Joseph Bonney, Senior Editor | Nov 18, 2011 9:38AM EST
Sea Star Line will plead guilty and pay a $14.2 million criminal fine and the carrier’s former president, Frank Peake, was indicted on a charge of conspiring to fix prices in the U.S. mainland-Puerto Rico trade.
A federal grand jury in San Juan indicted Peake with conspiring to fix prices from late 2005 until April 2008, when federal agents raided offices of Sea Star and other Puerto Rico carriers.
Peake became a vice president last year at American Shipping Group, Sea Star’s managing partner and 90 percent owner, but “is no longer with the company” as of Friday, said Anthony Chiarello, the parent company’s CEO.
Horizon Lines pleaded guilty in March to a felony antitrust violation and accepted a $45 million fine the Justice Department agreed to reduce to $15 million because it was all the company could afford to pay.
Since the antitrust investigation became public, five former executives — three from Horizon, two from Sea Star — have pleaded guilty to antitrust violations or hiding evidence.
Peake’s lawyer, David Oscar Markus of Miami, told the Associated Press his client was innocent. “He is never going to do a day in jail because he didn’t do the things they said he did,” Markus told the AP.
Peake is accused of meeting with competitors to allocate customers and set prices for freight services for government and commercial clients.
Under its agreement, which is subject to court approval, Sea Star admitted conspiring to set prices and rig bids. Sea Star, Horizon and Crowley Maritime have paid to settle civil antitrust charges resulting from the price-fixing allegations.
Numerous civil antitrust claims against the carriers are still pending by shippers that opted out of the class-action settlements.
Jacksonville-based Sea Star issued a statement apologizing to its customers, and noted the agreement provides that the Justice Department won’t bring criminal charges against its parent companies, Saltchuk Resources and American Shipping Group.
“We extend sincere apologies to all of our loyal customers and the consumer who were affected by this conduct,” said Chiarello in the statement. “It was contrary to everything that Sea Star stands for and will not be tolerated in the future.”
Chiarello is CEO of American Shipping Group, and is managing day-to-day operations at Sea Star since the resignation this month of Sea Star CEO Steve Hastings. The Justice Department said the charges against Sea Star and Peake “arose from an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the coastal water freight transportation industry,
-- Contact Joseph Bonney at jbonney@joc.com. Follow him on Twitter @josephbonney.