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School Bus Company Owners Indicted for Bid-Rigging and Fraud in Puerto Rico

On May 20, 2015, a federal grand jury in San Juan, Puerto Rico indicted five individuals for bid rigging and fraud conspiracies in connection with an auction for public school bus transportation contracts.  The auction was based in Puerto Rico’s Caguas municipality, 20 miles south of San Juan.

The Justice Department filed a seven-count felony indictment in U.S. District Court of the District of Puerto Rico against the five school bus transportation company owners.  The first count alleges that the bus owners conspired to rig bids and allocate the market for public school bus transportation services in Caguas municipality, a violation of Sherman Act § 1.  Each defendant faces a maximum sentence of ten years in prison and a $1 million fine on this charge.  That fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than $1 million.

The second count alleges that the bus owners conspired to commit mail fraud, and the remaining counts charged them with mail fraud.  Each of these counts could lead to a maximum sentence of 20 years in prison and a $250,000 fine.

According to the Justice Department, the conspiracy occurred from around August 2013 until May 2015, and related to a 2013 auction to award four-year contracts for public school bus transportation.  According to a statement by Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division, “The defendants are charged with depriving taxpayers, the Municipality of Caguas and the Puerto Rico Department of Education of the benefits of a competitive bidding process for school bus contracts.”

This indictment is part of an “ongoing effort to investigate and prosecute financial crimes” in the District of Puerto Rico, according to U.S. Attorney Rosa Emilia Rodríguez-Vélez.  In particular, this is the first case resulting from an ongoing federal antitrust investigation, conducted by the Antitrust Division’s Washington Criminal I Section, the U.S. Attorney’s Office of the District of Puerto Rico, the FBI’s Puerto Rico Field Office and the U.S. Department of Education Office of Inspector General, into price fixing, bid rigging, and other anticompetitive conduct in Puerto Rico’s school bus transportation services industry.