Shipping Execs Agree to Plead Guilty

Thursday, October 02, 2008

The U.S. Department of Justice announced that four individuals have agreed to plead guilty for their involvement in a conspiracy to eliminate competition and raise prices for moving freight between the Continental U.S. and . A fifth shipping executive has agreed to plead guilty to destroying evidence of the shipping conspiracy.

The five executives charged  work for large companies that provide freight shipping services to customers transporting goods between the continental and . These companies transport a variety of cargo shipments, such as heavy equipment, medicines and consumer goods, on scheduled ocean voyages between the continental and . The to shipping lane is governed by the Jones Act, a portion of the Merchant Marine Act of 1920. The Jones Act dictates that any cargo being sent between two ports (including possessions and territories like Puerto Rico) must be on ships that were built in the , owned by citizens, and fly the American flag. Sales of freight services in the to Puerto Rico shipping lane total hundreds of millions of dollars every year, as ocean shipping is a primary way for customers to move goods to and from the .

The four individuals charged with violating the federal antitrust laws have agreed to plead guilty for their roles in a conspiracy that began at least as early as May 2002 and continued until as late as April 2008, the object of which was to eliminate competition and raise prices for the movement of goods in the U.S. to Puerto Rico shipping lane. The Department charged that the executives sought to eliminate competition and raise prices by agreeing not to compete for one another’s customers; agreeing to rig bids submitted to government and commercial buyers; and agreeing to fix the prices of rates, surcharges and other fees charged to customers.

Baci, Gill, Glova and Serra are each charged with violating the Sherman Act, which carries a maximum sentence of 10 years imprisonment and fines of $1 million for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

Chisholm has agreed to plead guilty for his conduct in obstructing the Department of Justice’s investigation of the shipping conspiracy. The charge alleges he destroyed documents on a computer server that were material to the coastal shipping grand jury investigation and responsive to a grand jury subpoena. He faces a maximum sentence of 20 years imprisonment and a fine of $250,000.

Three of the individuals, Gabriel Serra, Kevin Gill and Gregory Glova, are former Horizon Lines managers, and have agreed to plead guilty, serve time in jail, pay criminal fines and cooperate fully with the Department's ongoing antitrust investigation.

Horizon Lines said it intends to continue to cooperate fully with the Department of Justice as it moves forward with its investigation. The company will continue its long established commitment to providing the highest quality service to our customers.

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