This is Part II of an ongoing FreightWaves investigation into an alleged double-brokering ring based in Southern California. Click here for Part I. Click here for Part III.
The CEO of several transportation companies linked to an alleged sophisticated double-brokering ring claims he’s being unfairly targeted by his competitors, possibly because of his Armenian heritage.
On a call with FreightWaves, Steve Avetyan initially denied any affiliation with All State Association, headquartered in San Fernando, California. All State Association is one of three brokerages at the center of an alleged multimillion-dollar load-board scam involving nearly 600 companies.
He told FreightWaves that he knew the owners and “was familiar with their situation” and that load board providers, including Oregon-based DAT, “had shut down 300 users for alleged fraud,” but that he was not involved in the company.
“All State Association and the brokerage you are speaking about are two different companies,” Avetyan told FreightWaves.
He said the confusion started when All State Trucklines, headquartered in Los Angeles, changed the name of its brokerage to All State Association.
“It doesn’t make sense because you would put logistics or trucking,” Avetyan said. “The word ‘association’ doesn’t go with a brokerage name, but I can’t speak on their behalf. Those guys aren’t chumps, they’re making $500 to $600 million and living in $5 million mansions, though.”
He later confirmed to FreightWaves, however, that he was one of “those guys” after a 2018 Vibes podcast on YouTube surfaced of him and the company’s CFO, Alfred Megrabyan, explaining All State Association’s business practices. The childhood best friends, who graduated from Glendale High School in 1996, started the company in 2003.
While Avetyan denies knowing the CEO of All State Trucklines, Armen Karibyan, California secretary of state documents list Karibyan as an officer of All State Association. In business filings, he’s also listed as the secretary of a factoring company, Royalty Capital Inc., that Avetyan owns. Although the company is registered as a Nevada corporation, the mailing address is the same as All State Association in San Fernando. Business filings for Royalty Capital list Avetyan and Karibyan as working out of the same office in Las Vegas.
Founders dish on building transportation empire
In February 2018, Avetyan and Megrabyan appeared on a Vibes podcast talking about their business success, claiming they had made nearly $200 million the previous year and were planning a company retreat to present 18 Rolex watches to the company’s top sales agents the following month.
Avetyan describes All State Association as “a transportation services provider” that helps other entrepreneurs build their trucking companies or brokerages. But it comes with a hefty price — All State gets 20% of clients’ revenue.
“We are a platform for companies in the transportation industry,” Avetyan told Vibes. “We are there to back you up, to help you with all aspects of the trucking business — you know, the back-end stuff like capital, financing, truck access, software, all those other things … to help you build your business.”
At the time, Megrabyan said the company had more than 500 sales agents that All State has financed to start their own transportation companies in the U.S. and has hired hundreds more agents in Armenia.
“We’re probably one of the largest Armenian trucking companies in the country,” Megrabyan said.
Today, however, Avetyan says the root of the double-brokering controversy may actually be his Armenian heritage.
“There’s a lot of misinformation out there about me and my relationship with these companies,” Avetyan said. “I don’t know if I am being targeted because I’m Armenian and so are many of the people I’ve helped set up their businesses, but it’s definitely character assassination. Everyone double-brokers — it’s been around forever.”
While double-brokering is legal, doing so without disclosing it to shippers is not.
Broker says two-year project to track load-board scammers paid off
Frustrated with brokers and carriers being looted by a sophisticated network of load-board scammers posing as legitimate companies, Joe Howard, who works for a Midwestern logistics company, created a spreadsheet to track a list of suspect companies, largely based in Southern California. He said his goal is to warn others to do their due diligence or pay the price.
hundreds of motor carriers largely based in Southern California. Photo: Karen Roach/Shutterstock
Howard said the alleged double-brokering ring originally started with three large brokerages that are still operating, including All State Association, located in San Fernando, and Broadway Brokerage and TriStar Brokerage, both headquartered in Glendale, California.
