SHELL GAMES
How trucking companies that cheat drivers dodge penalties
In 2015, the California labor commissioner ordered Fargo Trucking to pay its drivers $8.7 million — as much as $370,000 each — for cheating them out of fair wages.
It was the largest judgment ever imposed in an industry notorious for exploiting its workers and running afoul of state labor laws.
But instead of writing checks to their drivers, Fargo’s owners set in motion a plan to make their company vanish. They jettisoned their retail clients and stripped the company of its assets. Then they moved it all under new company names, safe from the judgment of the courts.
Today they are back in business under the name Express FTC — hauling goods in the same trucks, for the same clients, out of the same office building that once belonged to Fargo.
Drivers still have not been paid.
“I know we’re never seeing a dime. ... Who cares if we starve, right?”
Carlos Garcia on the $8.7 million the California labor commissioner ordered Fargo Trucking to pay its drivers
A year-long USA TODAY Network investigation found that port trucking companies like Fargo have used legal loopholes, shell companies and bankruptcy protection to dodge the punishment labor court judges have handed down.
The network examined California labor commissioner cases filed by more than 1,100 port truck drivers and traced the outcomes for almost 60 companies found by the courts to have violated the law.
At least a dozen companies have avoided all or most of their labor judgments after shifting assets into new business names. Many delayed paying for two years or more, then filed for bankruptcy or pressured drivers to accept settlements that gave them a fraction of what the labor commissioner said they were owed.
The vast majority of the own-
ers still operate today, moving goods out of California ports and on their way to major retailers nationwide.
“The idea that companies are still around without paying the full boat is a point of outrage in and of itself,” said Jay Shin, directing attorney at Wage Justice Center, a non-profit that has provided legal help for the drivers.
From 2012 to 2016, port truck drivers were awarded $37 million in back pay and penalties. It’s not clear exactly how much has been paid out because state records don’t show most private settlements or pending negotiations. But the labor commissioner has been able to track only $3 million that has actually gone to drivers.
Executives at eight of the 12 companies that moved assets after workers filed labor claims declined to comment for this story or did not respond to interview requests. The other four said they had done nothing wrong but did not answer questions about their business moves.
In email exchanges with the USA TODAY Network, Fargo CEO Philip Ting said he has paid his drivers fairly. “We have put operators’ children through college, bought them homes,” he said. “We provided them the opportunity, and somehow we become the villains in all this.”
While his drivers sought payment through labor complaints, Ting chronicled the good life with posts on Facebook and Instagram. Courtside selfies at Lakers and Clippers games. Rolex watches.
In spring 2015 — around the time Fargo lost its labor cases — Ting flew first-class to Hawaii. That September, he traveled to New York, where he recently bought a $1.8 million condo, property records show. He went to Japan and Taipei, Taiwan, in December. Last year, he posted from Paris, Rio, and the Philippines. Sometimes he traveled by private jet.
“Some unwholesome lifestyle sh - - - ,” he posted on Instagram alongside a picture of Dom Pérignon champagne at an outdoor club. “Who lives like this?”
Meanwhile, drivers like Carlos Garcia are left waiting for checks that may never come.
The 56-year-old former Fargo driver has no savings. Much of his weekly income was eaten up by his truck expenses. Fargo charged him $300 a week to lease a rig, plus hundreds in additional fees for insurance, maintenance, fuel, parking — even the company toilet paper and office supplies.
Two years ago, the California labor commissioner awarded him more than $200,000 in back pay and penalties.
“I know we’re never seeing a dime of that,” said Garcia, who went into debt to pay bills and now fears bankruptcy. “Who cares if we starve, right?”
HOW IT ALL BEGAN
Until Fargo Trucking was hit with the biggest labor judgment in the port trucking industry, it was an unremarkable company, a midsize operation in a crowded field that moves containers from the ports of Los Angeles and Long Beach to nearby warehouses.
Then, in 2008, California passed a law that banned aging big rigs from serving the ports, part of an effort to cut down on deadly diesel fumes. The industry faced the prospect of buying 16,000 new trucks.
As the USA TODAY Network first reported in June, dozens of trucking companies in Southern California — where almost half of America’s imports enter the country — pushed the cost onto truckers by forcing them into lease-to-own programs for new trucks. Some drivers began working up to 20 hours a day for pennies an hour after expenses.
The setup kicked off labor complaints against more than 140 companies, including Fargo.
Fifty Fargo drivers, many of whom who spoke little English, testified that the company pressured them to sign truck leases to keep their jobs. Some couldn’t understand the contracts because they were not translated.
Half of them testified that managers forced them to work past the federal safety limit for commercial truckers, sometimes denying paychecks until they got back on the road.
