Updated at 642 p.m. on Friday, March 15, 2019, with more information.
The owner of a pair of Chattanooga trucking and logistics companies who is accused of distributing cocaine and giving alcohol and drugs to minors during parties at his home in Colorado has stepped down as the companies' CEO.
The Chattanooga-based transportation companies Lipsey Logistics and Lipsey Trucking announced Friday that Joseph Lipsey III was relinquishing his management roles. Johnny Jones, who helped co-found Lipsey in 2007 along with Lipsey, has been appointed interim CEO of the companies.
Lipsey was arrested on Tuesday in Aspen, Colorado on charges of distribution of cocaine to a minor, three counts of serving alcohol to a minor, possession of drug paraphernalia, and providing nicotine to minors. Lipsey's wife Shira and son, Joseph Lipsey IV, were arrested Monday on similar counts.
"While these allegations relate to a personal matter, Lipsey Logistics and Lipsey Trucking want to assure the public that they will have no impact on business operations," the company said in a statement. "Our customers remain our top priority and we are committed to delivering the high-quality service they expect and deserve."
Jones, who joined with Lipsey to help start the Chattanooga logistics company after the two previously worked at U.S. Xpress Enterprises in Chattanooga, will continue in his current roles as president and chief operations officer of Lipsey Logistics.
In October 2019, John White, current president of Lipsey Transport and former president of U.S. Xpress, will replace Jones as president of Lipsey Logistics.
The online logistics company Freightwaves estimates that Lipsey built a nearly $200 million-a-year transportation and logistics operation on the back of FEMA and state government contracts.
Under Colorado law, if convicted of the cocaine distribution charge, Lipsey could face a mandatory sentence of between eight and 32 years in prison. But the charges could also raise questions about contracts the Lipsey companies have with the Federal Emergency Management Agency (FEMA) and other government agencies.
FEMA awarded a contract to the Composite Analysis Group, Inc, a company owned and operated by Joseph Lipsey, for bottled water in support of the 2017 and 2018 disaster seasons.
A FEMA spokesperson declined to comment on the specifics of the charges against Lipsey, but the official said when a FEMA contractor is accused of wrongdoing, "we immediately refer it to the DHS Office of Inspector General for further guidance."
In October 2017, Bloomberg reported that Lipsey-owned businesses, including a water company, had won at least $215 million in FEMA relief services since Hurricane Harvey. On September 5, 2017, Lipsey Water was awarded a $143 million FEMA contract to provide bottled water for FEMA relief programs.
"If the cocaine charges stick, Lipsey's government contracts could be under threat," John Paul Hampstead, an editor for Freightwaves, wrote in a report on the arrest. "Needless to say, the prospect of multiple felony drug convictions, especially ones involving kids, puts Lipsey Logistics' federal contracts under threat."
Lipsey Logistics is headquartered in the Eastgate Town Center in Brainerd.
Contact Dave Flessner at email@example.com