[Federal Register Volume 64, Number 34 (Monday, February 22, 1999)]
[Notices]
[Pages 8570-8571]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-4234]


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FEDERAL MARITIME COMMISSION

[Docket No. 99-03]


I Chen ``Jenny'' Chiang dba Prestige Forwarding Co. and Hsueh L. 
``Frank'' Wu--Possible Violations of Sections 10(a)(1) and 19(d) of the 
Shipping Act of 1984, and 46 CFR Part 510; Order of Investigation and 
Hearing

    Respondent I Chen ``Jenny'' Chiang is a resident of Cerritos, 
California. From November 6, 1995 through April 15, 1998, Ms. Chiang 
was licensed by the Federal Maritime Commission as an ocean freight 
forwarder doing business as Prestige Forwarding Co. (``Prestige 
Forwarding''), FMC No. 4038. Jenny Chiang served as qualifying 
individual in applying for the forwarder license and was the only 
apparent employee of Prestige Forwarding. Following commencement of an 
investigation by the Commission regarding the activities of Prestige 
Forwarding, Ms. Chiang surrendered the freight forwarder license of 
Prestige Forwarding.
    Respondent Hsueh L. ``Frank'' Wu is the husband of Jenny Chiang. 
Mr. Wu is employed as a sales representative of Hyundai Merchant Marine 
Co. Ltd. (``Hyundai''), located in Gardena, CA. Jenny Chiang and Frank 
Wu reside at 13630 Destino Place, Cerritos, CA, which address also 
served as the offices of Prestige Forwarding throughout the time in 
question.
    Information obtained by the Commission indicates that Prestige 
Forwarding collected forwarder compensation from Hyundai and other 
ocean common carriers without providing any forwarding services or 
furnishing to the carrier the requisite certification entitling 
Prestige Forwarding to the payment of forwarder compensation thereon. 
Shipments on which Prestige Forwarding collected forwarder compensation 
appear to be tied primarily to cargo accounts then being serviced by 
Frank Wu at Hyundai, as well as to certain non-vessel-operating common 
carriers (``NVOCCs'') transporting cargo on the vessels of Hyundai and 
others. It further appears that Frank Wu offered to return to certain 
NVOCCs a portion of the freight forwarder compensation received by 
Prestige Forwarding on those shipments for which Prestige Forwarding 
was designated as freight forwarder on the respective ocean bills of 
lading.
    Section 19(d) of the Shipping Act of 1984 (``1984 Act''), 46 U.S.C. 
app. Sec. 1718(d), provides that an ocean freight forwarder may receive 
compensation only when such forwarder has performed specified services 
relating to securing the shipment and preparing the documentation 
thereon, and has furnished written certification to the carrier that it 
possesses a valid license and performed those services entitling the 
forwarder to compensation. The Commission's freight forwarder 
regulations, 46 CFR part 510, iterate the statutory requirements that a 
forwarder may receive compensation only where it has certified that it 
has performed the services entitling it to payment. 46 CFR 510.23. 
Section 10(a)(1) of the 1984 Act, 46 U.S.C. app. Sec. 1709(a)(1), 
prohibits any person knowingly and willfully, directly or indirectly, 
by means of false billings, false classification, false weighing, false 
report of weight, false measurement, or by any other unjust or unfair 
device or means, to obtain or attempt to obtain ocean transportation 
for property at less than the rates or charges that would otherwise be 
applicable. The Commission's freight forwarder regulations carry 
forward the statutory requirements by prohibiting a licensed forwarder 
from sharing any portion of its fee or freight forwarder compensation 
with any shipper or employee thereof. 46 CFR 510.22.
    It appears that, beginning no later than January 1997, Prestige 
Forwarding received compensation as an ocean freight forwarder without 
performing those services required for the payment of freight forwarder 
compensation. Under section 19 of the 1984 Act, the provision of 
forwarding services and good faith certification to the ocean common 
carrier is a statutory condition precedent to the payment and receipt 
of freight forwarder compensation. It further appears that Ms. Chiang's 
husband, Frank Wu, actively participated in establishing and 
implementing a scheme or device to extract money from ocean common 
carriers essentially under false pretenses. Since January 1997, 
compensation apparently was collected by Prestige Forwarding on more 
than 1500 shipments transported on Hyundai, without performing the 
services of a freight forwarder and without furnishing the requisite 
certification that such forwarder then possessed a valid license and 
had performed services entitling the licensee to the receipt of freight 
forwarder compensation. By so doing, it appears that Frank Wu and Jenny 
Chiang, individually and acting as Prestige Forwarding, violated 
section 19(d) of the 1984 Act, and also violated the Commission's 
forwarder regulations at 46 CFR Sec. 510.23.
    In addition, it appears that Prestige Forwarding remitted part of 
its forwarder compensation to its NVOCC shippers, and that checks were 
issued by Prestige Forwarding reflecting such payments. It further 
appears that Jenny Chiang's husband, Frank Wu, exercised a primary role 
in initiating and carrying out such arrangement with respect to such 
NVOCCs, and possibly other shipper accounts of Prestige Forwarding or 
Hyundai. In remitting or returning to the shippers a portion of the 
compensation paid to Prestige on their shipments, it appears that 
Respondents have sought unlawfully to lower the freight charges of the 
NVOCC-shippers. See, e.g. Pacon Express Inc., Luis R. Hallon and Sun 
Bong--Possible Violations of Sections 10(a)(1) and 19(d)(4) of the 
Shipping Act of 1984, 28 S.R.R. 352 (I.D., May 5, 1998) 
(Administratively final June 19, 1998). In doing so, it appears that 
Frank Wu and Jenny Chiang, individually and acting as Prestige 
Forwarding, violated section 19(a)(1) of the 1984 Act and also violated 
the Commission's forwarder regulations at 46 CFR 510.22(a).
    Section 11 of the 1984 Act, 46 U.S.C. app. Sec. 1710, sets forth 
the Commission's

