Transportation Publication Says Lipsey Cocaine Arrest Could Put In Jeopardy Its Lucrative Federal Contracts

Thursday, March 14, 2019

A freight publication says the cocaine arrest of a major Chattanooga transit owner could put in jeopardy some of his lucrative federal contracts.

Joseph Lipsey III was arrested at Aspen, Colo., earlier this week along with his wife, Shira, and son, 19-year-old Joseph Lipsey IV.

It was charged that the Lipseys were present when cocaine and alcohol were made freely available at parties at their upscale Aspen home.

FreightWaves said Lipsey had a water company among his holdings and "saw an opportunity in freight brokerage when the second Bush administration began privatizing and outsourcing disaster relief, where previously the federal government had leaned on the military. A small water company in the family’s portfolio helped the Lipseys secure an award to provide bottled water for hurricane relief.

"In 2003, Lipsey had engaged UPS for Federal Emergency Management Agency (FEMA) logistics and transportation support for disaster relief, but almost immediately Hurricane Isabel hit the global logistics conglomerate realized that the task of providing disaster relief logistics was more realistic with an asset-based truckload provider than through independent brokerage capacity. UPS handed over the business to US Xpress, which managed relief logistics on behalf of Lipsey."

FreightWaves said, "Joe Lipsey soon realized that there was a lot of money to be made in using brokerage capacity and by the 2005 hurricane season, the Lipseys had launched their own brokerage to move water and ice on a cost-plus basis for the government.

"On September 5, 2017, Lipsey Water was awarded a $143 million FEMA contract to provide bottled water. As of October 2017, Bloomberg reported that Lipsey won at least $215 million in FEMA relief services since Hurricane Harvey."

It was noted that the Lipsey firm said on its website, “Lipsey Logistics’ sister company, Lipsey Water, has numerous State and Federal emergency contracts providing Disaster Relief Services to communities affected by disasters, both natural and manmade. While working with thousands of carriers for FEMA relief, Lipsey quickly realized the need for a reliable logistics organization to manage the delivery of water, ice, and durable goods. Thus, Lipsey Logistics Worldwide was formed."

Freightwaves said, "If the cocaine charges stick, Lipsey’s government contracts could be under threat. FreightWaves estimates that Lipsey was able to build a nearly $200 million per year transportation and logistics operation on the back of FEMA and state government contracts.

"Not all of Lipsey’s logistics business is from FEMA. The firm, benefiting from being located in Chattanooga, has hired brokerage and trucking staff from truckload giants US Xpress, Covenant Transport and Coyote Logistics. Major clients that Lipsey have provided 3PL services include Home Depot, Niagara Waters, and Proctor & Gamble.

"Needless to say, the prospect of multiple felony drug convictions, especially ones involving kids, puts Lipsey Logistics’ federal contracts under threat."

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