenced — Matthew Ferguson to six months in prison; Kerry Ferguson to six months in prison; Streeter to five years probation; Kaemmerer to five years probation.

Vincent Ferguson, the father of Matthew, Kerry and Stephanie, will be sentenced later this year.


The six defendants were charged in an 11-count indictment including conspiracy to commit wire fraud, eight counts of wire fraud, major fraud against the United States and smuggling.

Founded in Waynesville, N.C., in 1941, Wellco Enterprises was a manufacturer and supplier of military and other rugged footwear, including combat boots for the U.S. armed forces. According to the indictment, from 2006 through 2012, the U.S. Department of Defense paid Wellco more than $138 million for military footwear.

In May 2007, two investment firms acquired Wellco in a $22 million deal and made it a subsidiary of Tactical Holdings Operations. Two years later, the company opened a 100,000-square-foot facility in Morristown and relocated its headquarters from Waynesville, N.C., to Knoxville.

According to prosecutors, Vincent Ferguson was president, CEO and director at Wellco from March 2006 through November 2012 and after the acquisition became the CEO of Tactical Holdings. Prior to his appointment at Wellco, Vincent Ferguson discussed with Wellco’s board of directors his turnaround plan for the company.


According to prosecutors, the plan was for Wellco to develop commercial channels for sale of the company’s footwear and to aggressively pursue sales to the U.S. government.

However, prosecutors claim Ferguson and the other defendants conspired to import military-style boots from China and other foreign countries, then marketing and selling the boots to the U.S. government, government contractors and the public as being “Made in the USA.”

According to court records, from December 2008 to August 2012, the defendants marketed and sold more than $8 million in boots falsely advertised as being made in the USA.

More specifically, the boot uppers and insoles were manufactured in China, and the soles were affixed at Wellco’s Morristown facility. Prosecutors claim the defendants required the Chinese plant to include the American flag and/or “USA” on the labels of certain boot uppers and to omit any reference to the actual country of origin.

The defendants did so in order to be compliant with certain domestic content preference laws, including the Trade Agreements Act and the Berry Amendment, according to a press release on the indictment.

After two shipments of these deceptively marked boots were detained and seized by the U.S. Department of Homeland Security’s Customs and Border Protection, the conspirators ordered the Chinese facility to stitch tear-away “Made in China” labels in Wellco boot uppers.

After importation, the conspirators instructed Wellco factory workers in Morristown to tear out the “Made in China” tags prior to shipping the boots to government and commercial purchasers.

In July 2014, Wellco filed Chapter 11 bankruptcy and one month later, a majority of the company’s assets was purchased by Original Footwear Holdings.

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