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May 3, 2017 1:00 PM, EDT

Beam Brothers Gives Up Postal Service Contracts

Beam Brothers

Mail contractor Beam Brothers Trucking agreed to turn over its contracts with the U.S. Postal Service to Eagle Express Lines Inc., while top executives of Beam Brothers prepare to defend themselves against federal charges.

They are accused of conspiracy, falsifying records and wire fraud stemming from a long-running investigation of violations of driver hours-of-service rules.

In March, a federal grand jury issued indictments against CEO Gerald Beam, Vice President Garland Beam, Manager of Operations Shaun Beam and Chief Financial Officer Nickolas Kozel on 126 counts of falsifying driver logs and not properly paying drivers since 2010.

The government is seeking a judgment of not less than $40 million, according to the indictment. The case is set to go to trial in U.S. District Court in Harrisonburg, Va., on May 22.

While each of the company executives has pleaded not guilty, the legal representative for Gerald Beam, attorney Mark Obenshain, said the uncertainty created by the federal indictment made it impossible to continue operations.

“It is heartbreaking that this turn of events would occur just because the federal government has made unproven accusations,” Obenshain said in a statement issued April 14. “While we believe the charges are entirely without merit and we are aggressively defending the case, it is hard for us to be forced out of a business which grew from a family-owned small hay hauler into one of the largest mail carriers in the country.”

Beam Brothers Trucking, based in Mount Crawford, Va., ranks No. 11 on the Transport Topics list of largest for-hire carriers in the mail sector with postal revenue of $76.2 million for the 12 months ended Sept. 30, 2015, according to data compiled by David Hendel of the Washington, D.C.-based law firm Husch Blackwell. Eagle Express Lines Inc. based in Homewood, Ill., ranks No. 5 with postal revenue of $140.2 million for the same period.

Over the past 10 years, the government has paid more than $500 million to Beam Brothers Trucking for mail delivery. The company operated across 17 states and served nearly every major city east of the Mississippi River.

Under the agreement with Eagle Express Lines, the Illinois-based carrier will immediately take over Beam Brothers’ operations and assume responsibility for nearly 600 drivers and office employees subject to final due diligence. A deal is expected to close by May 1.

Eagle Express Lines CEO Wayne Hoovestol expressed support for Beam’s employees. “We know there are a lot of safe, dedicated, long-term team members, and we hope that everyone will stay with us for years to come,” he said.

Obenshain also expressed gratitude to employees for their service and commitment to the business.

“Beam Brothers is a family business in every sense of the word,” he stated. “We are grateful to the U.S. Postal Service for the opportunity we were given to deliver the mail. And we are grateful to Wayne Hoovestol and Eagle Express for stepping in to help in this hour of need.”

Hoovestol also heads up another mail carrier, Hoovestol Inc., based in Eagan, Minn. The company ranks No. 8 on the TT list of top mail carriers with postal revenue of $92 million in fiscal year 2015.