Shady broker serving 51-month sentence hasn’t paid restitution

| Thursday, December 04, 2008

One former trucker was forced to sell off his fleet and close for business after being owed $103,812.

In another case, a shipper had to pay some carriers a total of $62,000 because even though the broker had been paid, he hadn’t paid the truckers. That business was left holding the bag.

The Member Assistance Department of the Owner-Operator Independent Drivers Association recalls countless trucking operations that lost hundreds and thousands of dollars at a time to John Russell – the one-time broker who evaded federal authorities for years.

Russell hasn’t paid a dime of his court-ordered $165,000 in restitution, according to the federal prosecutor who pursued Russell’s recent 51-month prison sentence.

Steven Snyder, U.S. Attorney out of Fort Smith, AR, saw Russell’s prosecution through to a 51-month sentence in federal prison.

Russell hasn’t paid any restitution yet, but Snyder said his office’s financial obligation unit is responsible for collecting the $165,000.

“The judgment is enforceable against him civilly, and that judgment is good for 20 years,” Snyder said. “If it’s not paid, it can be renewed for 20 years.”

Snyder’s office will file the judgment of record wherever Russell lives after he leaves prison, Snyder said. The judgment will act as a lien, preventing Russell from legally disposing of property.

Truckers owed money may be able to file a claim for those funds, Snyder said, suggesting they contact the FBI.

“Any money collected is divided up among the people that are owed restitution,” Snyder said.

OOIDA Membership Department Supervisor Sylvia Dodson worked collections when the Association’s now 5-inch-thick file was started on Russell – who spent much of his business life based in Arkansas.

Started six years ago, the file details $614,632 in unpaid freight hauled by OOIDA members and other truckers.

The drivers allege that Russell would broker loads while working the flawed system for obtaining authority while sometimes operating with a legitimate motor carrier number issued by the fed and other times he would not even bother with getting any authority. Same with the insurance. Russell used family members for references to say he “always paid his loads.”

Before most small carriers knew it, Russell had closed business but reopened under a different name.

In October, Russell was sentenced to serve 51 months in federal prison and to pay $165,000 in restitution to his victims. Russell had previously pleaded guilty to one count of wire fraud.

OOIDA officials said many truckers would be glad to hear that Russell would pay for some of his crimes but wouldn’t like hearing that he was prosecuted only for wire fraud and fined a fraction of what he owed truck drivers.

“While we are very happy with the prison time handed down, we can’t help but question the small fine in light of how much money this man essentially stole from hard-working truck drivers,” said Karen England, Supervisor of OOIDA’s Member Assistance Department.

Snyder defended the wire fraud prosecution, saying the court considers relevant conduct in its sentencing.

In 31 years as a prosecutor, Snyder said Russell’s case was the first trucking-related case he’d prosecuted.

OOIDA is pleased that the FBI investigated Russell’s case and the U.S. Attorney’s office prosecuted it, England said. The authority and expertise of the Federal Motor Carrier Safety Administration, however, should have led FMCSA to enforce its own regulations and spearhead the case against Russell, she said.

“More than anything, this man’s reign of terror over the trucking industry was made possible by the flawed authority system and lack of oversight exerted by FMCSA,” England said. “This system has to be fixed.”

Dodson wrote a letter on OOIDA’s behalf in February to the U.S. Probation Office in Arkansas. In it, she detailed Russell’s career history of avoiding payment to carriers.

Between March 2002 and July 2007, Russell:

  • Operated under 15 different motor carrier numbers issued by the Federal Motor Carrier Safety Administration.
  • Owned, acted as an agent, or was otherwise connected with 46 different companies and names.
  • Possessed 20 different addresses in eight different states.
  • Kept 38 different phone numbers.
  • Used the flaw in the $10,000 bond requirement by collecting from shippers then failing to pay carriers, which would ultimately grossly exceed the $10,000 bond.

“On the surface, he looked quite legit,” Dodson wrote. “Since industry practice allows 30-day pay period between delivery date, and payment date, it was very easy for Mr. Russell to book loads, arrange transportation, receive his payment and close his doors and move on before any of the owner-operators knew they had been stiffed.”

Russell ran companies out of Bakersfield and Salinas, CA; Joplin, Columbia and Dunweg, MO; Hardy, Ozark, Springdale, Fort Smith, Little Rock and North Little Rock, AR; Colorado Springs, CO; Harrodsburg, KY; Seagoville, TX; Oklahoma City; and New Lothrop, MI.

Dodson still thinks about the victims who lost their businesses after not being paid by Russell for loads hauled.

“I wish we could have helped more people he owed get their money back,” Dodson said.

Despite the fact the Association is thrilled that Russell is off the streets for the time being, England said his conviction represents just a small step toward cleaning up the riffraff that plagues the industry.

“It’s imperative FMCSA step up to the plate and accept their responsibility in putting an end to this type of predatory behavior that brokers can engage in,” she said.

– By Charlie Morasch, staff writer
charlie_morasch@landlinemag.com

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