(Complainant's Appeal at 15-16). The difference, Complainant argues, is that the administrative law judge in Ruma considered Complainant's recommendation and gave it weight; whereas, in this case, Complainant did not recommend a civil penalty, and the Chief ALJ gave Complainant's recommendation no weight (Complainant's Appeal at 16).

The Chief ALJ did consider the sanction recommendation of agency officials (Initial Decision and Order at 10-11). The recommendation of administrative officials as to the sanction is not controlling, and in appropriate circumstances, the sanction imposed may be considerably less, or different, than that recommended by administrative officials.3 The Chief ALJ does not indicate that he gave no weight to the agency's sanction recommendation, as Complainant contends. Instead, the Chief ALJ states that he rejects Complainant's sanction recommendation and sets forth his reasons for his rejection of Complainant's sanction recommendation. I do not find, as Complainant contends, that the Chief ALJ gave no weight to the agency's sanction recommendation.

Second, Complainant argues that the employee in the Ruma case was restricted in employment because the employee was responsibly connected to an employer which failed to pay a reparations award; whereas, here, Mr. Alvin Schepps was responsibly connected to a previous employer which committed repeated and flagrant violations of section 2(4) of the PACA (7 U.S.C. § 499b(4)). Complainant's sanction witness testified that the Agricultural Marketing Service is less likely to recommend civil penalties in a case in which the employed individual has been responsibly connected with a firm that has committed repeated and flagrant failure to pay violations than it is in a case in which the employed individual has been responsibly connected with a firm that has failed to pay a reparations award. However, neither the Department's sanction policy nor 7 U.S.C. § 499h(e) (Supp. I 1995) make a distinction between the employment of an individual responsibly connected with a firm that failed to pay a reparations award and the employment of an individual responsibly connected with a firm that failed to make full payment promptly in accordance with section 2(4) of the PACA.

Third, Complainant argues that the cases are different because the violation in this proceeding is much more serious than the Ruma violation. In Ruma,

'In re C.C. Baird, 57 Agric. Dec. 127, 176-77 (1998); In re Scamcorp, Inc., 57 Agric. Dec. 527, 57374 (1998); appeal dismissed, No. 98-3296 (8th Cir. Oct. 29, 1998); In re Allred's Produce, 56 Agric. Dec. 1884, 1918-19 (1997); In re Kanowitz Fruit & Produce, Co., 56 Agric. Dec. 942, 953 (1997) (Order Denying Pet. for Recons.); In re William E. Hatcher, 41 Agric. Dec. 662, 669 (1982); In re Sol Salins, Inc., 37 Agric. Dec. 1699, 1735 (1978); In re Braxton Worsley, 33 Agric. Dec. 1547, 1568 (1974).

57 Agric. Dec. 1498

Complainant based the recommended sanction on the good business reputation of, and no other violations committed by, Respondent. Complainant argues that Respondent's violation in this proceeding is much more serious than in Ruma, because the long history of PACA violations committed by firms with whom individuals associated with Respondent were involved aggravates the seriousness of Respondent's violation (Complainant's Appeal at 16).

However, the Complaint only alleges that Respondent violated section 8(b) of the PACA (7 U.S.C. § 499h(b)) based on its employment of Mr. Alvin Schepps after June 9, 1994. Respondent's "business reputation" is not relevant to the sanction to be imposed. Further, the history of PACA violations committed by firms with whom individuals (other than Mr. Schepps) affiliated with Respondent were involved is not relevant to the sanction to be imposed in this proceeding, unless those individuals are shown to be affiliated with Respondent in violation of section 8(b) of the PACA (7 U.S.C. § 499h(b)). If Respondent has committed violations of section 8(b) of the PACA (7 U.S.C. § 499h(b)) which were not alleged in the Complaint filed in this proceeding, a new proceeding should be instituted, and if any violations are found in this new proceeding, the violation which I find in this proceeding will be considered when determining the sanction to be imposed at the conclusion of the new proceeding. Fourth, Complainant argues that "the respondent in Ruma terminated its employment of the restricted individual. (Citation omitted.) Respondent, here, failed to take any steps to investigate why the Agency believed it employed Mr. Schepps (citation omitted) or to terminate any affiliation with Mr. Schepps.' (Complainant's Appeal at 17.) However, the record establishes that, while Respondent continued to employ Mr. Schepps in violation of section 8(b) of the PACA (7 U.S.C. § 499h(b)) for 172 days, Respondent did terminate employment of Mr. Schepps in November 1994.

