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From Antitrust Law Daily, January 26, 2017

Puerto Rico school bus contract probe nets four

By Jeffrey May, J.D.

Four school bus company owners have been convicted by a federal jury in Puerto Rico for participating in bid rigging and fraud conspiracies at an auction for public school bus transportation services in Puerto Rico’s Caguas municipality, the Department of Justice announced today (U.S. v. Rivera-Herrera, Case 3:15-cr-00361-GAG).

A seven-count felony indictment was filed in May 2015, naming five bus transportation company owners. The five defendants were: Gavino Rivera-Herrera, Luciano Vega-Martínez, Alfonso Gonzales-Nevarez, José L. Arroyo-Quiñones, and René Garay-Rodríguez. The government alleged that the individuals participated in bid rigging and fraud conspiracies at an auction for four-year, public school bus transportation contracts in Puerto Rico’s Caguas municipality in 2013. In addition to one count of conspiracy to rig bids and allocate the market for public school bus transportation services, the indictment also charges the defendants with one count of conspiracy to commit mail fraud and five counts of mail fraud. The defendants allegedly conspired to defraud the Puerto Rico Department of Education and the Caguas municipality, among others, in order to fraudulently obtain contracts for school bus transportation services.

The Justice Department announced that, following a week-long trial before Judge Gustavo A. Gelpi, Rivera-Herrera, Vega-Martínez, Gonzalez-Nevarez, and Garay-Rodríguez were found guilty of conspiring to rig bids and allocate the market for public school bus transportation contracts. In addition, each individual was found guilty of conspiracy to commit mail fraud and four counts of mail fraud for defrauding the municipality of Caguas in order to fraudulently obtain contracts for school bus transportation services. The Justice Department did not disclose the fate of the fifth defendant—Arroyo-Quiñones.

When the indictment was handed down in May 2015, the Justice Department identified the case as the first resulting from an ongoing federal antitrust investigation into anticompetitive conduct in Puerto Rico’s school bus transportation services industry. No additional charges have been publicly disclosed since that time. Sentencing for the convicted defendants is set for May 30.

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