However, not long after these entities were blocked from vying for loads on DAT, Howard claims two new brokerages popped up — all parented by Massive 3PL Corp., headquartered in Edinburg, Texas, and Fargo Freight Inc. of La Crescenta, California.
“These are just former All State, Broadway and TriStar employees and managers using different identities that are working together,” Howard says.
Howard said his reason for updating and sharing the list as new MC numbers pop up that are tied to the original Southern California brokerages is not racially motivated. A search of the companies linked to the alleged scheme show hundreds of complaints have been lodged against All State, Broadway and TriStar, along with Massive 3PL and other MC numbers tied in the network, for “unauthorized re-brokering or payment issues,” according to Carrier411 FreightGuard reports, and the Transportation Intermediaries Association (TIA) Watchdog reports.
Since the first article posted on Freightwaves.com about ties to Massive 3PL, the main brokerage linked to the burgeoning double-brokering scheme, were revealed, Howard said the alleged scammers have established nine new motor carrier (MC) numbers in an attempt to vie for freight on the major load boards.
Howard, who asked that his company not be named, said there were only a handful of companies on his list to avoid dealing with two years ago when he started the project. Now it has grown to nearly 600.
“I receive about eight requests per day for the list,” Howard told FreightWaves. “The biggest reaction I get is, how can they get away with this and why is the DOT [Department of Transportation] and FMCSA [Federal Motor Carrier Safety Administration] allowing this? Their second reaction is that they are surprised the list is so big.”
He told FreightWaves he has received countless emails from other brokers he shared the list with and that his effort potentially saved them thousands of dollars.
FMCSA did not respond to FreightWaves’ request for comment.
Howard says this sophisticated network has created hundreds of fake MC numbers, pretending to have trucks to get the loads from other brokers. Another entity involved in the alleged scheme re-brokers the freight to legitimate carriers that often have no idea the freight has been illegally double-brokered.
Once the legitimate carrier picks up the load, Howard said the alleged scammers often seek payment from the broker they booked the load with for transportation services or request fuel advances from the brokers before their unauthorized re-brokering scheme is discovered. Frequently, the legitimate trucking companies that transport the freight have little or no communication with the shippers that didn’t authorize the double brokering and sometimes have to fight to be paid, if at all.
Network largely based in Southern California
In Southern California, Howard said the cities of Glendale, Tujunga, North Hollywood and Burbank “could maybe hold between five to 10 legitimate trucking companies,” yet he said over 400 MCs are registered there. He claims most of the entities and employees involved in the alleged double-brokering scheme are “affiliated with each other in one way or another” and can be traced back to his original list.
Avetyan claims Howard’s list has hurt “a lot of innocent people” that started trucking companies and 3PLs that All State helped finance in Southern California.
“There’s a lot of good people in this area that have had to move or they have had to find other ways to work in this industry because of this list,” he said.
While he admits some companies operating in the Glendale area “caused some problems in the industry” in 2020, Avetyan said all of the companies linked to All State Association operate independently and he has no direct involvement in their day-to-day operations.
John B., a logistics coordinator for an Ohio-based 3PL, said frustration is mounting with FMCSA about why the alleged scammers are allowed to vie for freight when they don’t have any trucks or equipment and shippers or other brokers specifically state the loads are not to be double-brokered.
“It’s pretty bad right now — it’s like the Wild West out there for double or triple brokering loads,” John B., who asked that his last name and company not be identified, told FreightWaves.
Do you have a story to share? Send me an email. Your name will not be used without your permission.
Click for more articles by Clarissa Hawes
Freight fraud: Burgeoning double-brokering scheme like ‘whack-a-mole
Former employees shed light on sophisticated double-brokering network
2 truckers charged in kidnapping-for-ransom scheme
Utah trucking owner admits bribing FedEx manager, defrauding PPP loan program
Foreign truckers allege US job offers turned into human-trafficking scheme
