The owner of a New York trucking business who fabricated a supposedly independent Texas affiliate to circumvent his existing firm’s negative safety rating and avoid higher insurance costs has been found guilty of conspiracy and fraud.
On June 21, a jury in the U.S. District Court for the Western District of New York, following a three-week jury trial, found Tony Kirik guilty on seven counts that include conspiracy, false documents, false statements, falsification of records, and concealment of material facts.
According to prosecutors, Kirik, owner of Orange Transportation Services, Inc. (OTS) in Rochester, and Dallas Logistics, Inc. (DLI), conspired with others to defraud the Federal Motor Carrier Safety Administration (FMCSA), an agency of the Department of Transportation (DOT). As part of the scheme. Kirik submitted forms to FMCSA falsely representing that DLI’s principal address was in Dallas and that it was an independent firm and not under Kirik’s control.
Investigators said that Kirik and co-conspirators forged signatures and purged documents in their attempt to conceal from FMCSA that Kirik owned and managed DLI. They also concealed that DLI was affiliated with OTS, which had received a “conditional” FMCSA safety rating. A conditional rating means that a trucking company does not have adequate safety management controls in place to meet DOT standards.
By obtaining a more favorable safety rating and concealing its affiliations, DLI lowered its insurance premiums and increased its revenue from customers, some of whom were unwilling to use a motor carrier like OTS with a conditional safety rating, according to prosecutors.
In addition to a unique DOT identifier, many trucking firms are required to also obtain specific interstate operating authority based on the type of business or goods being transported. This unique identifier, known as a MC number, determines what types and levels of insurance the motor carrier must have.
FMCSA conducts safety compliance reviews and assigns ratings to carriers. The ratings include unsatisfactory, conditional and satisfactory. The agency maintains an online system that shows each carrier’s record including numbers of drivers, crashes, insurance and bonds, inspections and enforcement activity.
To prevent motor carriers from concealing poor safety or compliance records, DOT regulations require motor carriers to identify affiliated and reincarnated motor carriers that share common ownership, management, control or family relationships. The regulations prohibit two or more motor carriers from using common management or relationships to avoid compliance with legal requirements or otherwise mask or conceal non-compliance with DOT safety standards.
FMSCA said it conducted a compliance review of DLI and learned that contrary to information it had been given, DLI was not in Dallas and that it was affiliated with OTS, which had a conditional safety rating. The agency later learned that Kirik named someone else as the “paper president” of DLI and he directed an employee to forge signatures and purge various documents to conceal his relationship with DLI.
The government brought its charges against Kirik in November 2020.
Topics Trucking
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