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FMCSA puts 4 Kansas companies out of business for being ‘chameleon carriers’

FMCSA put four Kansas trucking companies out of business based on the conclusion that they were reincarnated “chameleon carriers.”

By LYNDON FINNEY
The Trucker Staff

4/25/2013

WASHINGTON — The Federal Motor Carrier Safety Administration Thursday said it had ordered four Olathe, Kan.-based trucking companies — Royal Transport Inc., Nationwide Inc., Freight Inc. and Midwest A, Inc. to immediately cease all interstate transportation service based on evidence that they are reincarnated “chameleons” for an unsafe truck company previously shut down by the agency.

In essence, the agency found that Binder Singh had founded one trucking company after another to avoid the negative consequences of Royal Transport’s conditional safety rating and its negative compliance history, and to avoid civil penalties the FMCSA had imposed.

The chronology of events reads like a trucking soap opera.

The case is strikingly similar to several other situations where a second carrier was started to carry on the services of a prior carrier that had out-of-service for safety violations and in which management and/or equipment involved with the second company was the same as the company put OOS.

Data on applications for new trucking companies and data on OOS orders are stored in separate information systems with the FMCSA that do not electronically share data. Thus, applications filed by executives of a company put OOS can go undetected for long periods of time.

FMCSA currently is in the process of developing a Unified Registration System that would combine all data in one system, which would prevent instances such as described in the order against the four companies.

The agency said it served an Operations Out-of-Service and Record Consolidation Order against the four companies in January, but because the companies were not considered imminent hazards in terms of safety, Singh was allowed to request an administrative review.

The administrative review upheld the decision to shut down the companies because they were considered illegal chameleon carriers.

FMCSA said its field investigation found common relationships among the companies, both among the companies’ executives and their bases of operation.

State of Kansas vehicle registration records demonstrated that eight vehicles were commonly used by Royal, Nationwide and Freight. Royal and Nationwide used the same five drivers to perform transportation services; Nationwide and Freight used the same five drivers to perform transportation services; and Royal and Freight used the same three drivers to perform transportation services.

The FMCSA said on Oct. 1, 2004, following a compliance review, it notified Royal that it had received a Conditional safety rating as a result of violations and served a claim asserting a civil penalty, which Royal agreed to pay.

On Oct. 16, 2005, while Royal remained in a conditional status, Harjit Kaur, Singh’s wife, applied for a DOT number for Nationwide Inc.

On May 4, 2006, Royal underwent a second compliance review based on its high SEA scores in driver (92.3) and Safety Management. The compliance review refers to Harjit Kaur as Royal's president. Although Royal received a satisfactory safety rating as a result of the 2006 review, it was noted that continued compliance monitoring would be the recommended course of action based on the issues discovered with compliance with Hours of Service requirements and recordkeeping challenges.

On Jan. 8, 2008, Nationwide underwent a compliance review based on a complaint that the carrier was asking drivers to drop trips from their logbooks, which FMCSA found to be true. The regulatory agency assessed a civil penalty, which has yet to be paid.

Because Nationwide did not pay the penalty, the FMCSA ordered the company OOS July 8, 2008.

On May 15, 2009, Avtar Singh, Binder Singh’s father, filed articles of incorporation for Freight Inc., and June 4, 2009, filed an MCS-150 applying for its DOT number. The FMCSA said Binder Singh retained authority to hire Freight Inc.’s drivers.

On July 28, 2010, Nationwide notified the FMSCA that it was out of business.

On Feb. 24, 2011, Freight Inc. underwent a focused compliance review because its fatigued driver BASIC percentile score was 87.8 and its vehicle maintenance BASIC percentile score was 85.2. During the review, Binder Singh represented that he owned the company with his father. Binder Singh was responsible for dispatching all loads and for compliance with HOS regulations. Because the review was a focused review, it did not result in a safety rating.

On Sept. 14, 2011, Binder Singh filed articles of incorporation for Midwest A Inc. and obtained a DOT number for Midwest Oct. 5, 2011. He is identified as Midwest's president.

In 2012, the FMCSA assigned an investigator to conduct a new entrant audit for Midwest A. The investigator discovered that Midwest had the same identifying characteristics for management and ownership as Royal, Nationwide and Freight. The investigation said Midwest did not appear to have started operations and, because of the discovered similarities to existing companies, the safety audit was not completed and the information was transferred to FMCSA's Kansas Division.

On Jan. 26, 2012, Freight underwent a compliance review initiated as a result of Freight's Unsafe Driving BASIC (98.2 percent), its Fatigued Driving BASIC (95.2 percent) and Vehicle Maintenance BASIC. Binder Singh represented Freight during the compliance review. Harjit Kaur was reported as assisting with organizing the paperwork and overseeing the finances for the company.

Binder Singh admitted that he owned Royal. He also claimed that Nationwide was owned by his "previous wife," Harjit Kaur. He claimed that Freight is owned by his father and that he has a "manager role" due to some language and communication barriers.

He acknowledged that he owned Midwest and claimed that Royal and Nationwide filed for bankruptcy and that during the course of the bankruptcy all of their debts were discharged.

The FMCSA said its Field Administrator's evidence demonstrated that Binder Singh was more than just a titular figurehead for the various entities he used to conduct transportation operations.

The final OOS order against the four companies was issued April 15.

To read the entire document detailing the case, click here.

The Trucker staff can be reached to comment on this article at editor@thetrucker.com.

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