"

Fifth, Complainant argues that in Ruma the civil penalty was based on the "articulable calculation" of the "net profits that Ruma would lose if it were to serve the 45 day suspension" and the "calculation was used to replicate the deterrent effect of the suspension if Ruma chose to pay the civil penalty in lieu of serving the suspension." (Complainant's Appeal at 17-18.) Complainant argues that the Chief ALJ did not provide an articulable calculation for the $15,000 civil penalty, in lieu of the 45-day suspension, assessed by the Chief ALJ. I reject this argument because neither the Department's sanction policy nor 7 U.S.C. § 499h(e) (Supp. I 1995) requires an "articulable calculation" for setting the amount of a civil penalty. The civil penalty authorized by PACAA1995 is discretionary and requires that certain factors be considered when setting

the amount of the civil penalty. I find that the Chief ALJ considered all of the factors he was required to consider to determine the amount of the civil penalty to assess against Respondent.

Sixth, Complainant argues that the Chief ALJ did not give due consideration. to the criteria in the statute by only comparing the facts and circumstances of this case with the Ruma case; and that as a consequence the Chief ALJ's $15,000 civil penalty in lieu of a 45-day suspension is contrary to the mandate of Congress because the Chief ALJ failed to consider the size of the business, and the seriousness, nature, and the amount of the violation. I reject this argument because it is factually wrong. While it is true that the Chief ALJ compared this case to Ruma, it certainly is not error to compare these very similar cases. Further, the record establishes that the Chief ALJ based his decision to assess Respondent a civil penalty of $15,000 in lieu of a 45-day suspension for its violation of section 8(b) of the PACA (7 U.S.C. § 499h(b)) on these factors: 1) the size of the business is a small business of less than 5 million dollars in sales annually; 2) the number of employees is 15 to 20; 3) the seriousness of the violations is that the violations are serious; 4) the nature of the violations is that Respondent continued to employ a person subject to PACA employment restrictions without securing a surety bond after notice of the requirement for a surety bond; and 5) the amount is that the violative employment continued for 172 days. (Initial Decision and Order at 10-11.) The Chief ALJ has fulfilled all requirements for imposing an alternative civil penalty under the Department's sanction policy and under 7 U.S.C. § 499h(e) (Supp. I 1995).

For the foregoing reasons, the following Order should be issued.

Order

Respondent, Colonial Produce Enterprises, Inc., is assessed a civil penalty of $15,000, which shall be paid by a certified check or money order, made payable to the Treasurer of the United States, and forwarded to, and received by: James Frazier, United States Department of Agriculture, Agricultural Marketing Service, Fruit and Vegetable Division, PACA Branch, Room 2095-South Building, 1400 Independence Avenue, S. W., Washington, DC 20250, within 60 days after the date of service of this Order on Respondent. Respondent shall indicate on the certified check or money order that payment is in reference to PACA Docket No. D-95-534. In the event the PACA Branch does not receive a certified check or money order in accordance with this Order, a 45-day suspension of Respondent's PACA license shall take effect, beginning 61 days

57 Agric. Dec. 1517

after the date of service of this Order on Respondent.

In re: JOSEPH T. KOCOT.

PACA-APP Docket No. 97-0006.

Decision and Order filed August 10, 1998.

Responsibly connected-Active involvement in violations - Officer, director, and shareholderAlter ego-Nominal - Rebuttable presumption standard.

The Judicial Officer affirmed Judge Baker's (ALJ) decision that Joseph T. Kocot (Petitioner) was responsibly connected with Caito & Mascari, Inc., during the time that Caito & Mascari, Inc., violated the PACA. Petitioner admits that he was the president, a director, and a holder of 38 per centum of the outstanding stock of Caito & Mascari, Inc., during the time that Caito & Mascari, Inc., violated the PACA. The definition of responsibly connected in section 1(b)(9) of PACA (7 U.S.C. § 499a(b)(9) (Supp. II 1996)) establishes a rebuttable presumption, which provides that: a petitioner, even though a corporate officer, director, or holder of more than 10 per centum of the stock of a violating corporation is not deemed responsibly connected if the petitioner proves by a preponderance of the evidence both (1) that petitioner was not actively involved in the activities resulting in the violations and (2) that the petitioner either was only nominally an officer, director, and shareholder of the violating corporation or was not an owner of the violating corporation which was the alter ego of its owners. Petitioner failed to prove that he was not actively involved in activities that resulted in Caito & Mascari, Inc.'s violations of the PACA or that his positions with Caito & Mascari were merely nominal. Instead, the evidence reveals that Petitioner was intimately involved with the formulation of policies concerning Caito & Mascari, Inc.'s finances and Caito & Mascari, Inc.'s day-to-day operations. Petitioner knew of Caito & Mascari, Inc.'s violations of the PACA; issued checks to persons other than produce sellers, thereby reducing Caito & Mascari, Inc.'s ability to pay produce sellers in accordance with the PACA; and allowed the continuation of a scheme designed to prevent detection of Caito & Mascari, Inc.'s violations. Since Petitioner admits that he was a holder of 38 per centum of the stock of Caito & Mascari, Inc., he is an owner of Caito & Mascari, Inc., and the defense that Caito & Mascari, Inc., was the alter ego of others, is not available to Petitioner.

