WASHINGTON – A Virginia trucking company indicted last month by a federal grand jury on more than 120 counts of fraud and conspiracy is relinquishing its government contracts for hauling U.S. mail.
Eagle Express Lines, which is based in Homewood, Ill., and also primarily transports mail for the U.S. Postal Service, will take over all trucking operations at Beam Bros. Trucking Inc. next month, the companies said.
“The agreement includes the interim financing for Beam’s current obligations and operation until the takeover of operations which is expected to be May 1st, 2017,” a statement from Eagle Express President Wayne Hoovestrol that is posted on Beam Bros.’ website says.
Gerald Beam, co-owner and president of Beam Bros., said in a statement: “We are fortunate to work with the Hoovestol/Eagle group. I take comfort in knowing that our people will be taken care of and will continue working and hauling mail.”
The March 16 indictment accuses Beam Bros. Trucking and its leadership of “aiding, abetting, encouraging, requiring and permitting” drivers to violate federal safety laws by exceeding their permitted driving hours and compelling them to forge driving logs to cover up the transgressions. The company also failed to pay drivers all their overtime hours, the indictment alleges. The violations date back to June 1999, the indictment alleges.
Federal regulations dictate the hours truck drivers may work. A driver may drive no more than 11 hours during a 14-hour work period and must have at least 10 hours off between shifts. Drivers are required to keep and update logs of their hours to show that they are in compliance with the law. Many trucking companies – including Beam Bros. – now mostly use paperless electronic logs, which make fraud more difficult.
The 126-count indictment estimates the Postal Service has paid Beam Bros. more than half a billion dollars over the past 10 years to transport mail. The Mount Crawford, Va. company, founded in 1932, has hauled mail since 1995 and now carries mail in 17 states. The mail contracts comprise the bulk of its business.
Beam Bros. has insisted throughout the seven-year federal investigation that the allegations are false. But the company said in a statement last week that “the mere filing of the federal indictment and the uncertainty that has accompanied it has made it impossible for us to continue our operations.”
“It is heartbreaking that this turn of events would occur just because the federal government has made unproven accusations. While we believe the charges are entirely without merit and we are aggressively defending the case, it is hard for us to be forced out of a business which grew from a family owned small hay hauler into one of the largest mail carriers in the country,” said the statement released by Mark Obenshain, attorney for co-owner Gerald Beam.
“It is even worse to see the anxiety of our employees who have been fearful for their jobs before we even have had our day in court,” the statement added.
Eagle Express’ statement was addressed to Beam Bros.’ 600 employees and tried to reassure them that they would not lose their jobs. “We know there are a lot of safe, dedicated, long-term team members, and we hope that everyone will stay with us for years to come.”
The statement said that in May the workers “will become Eagle Express Line employees, with health insurance carried over and all pay and accrued vacation with Beam Brothers paid out on their final check from the company on May 12.”
Drivers must file out on “an abbreviated employment application” as required by the U.S. Department of Transportation and will retain their original anniversary date, the statement said.
Both Beam Bros. and Eagle Express Lines were contacted for additional comment but neither company responded.
Beam Bros. has received several civil penalties for similar violations, but this is the first time that criminal charges are being brought against the company.
In 2003, the Federal Motor Carrier Safety Administration (FMCSA) fined Beam Bros. $22,670 after an investigation discovered that a driver was allowed to exceed legal driving hours on five occasions. The company later settled and agreed to pay $20,000. In 2010, the company was fined $31,480 after an investigation found 23 similar violations. The company paid $25,000 in that case.
The FMCSA told the company at that time to avoid such violations in the future.
In addition to Beam Bros. Trucking and Gerald Beam, 67, the March indictment names as defendants Beam Bros. Holding Corp.; co-owner and vice-president Garland Beam, 62; his son Shaun Beam, 35, the former operations manager; and Nickolas Kozel, 40, the former chief financial officer. The indictment says investigators discovered emails from the men indicating they were aware of and even encouraged the violations.
The four defendants appeared in U.S. District Court in Harrisonburg, Va. on March 30. Each pleaded not guilty.
Arguing that Beam Bros. could collapse if the case drags on, defense attorneys invoked the defendants’ constitutional rights to a speedy trial. Indeed, Beam Bros. is struggling to avoid bankruptcy.
The government claims that Beam Bros. made at least $40 million – directly or indirectly – from the crimes outlined in the indictment. The government could seek that money before a conviction.
The company’s attorneys have filed a motion seeking a decree nisi — a court ruling that would prohibit the government from going after the company’s funds before a conviction. The motion states prosecutors have told Beam Bros. the government would make no guarantees.
The trial is scheduled to begin on May 30. Prosecutors expect it to last two months and include 50-70 witnesses.