The First Circuit Court of Appeals recently upheld the five-year prison sentence of former Sea Star Line LLC president, Frank Peake, following his conviction as part a massive shipping price-fixing scheme centered in Puerto Rico. See the First Circuit’s opinion here.
The Government alleged that Peake, along with the heads of several other carriers, conspired to artificially inflate shipping rates and surcharges and rigged bids submitted to corporations and government entities for freight services. Following a two week trial, Peake was convicted and his sentence was calculated based on the $565 million in revenue that Sea Star generated between 2005 and 2008.
On appeal, Peake’s counsel raised various challenges including that: the juror pool had been tainted by the prosecution’s references to the effect of the scheme on the price of consumer goods; the judge improperly directed the jury to continue deliberations when it appeared to be hung; and the sentence had not been properly calculated because at least some portion of Sea Star’s revenue was not the result of the price-fixing scheme, and therefore, the sentence calculation should be reduced.
The First Circuit rejected these arguments and found that the District Court had properly instructed the jury regarding the basis for the sentence calculation and had not erred when instructing the jury to continue its deliberations after it was unable to come to a resolution within a single day.
This case underscores just how high the stakes for individual actors can be when the federal sentencing guidelines are applied to full extent. When potential violations arise and possible resolutions are considered, individuals and their counsel must appreciate that “worst-case-scenario” prison sentences are indeed possible even if they appear disproportionate to the actual gains from the violation. Well-versed counsel is the best resource to evaluate potential personal liability and navigate the nuances of resolution prior to trial (and the possible application of the sentencing guidelines).