Fargo executives denied those claims at the hearings. But on July 16, 2015, more than two years after the first complaint was filed, a California labor com- missioner hearing officer issued a 360-page bulk ruling ordering Fargo to pay employees $8.7 million in back pay and penalties.
The rulings say Fargo failed to pay overtime and improperly charged for truck expenses but do not address other allegations by the drivers.
In the months leading up to the judgment, Fargo Trucking appeared to have plenty of money, including at least 58 trucks registered in its name, tax filings and port entry records show. Approximate value: $7.5 million.
Fargo has moved goods for UPS, the vacuum company Bissell and manufacturing giant 3M, according drivers’ manifests matched with shipping data from the trade research firm Panjiva.
In January 2016, Fargo received a court order demanding payment on the labor commissioner judgments. Weeks passed, then months.
No checks arrived.
Last August, drivers sued Fargo, accusing the company of fraud for hiding up to 90 trucks in CKT. The trucks tell the story. Using registrations, lease contracts, tax filings and California port records, the USA TODAY Network found that Fargo transferred at least 50 trucks to businesses run by people associated with the company.
One of the companies, CKT Logistic, was created by June Ou, Fargo’s founder and Ting ’s mother, California secretary of state records show. CKT is the lienholder of at least one of the former Fargo trucks, according to registration documents provided by a driver. The other company, Express FTC, was incorporated by Gershom Shing, Fargo’s former accountant. He registered the company on July 13, 2015, three days before labor judgments against Fargo were mailed.
More than 50 Fargo trucks now regularly appear as Express FTC in records that track drivers entering the gates at the ports of Los Angeles and Long Beach.
The Express office, where drivers pick up their checks and park their trucks, is at 2727 East Del Almo St. in Rancho Dominguez — the same building used by Fargo.
Shing “is a false president,” said Garcia, the former Fargo driver. “He’s just an accountant. They’re hiding the business by doing that.”
Shing and Ting declined to answer questions about Express FTC or CKT Logistic. Ou said she doesn’t know anything about the judgments: “I’m retired.”
‘WHERE DOES THAT LEAVE US?’
The USA TODAY Network found that one in five port trucking companies ordered to repay drivers moved assets in similar ways.
Facing $9.4 million in labor claims, QTS Inc. moved at least $600,000 into the owner’s family trust — mostly in the form of rent payments — and gave away its biggest client to a new company created by one of its employees, according to bank statements and emails that lawyers subpoenaed to detail the transactions. Former QTS executive Ki Yoon denied the allegation and said the company had few assets left to move after paying its legal bills.
In 2015, a bankruptcy judge found that Seacon Logix “stripped away” all its business, going from $12.8 million in income one year to $227,000 the next. The owners ran a network of trucking operations that began delivering containers for Seacon’s former customers out of the same address, bankruptcy court records show.
When asked about the company’s operations, Jason Goh, a former Seacon president, said: “I’d rather not talk about it. The company’s not even open anymore.”
These companies and many others filed for bankruptcy, arguing they could not repay drivers and stay in business.
Most companies, including QTS and Seacon, wind up paying settlements, usually for less than the judgment. At least six companies have paid nothing to some drivers who won judgments.
From 2013 to 2014, 23 drivers filed labor complaints against Superior Dispatch, a small port trucking company based in Lynwood, Calif. At the time, the company had at least 30 trucks moving goods for retailers, California port records show.
But as the drivers waited for their cases to be heard, Superior’s trucks and customers began to disappear. By the time drivers were awarded $2.4 million in back pay in spring 2015, the company was well on its way to shutting down.
According to a lawsuit filed by the drivers, the company assets didn’t go far. Superior Dispatch owner Melinda Melgar gave them to her son, who operates his own hauling operation, Roadking Trucking, the suit alleged. Last year, at least seven former Superior Dispatch trucks appeared at the harbor hauling loads for Roadking at least once, port records show.
Superior Dispatch drivers still have not been paid.
“It’s classic fraudulent transfer if you transfer things to your relatives and you’re not given valuable consideration,” said attorney Stephen Glick, who represents the drivers.
Melgar did not respond to interview requests. Her son, Michael Noles, who runs Roadking Trucking, did not respond to phone messages or letters seeking comment.
Fargo, meanwhile, is still registered as a company in California but has not paid its judgments. Last month — more than a year after drivers won their case — CEO Philip Ting called about 20 former Fargo drivers to a meeting.
He gave the drivers a choice: accept $7,000 now or he would file for bankruptcy, an offer he has since increased. Most drivers are owed more than $100,000.
“He said, ‘ We don’t have that money,’ ” recalled someone who was at the meeting and spoke on condition of anonymity because he fears retaliation. Two other drivers described a similar scene.
“They go after us at our weakest point,” said one driver, worried about losing everything. “Where does that leave us?”