Supply Chain News / Risk & Compliance / 3PLs & 4PLs

Oasis Capital Owner Indicted

Indictment follows FMCSA investigation of fraudulent broker trust fund.

February 7, 2014

After receiving complaints from broker members, the Transportation Intermediaries Association (TIA), requested the Federal Motor Carrier Safety Administration (FMCSA) investigate the status of Oasis Capital Inc. of La Mirada, Calif. The company reportedly had hundreds of broker trust funds on file with the FMCSA.

TIA requested the FMCSA investigation in November 2009 and again in March 2010 based on evidence that the State of California had revoked Oasis Capital’s Finance Lender’s License in May 2007. Despite that, says TIA, Oasis Capital continued to open trust funds and to file forms with the FMCSA.

According to the U.S. Department of Transportation's Office of Inspector General's website, “Oasis solicited brokers and accepted payments in the amount of $10,000 each to establish trust funds only to use the monies for other purposes. FMCSA suspended Oasis' privileges to file trust funds on behalf of brokers in January 2010 and began the process of revoking the approximately 500 Oasis trust funds on file with FMCSA.”

Bonnie Warren of Oasis Capital, Inc. has been formally indicted by the U.S. District Court, Los Angeles, California, in connection with a fraudulent trust fund scheme.

DOT notes, “Trust fund monies are supposed to be maintained for the purpose of providing payments to shippers or motor carriers in cases where the broker fails to carry out its contract to provide transportation services by authorized motor carriers.”

 

In a statement TIA said, “This indictment further validates TIA’s long held position that brokers, shippers and carriers need to make sure they are working with legitimate, financially stable and ethical trust companies. The most recent transportation reauthorization [MAP-21] passed in July 2012, which contained a number of provisions that addressed the growing concern of fraud in multiple aspects of the transportation industry.”

TIA continued, “Specifically, there is a provision requiring the FMCSA to establish performance standards for broker bonding companies and other acceptable surety entities, including requirements that the broker and freight forwarder can only file a bond issued by a surety registered and in good standing with the U.S. Department of Treasury; or a trust or other security acceptable by the FMCSA Administrator. This is provided that the surety amount consists of assets readily available to pay claims without resort to personal guarantees or collection of pledged accounts receivable. This makes the bond issuer, trust or other security holder ultimately responsible for failure to make required payments. The law also puts in place specific procedures for notification of cancellation of a bond/trust and specifies procedures for addressing claims in a timely manner.”

For more information on MAP-21 broker requirements, see Congress Acts on Transportation Bill, World Trade 100, August 2012.

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