Stephen P. McCarron, Washington, D.C., for Petitioner.

JoAnn Waterfield, for Respondent.

Initial decision issued by Dorothea A. Baker, Administrative Law Judge.
Decision and Order issued by William G. Jenson, Judicial Officer.

Joseph T. Kocot [hereinafter Petitioner] instituted this proceeding pursuant to the Perishable Agricultural Commodities Act, 1930, as amended (7 U.S.C. §§ 499a-499s) [hereinafter the PACA], and the Rules of Practice Governing Formal Adjudicatory Proceedings Instituted by the Secretary Under Various Statutes (7 C.F.R. §§ 1.130-.151) [hereinafter the Rules of Practice], by filing a Petition for Review (With Oral Hearing) [hereinafter Petition] on March 14, 1997. The Petition challenges the determination by the Chief of the PACA Branch, Fruit and Vegetable Division, Agricultural Marketing Service, United States Department of Agriculture [hereinafter Respondent], that Petitioner was

responsibly connected, as defined in section 1(b)(9) of the PACA (7 U.S.C. § 499a(b)(9)), with Caito & Mascari, Inc., during a period in which Caito & Mascari, Inc., violated section 2(4) of the PACA (7 U.S.C. § 499b(4)).

Respondent informed Petitioner's counsel, Mr. Stephen P. McCarron, Esq., in letters dated February 14, 1997, that a complaint had been filed by the United States Department of Agriculture [hereinafter USDA] against Caito & Mascari, Inc., alleging that during the period September 1995 through May 1996, Caito & Mascari, Inc., failed to make full payment promptly to 77 sellers for 295 lots of perishable agricultural commodities totaling $997,652.91 and that PACA Branch records indicate that Anthony A. Caito, Joseph A. Caito, Sr., Joseph A. Caito, Jr., Thomas A. Caito, Joseph T. Kocot, and Magdalina M. Mascari [hereinafter Petitioners] each had taken an active role as an officer, director, and/or shareholder in Caito & Mascari, Inc., during the period in which the alleged violations of the PACA occurred and that Petitioners were accordingly determined to be responsibly connected with Caito & Mascari, Inc., during the period that Caito & Mascari, Inc., is alleged to have violated the PACA.

Petitioners challenged the February 14, 1997, determination by Respondent that they were responsibly connected with Caito & Mascari, Inc., during the period of time that Caito & Mascari, Inc., violated the PACA. On March 28, 1997, Respondent filed documents with the Hearing Clerk that comprise the record upon which Respondent based his determinations that Petitioners were responsibly connected with Caito & Mascari, Inc.

On May 19, 1997, Administrative Law Judge Dorothea A. Baker [hereinafter ALJ] consolidated for oral hearing the disciplinary proceeding instituted against Caito & Mascari, Inc., for alleged violations of section 2(4) of the PACA (7 U.S.C. § 499b(4))' with proceedings instituted by Petitioners challenging Respondent's determinations that they were responsibly connected with Caito & Mascari, Inc., during the period of time that Caito & Mascari, Inc., violated section 2(4) of the PACA (7 U.S.C. § 499b(4))2 (Memorandum of Prehearing

'The disciplinary proceeding instituted against Caito & Mascari, Inc., is captioned, In re Caito & Mascari, Inc., PACA Docket No. D-97-0008.

'The responsibly connected proceedings instituted by Anthony A. Caito, Joseph A. Caito, Sr., Joseph A. Caito, Jr., Thomas A. Caito, Joseph T. Kocot, and Magdalina M. Mascari challenging Respondent's determinations that they were responsibly connected with Caito & Mascari, Inc., during the period that Caito & Mascari, Inc., violated section 2(4) of the PACA (7 U.S.C. § 499b(4)) are captioned respectively, as follows: (1) In re Anthony A. Caito, PACA-APP Docket No. 97-0002; (2) In re Joseph A. Caito, Sr., PACA-APP Docket No. 97-0003; (3) In re Joseph A. Caito, Jr., PACA-APP Docket No. 97-0004; (4) In (continued...)