landedfreightforwarder

INTHEUNITEDSTATESDISTRICTCOURTFORTHEEASTERNDISTRICTOFVIRGINIAAlexandriaDivisionUNITEDSTATESOFAMERICA)CRIMINALNO.
1:06CR57)v.
)CountI:15U.
S.
C.
§1)CountII:15U.
S.
C.
§1ALLIEDFREIGHTFORWARDING,INC.
,))Filed:2/24/06Defendant.
)CRIMINALINFORMATIONAlliedFreightForwarding,Inc.
("ALLIED")ismadeadefendantonthechargesherein.
THEUNITEDSTATESCHARGESTHAT:DefendantandCo-Conspirators1.
DefendantALLIEDis,andwasduringtherelevantperiod,aU.
S.
company,organizedunderthelawsoftheStateofDelawareandheadquarteredinWestmont,IL.
DefendantALLIEDisawholly-ownedsubsidiaryofSIRVA,Inc.
,acorporationalsoheadquarteredinWestmont,IL.
Duringtherelevantperiod,defendantALLIEDwasinthebusinessofprovidingfreightforwardingservices,asdescribedinparagraph5,relatedtothetransportationofmilitaryhouseholdgoods.
2.
Variouscompanies,partnerships,andindividuals,notmadedefendantsinthisCount,participatedasco-conspiratorsintheoffensechargedhereinandperformedactsandmadestatementsinfurtheranceoftheconspiracy.
3.
WheneverthisCountreferstoanyact,deed,ortransactionofanycompany,itmeansthatthecompanyengagedintheact,deed,ortransactionbyor2throughitsofficers,directors,employees,agents,orotherrepresentativeswhiletheywereactivelyengagedinthemanagement,direction,orcontrolofitsaffairs.
Background4.
DODadministersandcoordinatesitsInternationalThroughGovernmentBillofLading("ITGBL")programforthetransportationofmilitaryhouseholdgoodsbetweentheUnitedStatesandothercountriesthroughtheMilitaryTrafficManagementCommand("MTMC").
MTMC,recentlyrenamedSurfaceDistributionandDeploymentCommand("SDDC"),isheadquarteredinAlexandriaintheEasternDistrictofVirginia.
ShipmentsofmilitaryhouseholdgoodsundertheITGBLprogramareknownas"ITGBLtraffic.
"5.
"FreightForwarders,"alsoknownas"forwarders"or"carriers,"areU.
S.
companiesthatsubmitITGBLrates,contractwithMTMC,andultimatelyshouldertheresponsibilityforITGBLshipments.
6.
EachITGBLmoveiscomprisedoffivesteps.
AmovefromGermanytotheUnitedStates,forexample,requiresthefollowing:(1)localGermanagentservices,(2)Europeanportagentservices,(3)oceantransportservices,(4)U.
S.
portagentservices,and(5)U.
S.
destinationagentservices.
Freightforwardersgenerallyhiresubcontractorstoperformsomeofthesestepsforthem.
7.
"Landedrateproviders"actasonetypeofsubcontractor,bundlingtheforeigninlandservice,foreignportservice,andoceantransportforsaletofreightforwardersforaunitary"landedrate.
"8.
UndertheITGBLprogram,freightforwardersfile"throughrates"withMTMC(nowSDDC)twiceayearinatwo-stepbiddingprocess.
"Throughrates,"3expressedindollarsperhundredweight("$/cwt"),aretheratesbidtoDODbyU.
S.
freightforwardersandpaidbyDODforallthemovingandtransportationservicesprovidedinthedoor-to-doormovebetweenaforeigncountryandtheUnitedStates.
Thethroughratesarespecificto"channels,"orroutes,toorfromaparticularstate,orportionofastate,andaforeigncountry(e.
g.
,Germany-Virginia).
OfthechannelsbetweenEuropeandtheUnitedStates,amajorityofmilitaryhouseholdgoodstonnagemovestoandfromapproximatelytwentyhigh-volumestates,includingtheCommonwealthofVirginia.
9.
Eachratefilingcoversasix-monthperiod,or"cycle.
"ThesummercyclerunsfromApril1throughSeptember30;thewintercyclerunsfromOctober1throughMarch31.
TheITGBLcyclesarereferredtobytheabbreviation"IS,"forInternationalSummer,or"IW,"forInternationalWinter,combinedwiththerelevantyear.
Thus,the"IS-01cycle"isshorthandfortheInternationalSummercyclethatranfromApril1,2001throughSeptember30,2001.
10.
