Frank Peake, former president of Sea Star Line, was convicted of antitrust conspiracy for his role in price-fixing by carriers in the U.S. mainland-Puerto Rico trade between late 2005 and early 2008.
A U.S. District Court jury in San Juan returned the guilty verdict Tuesday following a two-week trial.
According to evidence presented at the trial, Sea Star, Peake and co-conspirators rigged bids, fixed rates and surcharges and allocated customers among themselves by agreeing which company would submit winning bids.
Peake was convicted of price-fixing in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine 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.
Peake’s conviction follows guilty pleas by five other carrier officials — two from Sea Star and three from Horizon. In addition, Sea Star, Horizon and Crowley Liner Services pleaded guilty to antitrust violations and paid a total of more than $46 million in criminal settlements.
Prosecution witnesses in Peake’s trial included Peter Baci, former senior vice president of Sea Star, and Gabriel Serra, former senior vice president and general manager for Puerto Rico services at Horizon.
Baci and Serra were among the five former Sea Star and Horizon officials who served prison terms after pleading guilty to antitrust violations or hiding evidence.
In addition to criminal penalties, Sea Star, Horizon and Crowley a total of more than $57 million in class-action civil settlements to direct or indirect customers. Prosecutors said Sea Star and Horizon began colluding in 2002 and that the conspiracy later was expanded to include Crowley.
Sea Star pleaded guilty on Dec. 20, 2011, and was fined $14.2 million for its role in the conspiracy from as early as May 2002 until at least April 2008, when federal agents raided carriers’ offices.
“The coastal shipping price-fixing conspiracy affected the price of nearly every product that was shipped to and from Puerto Rico during the conspiracy,” said Bill Baer, assistant attorney general in charge of the Justice Department’s Antitrust Division, in a written statement. “This successful prosecution shows that the division will hold accountable high-level executives who perpetuate these crimes.”
The Justice Department said its investigation of domestic Jones Act ocean carriers is continuing.