Fraudulent Broker Gets 10 Years in Jail

Fraudulent Broker Gets 10 Years in Jail

A California man who pleaded guilty to a scheme that defrauded truckers and freight brokers was sentenced to more than 10 years in federal prison Tuesday.

U.S. District Judge Lawrence K. Karlton sentenced Kulwant Singh Gill to 10 years and 10 months in prison, followed by three years of supervised release.

Karlton ordered Gill to pay $443,388 to the victims of his scheme, in which he accepted shipments as a trucker and then brokered them to actual carriers.

The 10-year, 10-month sentence is one of the toughest handed down for this type of fraud, which logistics industry officials say is rampant and hard to prosecute.

"The transportation industry is ripe with fraud," said Robert Voltmann, president and CEO of the Transportation Intermediaries Association. The sentencing is a "positive sign," he said.

Victims of illicit double brokering often don’t report the crime for fear that it will affect their insurance rates, or because they don’t know who to contact.

Also, the scammers often fold up their fraudulent business before they can be found and reopen elsewhere using another name, perpetuating their scheme.

Earlier this month, Rubik Avetyan was sentenced to five years in prison and his sons Alfred and Allen to four years and two months for a double brokering scheme.

A federal court in Pennsylvania ordered the Avetyans to pay $1.1 million in restitution to carriers they defrauded while operating as Standard Transport.

The Federal Motor Carrier Safety Administration pulled their authority in 2009. An investigation found the Avetyans had defrauded approximately 165 truckers.

In 2009, two Russian nationals were sentenced to a combined 10 years in prison and ordered to pay $2.8 million for running a similar scheme in California.

The $109 billion transportation bill passed by the Senate includes anti-brokerage fraud provisions backed by the TIA and Owner-Operator Independent Drivers Association.

The House bill had similar provisions, Voltmann said. "The legislation will provide the private sector with the means of going after fraudulent operators and cheats."

Gill, a resident of Antelope, Calif., was convicted in 2009 on eight counts of wire fraud and five counts of making false statements to a government agency.

Posing as a trucker, the 53-year-old would secure loads through freight matching services and then post those loads on the same or other websites as a broker.

Although he received payment from the original brokers, who believed Gill had delivered the freight, he then refused to pay the truckers who actually hauled it.

Gill was indicted in 2006, but continued his scheme while on pretrial release, which led to another indictment in 2008, the U.S. Department of Justice said.

Contact William B. Cassidy at wcassidy@joc.com. Follow him on Twitter at @wbcassidy_joc