Inthefirststepoftheratefilingprocess,the"initialfiling,"whichoccursaboutsixmonthsbeforethecyclebegins,freightforwardersfileratesineachchannel,eastboundandwestbound.
Intheinitialfiling,theforwardersmayeitherfilealowrateoran"administrativehigh"rateinordertopreservetheirrighttobidagaininthesecondphaseofthebiddingprocess.
Aftertheinitialfiling,MTMCpublishesthelowestfive("low-5")ratesofferedineachchannelandtheidentitiesofthefreightforwardersfilingthoserates.
Thelowestratebidforachannelistermedthe"primethroughrate.
"MTMCguaranteestothefreightforwarderthatsetstheprimethroughrateinagivenchannelacertainpercentageoftheshipmentsinthatchannelasanincentivetosetthe4primethroughrate.
Inthesecond,or"me-too,"phaseofthebiddingprocess,everyforwarderthatfiledanyrateintheinitialfilinghastheopportunitytomatch,or"me-too,"theprimethroughrateortofileanyratehigherthantheprimethroughrateineachchannel.
11.
MTMCrequiresthateachfreightforwardercertifyoraffirminaCertificateofIndependentPricing,incorporatedintheTenderofServicewhichgovernsthebiddingprocess,thateachbidsubmittedwasderivedindependently,withoutcommunication,agreement,understanding,collusion,oranyotheractioninrespecttoratesorfareswithanycarrier,competitor,oragentthereof.
12.
Thefreightforwarderthatbidstheprimethroughrateisguaranteedafixedpercentageofthetrafficinagivenchannel.
Theremainingtrafficisthenawardedseriatimtoeachforwarderthatmatched,or"me-tooed,"theprimethroughrate.
Inthisway,overthecourseofthecycle,thevastmajorityofshipmentsineachchannelmoveattheprimethroughrate.
Thus,aforwardertypicallymustme-tootheprimethroughrateinordertobeawardedshipments.
13.
FortheIW-00cycle,U.
S.
freightforwarderswererequiredtofiletheirinitialratesbyMay23,2000.
Me-toobidswereduebyAugust1,2000.
FortheIS-01cycle,U.
S.
freightforwarderswererequiredtofiletheirinitialratesbyNovember28,2000.
Me-toobidswereduebyJanuary16,2001.
CountOne-ConspiracyToRestrainTrade(15U.
S.
C.
§1)14.
BeginninginoraboutNovember2000andcontinuinguntilinoraboutOctober2001("therelevantperiod"),theexactdatesbeingunknowntotheUnited5States,defendantALLIEDandco-conspirators,includingacorporate,freightforwarderco-conspirator("FF-1"),enteredintoandengagedinacombinationandconspiracytosuppressandeliminatecompetitionbyallocatingchannelsforthetransportationofhouseholdgoodsownedbyU.
S.
militaryandcivilianDepartmentofDefense("DOD")personnel("militaryhouseholdgoods")fromGermanyandItalytotheUnitedStates.
Thechargedcombinationandconspiracyengagedinbythedefendantandco-conspiratorsinunreasonablerestraintofinterstateandforeigntradeandcommerceviolated15U.
S.
C.
§1.
15.
Thechargedcombinationandconspiracyconsistedofacontinuingagreement,understanding,andconcertofactionamongthedefendantALLIEDanditsco-conspirators,thesubstantialtermofwhichwastoincreasetheratespaidbyDODforthetransportationofmilitaryhouseholdgoodsbetweenGermanyandtheUnitedStatesandbetweenItalyandtheUnitedStates.
16.
Eachandeveryallegationcontainedinparagraphs1-13ofthisInformationisherere-allegedasiffullysetforthinthisCount.
MannerandMeansoftheConspiracy17.
Forpurposesofformingandcarryingoutthechargedcombinationandconspiracy,defendantALLIEDandco-conspiratorsdidthefollowingthingsamongotherswithrespecttoITGBLtrafficfortheIS-01cycle:a.
agreedtojointlyseekpreferentiallandedratestoadvantagetheminbeingabletosetprimethroughratesintheinitialfiling;b.
agreedtoallocatebetweenthemthehigh-volumechannelsbetweenGermanyandtheUnitedStatesandItalyandtheUnitedStates;and6c.
agreednottocompeteagainsteachotherinanyoftheallocatedchannels.
18.
Forpurposesofexecutingthechargedcombinationandconspiracy,defendantALLIEDandco-conspiratorscarriedouteachandeveryactivityandagreementdescribedinparagraph17fortheIS-01cycle.
19.
