Ex-Sea Star president loses price-fixing conspiracy appeal

Ex-Sea Star president loses price-fixing conspiracy appeal

Frank Peake, former president and chief operating officer of Sea Star Line, has lost his appeal of his conviction and five-year prison sentence for participating in a price-fixing conspiracy in the U.S. mainland-Puerto Rico market.

The 1st U.S. Circuit Court of Appeals upheld Peake’s sentence, one of the longest ever issued in a federal antitrust case.

Peake was convicted in U.S. District Court in San Juan of participating between at least late 2005 until April 2008 in a conspiracy by carriers to fix rates, allocate customers, and rig bids.

Five other former officials of Sea Star (now called TOTE Maritime) and Horizon Lines pleaded guilty to antitrust conspiracy or concealing evidence shortly after federal agents raided the carriers’ headquarters in April 2008. They were sentenced to prison terms ranging from seven months to four years.

Sea Star, Horizon and Crowley Liner Services also pleaded guilty to antitrust violations and were ordered to pay a total of more than $46 million in criminal fines. The carriers also paid a total of more than $57 million in class-action settlements with direct or indirect customers, in addition to private settlements with other plaintiffs.

Thomas Farmer, former vice president of price and yield management of Crowley Liner Services, was acquitted of antitrust conspiracy in May after a jury trial in San Juan.

In his appeal, Peake challenged his conviction and sentence on several grounds, beginning with a claim that his indictment was invalid because antitrust laws prohibit restraint of trade or commerce “among the several states,” and that Puerto Rico is a  commonwealth.

He also challenged a search warrant’s seizure of his computer and Blackberry, improper remarks by the prosecutor, admission of allegedly prejudicial testimony, and the district court’s refusal to grant a change of venue or allow a theory-of-defense instruction to the jury, and the length of his sentence.

In 40-page decision, the appeals court said it found no errors to justify a reversal of the conviction and sentence, and that “the district court marshaled this trial in a commendable manner."

Contact Joseph Bonney at joseph.bonney@ihs.com and follow him on Twitter: @JosephBonney.