[[Page 8571]]

authority to investigate violations of the 1984 Act. Under section 13 
of the 1984 Act, 46 U.S.C. app. Sec. 1712, a person is subject to a 
civil penalty of not more than $25,000 for each violation knowingly and 
willfully committed, and not more than $5,000 for other violations of 
the 1984 Act or regulations issued thereunder.\1\
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    \1\ These penalties are increased 10 percent for any violations 
occurring after November 7, 1996. See Inflation Adjustment of Civil 
Penalties, 61 Fed. Reg. 52704 (October 8, 1996).
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    Now therefore, it is ordered, That pursuant to sections 10, 11, 13 
and 19 of the 1984 Act, 46 U.S.C. app. Secs. 1709, 1710, 1712 and 1718, 
an investigation is instituted to determine:
    (1) Whether Hsueh L. ``Frank'' Wu and I Chen ``Jenny'' Chiang, 
individually and doing business as Prestige Forwarding Co., violated 
section 19(d) of the 1984 Act, 46 U.S.C. app. Sec. 1718(d), and the 
Commission's forwarder regulations at 46 CFR Part 510, by obtaining 
ocean freight forwarder compensation on shipments for which the 
Prestige Forwarding did not furnish freight forwarding services nor 
provide the necessary certification to the carrier entitling the 
forwarder to receive such compensation;
    (2) Whether Frank Wu and Jenny Chiang, individually and doing 
business as Prestige Forwarding Co., violated section 10(a)(1) of the 
1984 Act, 46 U.S.C. app. Sec. 1709(a)(1), and the Commission's 
forwarder regulations at 46 CFR Part 510, by allowing shippers to 
obtain transportation for property at less than the rates or charges 
otherwise applicable by unjust or unfair device or means of rebating or 
remitting to such shippers a portion of the forwarder compensation 
earned on their respective shipments;
    (3) Whether, in the event violations of sections 10(a)(1) and 19(d) 
of the 1984 Act and 46 CFR Part 510 are found, civil penalties should 
be assessed against Frank Wu and Jenny Chiang and, if so, the amount of 
penalties to be assessed;
    (4) Whether, in the event violations of sections 10(a)(1) and 19(d) 
of the 1984 Act and 46 CFR Part 510 are found, an appropriate cease and 
desist order should be issued.
    It is further ordered, That a public hearing be held in this 
proceeding and that this matter be assigned for hearing before an 
Administrative Law Judge of the Commission's Office of Administrative 
Law Judges at a date and place to be hereafter determined by the 
Administrative Law Judge in compliance with Rule 61 of the Commission's 
Rules of Practice and Procedure, 46 CFR Sec. 502.61. The hearing shall 
include oral testimony and cross-examination in the discretion of the 
Presiding Administrative Law Judge only after consideration has been 
given by the parties and the Presiding Administrative Law Judge to the 
use of alternative forms of dispute resolution, and upon a proper 
showing that there are genuine issues of material fact that cannot be 
resolved on the basis of sworn statements, affidavits, depositions, or 
other documents or that the nature of the matters in issue is such that 
an oral hearing and cross-examination are necessary for the development 
of an adequate record;
    It is further ordered, That Hsueh L. ``Frank'' Wu and I Chen 
``Jenny'' Chiang are designated Respondents in this proceeding;
    It is further ordered, That the Commission's Bureau of Enforcement 
is designated a party to this proceeding;
    It is further ordered, That notice of this Order be published in 
the Federal Register, and a copy be served on parties of record;
    It is further ordered, That other persons having an interest in 
participating in this proceeding may file petitions for leave to 
intervene in accordance with Rule 72 of the Commission's Rules of 
Practice and Procedure, 46 CFR 502.72;
    It is further ordered, That all further notices, orders, and/or 
decisions issued by or on behalf of the Commission in this proceeding, 
including notice of the time and place of hearing or prehearing 
conference, shall be served on parties of record;
    It is further ordered, That all documents submitted by any party of 
record in this proceeding shall be directed to the Secretary, Federal 
Maritime Commission, Washington, D.C. 20573, in accordance with Rule 
118 of the Commission's Rules of Practice and Procedure, 46 CFR 
502.118, and shall be served on parties of record; and
    It is further ordered, That in accordance with Rule 61 of the 
Commission's Rules of Practice and Procedure, the initial decision of 
the Administrative Law Judge shall be issued by February 16, 2000, and 
the final decision of the Commission shall be issued by June 15, 2000.
Bryant L. VanBrakle,
Secretary.
[FR Doc. 99-4234 Filed 2-19-99; 8:45 am]
BILLING CODE 6730-01-M