TheseagreementsandactivitiesundertakenbydefendantALLIEDandco-conspiratorsreducedcompetitionandrestrainedtradeinthemarketforthetransportationofmilitaryhouseholdgoodsduringtheIS-01cycle.
InterstateandForeignTradeandCommerce20.
Duringtherelevantperiod,rates,proposals,contracts,invoicesforpayment,payments,andotherdocumentsessentialtotheprovisionofITGBLservicesweretransmittedininterstateandforeigntradeandcommercebetweenandamongofficesofdefendantALLIED,co-conspiratorFF-1,andMTMC,locatedinvariousStatesandforeigncountries.
21.
Duringtherelevantperiod,defendantALLIEDandco-conspiratorFF-1transported,orarrangedforthetransportationof,substantialquantitiesofmilitaryhouseholdgoods,inacontinuousanduninterruptedflowofinterstateandforeigncommerce,betweenGermanyandItalyandtheUnitedStates,throughvariousU.
S.
portsandStatestofinaldestinationsinvariousStates.
22.
Duringtherelevantperiod,MTMCreceivedbidsforITGBLservicesbywireandmailfromtheofficesofdefendantALLIEDandco-conspiratorFF-1.
23.
Duringtherelevantperiod,DODpaidforITGBLservicesbycheck,wiretransfer,andothermonetaryinstrumentstransmittedtothebankaccountsofdefendant7ALLIEDandco-conspiratorFF-1inacontinuousanduninterruptedflowofinterstatecommerce.
24.
TheactivitiesofdefendantALLIEDandco-conspiratorFF-1inconnectionwiththetransportationofmilitaryhouseholdgoodswerewithintheflowof,andsubstantiallyaffected,interstateandforeigntradeandcommerce.
JurisdictionandVenue25.
Duringtherelevantperiod,MTMCreceivedbidsforITGBLservicesbyinterstatewireandmailatitsofficesintheEasternDistrictofVirginiaoriginatingfromtheofficesofdefendantALLIEDandco-conspiratorFF-1.
26.
ThecombinationandconspiracychargedinthisCountwasformedandcarriedout,inpart,withintheEasternDistrictofVirginiawithinthefiveyearsprecedingthefilingofthisCriminalInformation.
(InviolationofTitle15,UnitedStatesCode,Section1).
CountTwo–ConspiracytoRestrainTrade(15U.
S.
C.
§1)THEUNITEDSTATESFURTHERCHARGESTHAT:27.
BeginninginoraboutMay2000andcontinuinguntilinoraboutSeptember2001("therelevantperiod"),theexactdatesbeingunknowntotheUnitedStates,defendantALLIEDandco-conspiratorsenteredintoandengagedinacombinationandconspiracytosuppressandeliminatecompetitionandrestraintradeinthemarketforthetransportationofmilitaryhouseholdgoods,byagreeingontheratesinparticularchannelsthatthecorporateco-conspiratorswouldfilewithMTMC,withtheunderstandingthatdefendantALLIEDwouldserviceanyITGBLorHawaiitraffic8tenderedbyMTMCtoitscorporateco-conspirators.
ThechargedcombinationandconspiracyengagedinbydefendantALLIEDandco-conspiratorsinunreasonablerestraintofinterstateandforeigntradeandcommerceviolatedSection1oftheShermanAntitrustAct.
28.
"Hawaiitraffic"ismilitaryhouseholdgoodstrafficwhichmovesbetweentheUnitedStatesmainlandandtheStateofHawaii.
HawaiitrafficisgovernedunderthesameMTMCrulesandregulationsasITGBLtraffic.
29.
Thechargedcombinationandconspiracyconsistedofacontinuingagreement,understanding,andconcertofactionamongdefendantALLIEDandco-conspirators,thesubstantialtermofwhichwastosuppressandeliminatecompetitionbetweendefendantALLIEDandco-conspiratorsforITGBLandHawaiitraffic.
30.
Eachandeveryallegationcontainedinparagraphs1-13ofCountOneofthisInformationisherere-allegedasiffullysetforthinthisCount.
MannerandMeansoftheConspiracy31.
