United States: Antitrust Division Cracks Down on Corruption in The Moving And Storage And Printing Businesses

This past month, the Antitrust Division filed pricefixing and conspiracy charges against a moving and storage company, and a printing and graphics broker pleaded guilty to bid-rigging and conspiracy. The Division continues to pursue white collar criminals across the spectrum of commerce.

On February 18, the Division announced that the Pasha Group, headquartered in Corte Madera, California, was charged with conspiring to fix prices and to defraud the United States in connection with transportation of military and civilian household goods. In particular, the Pasha Group was charged with conspiring to increase the rates paid by the Department of Defense ("DOD") for the transportation of military and civilian household goods from Germany to the United States in 2002. The Division also filed superseding charges against Belgium-based Gosselin World Wide Moving N.V. for its role in the same conspiracy.

In recent years, the DOD has spent more than $100 million annually to move the household goods of its military and civilian personnel from Germany to the United States. These charges resulted from an ongoing federal antitrust investigation of anticompetitive and fraudulent conduct in the industry that provides transportation to the DOD for the movement of military household goods. This continuing investigation is being conducted by the Division's National Criminal Enforcement Section with the assistance of the DOD Office of Inspector General Defense Criminal Investigative Service and the Army Criminal Investigation Division.

On February 27, 2004, James Bechand ("Bechand") of Lloyds Neck, New York, an independent broker representing a printing company based in Ronkonkoma, New York, pleaded in U.S. District Court in Manhattan to one count of conspiracy to commit commercial bribery and mail fraud and one count of bid rigging in connection with a scheme to defraud Salomon Smith Barney, Inc. ("SSB").

According to the charges, between early 2000 and August 2001, Bechand paid more than $35,000 in kickbacks to an unidentified SSB executive in exchange for a promise that his annual business with SSB would double from $1 million to $2 million. The kickbacks allegedly took the form of payments by Bechand on the SSB executive's credit card and home equity line of credit, and were used to pay off additional expenses incurred by the executive.

In addition, the charges state that on the SSB executive's instructions, Bechand submitted intentionally high "cover bids" for various SSB printing contracts, including one bid for a contract substantially in excess of $1 million. The cover bids were allegedly designed to subvert SSB's competitive bidding requirement and to lead SSB to believe that it was receiving the best value for its money, when in fact it was not. As a result of the alleged corrupt relationship between Bechand and the SSB executive, SSB paid higher prices for printing than it would have if its executive had aggressively and honestly solicited competitive prices from other vendors.

The prosecution of Bechand is being conducted jointly by the Division's New York Field Office and the U.S. Attorney's Office for the Southern District of New York, with the assistance of the Federal Bureau of Investigation and the Internal Revenue Service Criminal Investigation.

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