Forpurposesofformingandcarryingoutthechargedcombinationandconspiracy,defendantALLIEDandco-conspiratorsdidthefollowingthings,amongothers,withrespecttotheIW-00andIS-01cycles:a.
agreedthatdefendantALLIEDwoulddirecteachcorporateco-conspiratortofileratesforITGBLandHawaiitrafficatparticularlevelsinspecificchannels;b.
agreedthatdefendantALLIEDwouldserviceallITGBLandHawaiitraffictenderedbyMTMCtoeachcorporateco-conspirator;c.
agreedthatdefendantALLIEDwouldpayallsubcontractorsfor9servicesprovidedtoshipmentstenderedtoeachcorporateco-conspirator;d.
agreedthatdefendantALLIEDwouldassumetheriskofprofitorlossonshipmentstenderedtoeachcorporateco-conspirator;e.
agreedthatdefendantALLIEDwouldultimatelyreceiveallpaymentsfromDODforshipmentstenderedtoeachcorporateco-conspirator;f.
agreedthatdefendantALLIEDwouldpayitscorporateco-conspiratorsaflatrateof$1/cwttoserviceITGBLtraffictenderedtothembyMTMCandservicedbydefendant;andg.
agreedthatdefendantALLIEDwouldpayitscorporateco-conspiratorsaflatrateof$4/cwttoserviceHawaiitraffictenderedtothembyMTMCandservicedbydefendant.
32.
Forpurposesofexecutingthechargedcombinationandconspiracy,defendantALLIEDandco-conspiratorsmadeandcarriedouteachandeveryagreementandactivitydescribedinparagraph31fortheIW-00cycle.
33.
FortheIS-01cycle,forthepurposesofexecutingthechargedcombinationandconspiracy,defendantALLIEDandco-conspiratorsmadeeachandeveryagreementdescribedinparagraph31andtookactsinfurtherancethereof.
InterstateandForeignTradeandCommerce34.
Duringtherelevantperiod,rates,proposals,contracts,invoicesforpayment,payments,andotherdocumentsessentialtotheprovisionofthetransportationofmilitaryhouseholdgoodsweretransmittedininterstateandforeigntradeandcommercebetweenandamongofficesofdefendantALLIED,corporateco-conspirators,andMTMC,locatedinvariousStatesandforeigncountries.
1035.
Duringtherelevantperiod,defendantALLIEDandcorporateco-conspiratorstransported,orarrangedforthetransportationof,substantialquantitiesofmilitaryhouseholdgoods,inacontinuousanduninterruptedflowofinterstateandforeigncommercebetweenEuropeandtheUnitedStatesandbetweentheStateofHawaiiandtheUnitedStatesmainland,throughvariousU.
S.
portsandStatestofinaldestinationsinvariousStates,includingasubstantialamountoftrafficintoandoutoftheCommonwealthofVirginia.
36.
Duringtherelevantperiod,MTMCreceivedbidsforthetransportationofmilitaryhouseholdgoodsbyinterstatewireandmailfromtheofficesofdefendantALLIEDandcorporateco-conspirators.
37.
Duringtherelevantperiod,DODpaidforthetransportationofmilitaryhouseholdgoodsbycheck,wiretransfer,andothermonetaryinstrumentstransmittedtothebankaccountsofdefendantALLIEDandcorporateco-conspiratorsinacontinuousanduninterruptedflowofinterstatecommerce.
38.
TheactivitiesofdefendantALLIEDandcorporateco-conspiratorsinconnectionwiththetransportationofmilitaryhouseholdgoodswerewithintheflowof,andsubstantiallyaffected,interstateandforeigntradeandcommerce.
JurisdictionandVenue39.
Duringtherelevantperiod,MTMCreceivedbidstoperformthetransportationofmilitaryhouseholdgoodsbyinterstatewireandmailatitsofficesinAlexandriaintheEasternDistrictofVirginiainitiatedbyororiginatingfromdefendantALLIEDandcorporateco-conspiratorsorthoseworkingattheirbehest.
1140.
ThecombinationandconspiracychargedinthisCountwasformedandcarriedout,inpart,withintheEasternDistrictofVirginiawithinthefiveyearsprecedingthefilingofthisCriminalInformation.
(InviolationofTitle15,UnitedStatesCode,Section1).
/s//s/THOMASO.
BARNETTLISAM.
PHELANAssistantAttorneyGeneralChief,NationalCriminalEnforcementSection/s//s/SCOTTD.
HAMMONDHAYSGOREY,JR.
DeputyAssistantAttorneyGeneralMARKW.
PLETCHERAttorneys/s/U.
S.
DepartmentofJusticeMARCSIEGELAntitrustDivisionDirectorofCriminalEnforcementSuite37001401HStreet,N.
W.
Washington,D.
C.
20530AntitrustDivision(202)307-0000U.
S.
DepartmentofJustice/s/ROBERTC.
ERICKSONAssistantUnitedStatesAttorneyEasternDistrictofVirginia