The Antitrust Division of the Department of Justice (“DOJ”) scored an important victory on September 20, 2012 when AU Optronics Corp. (AUO) of Taiwan was fined $500,000,000 by U.S. District Court Judge Susan Illston in San Francisco for participation in a criminal price fixing conspiracy in the market for thin-film transistor liquid crystal display (LCD) panels. Judge Illston also sentenced two high level executives of AUO to 3-year prison terms each and fined each of them $200,000 for their participation in the criminal conspiracy. See Press Release, U.S. Dep’t of Justice, Taiwan-Based AU Optronics Corporation Sentenced To Pay $500 Million Criminal Fine For Role In LCD Price-Fixing Conspiracy (Sept. 20, 2012) (http//www.justice.gov/atr/public/press_release/2012/287189.htm).
On June 27th, 2012, the 7th Circuit established elements extending the reach of United States antitrust law to certain cases where foreign companies engage in anticompetitive conduct outside the United States. (Minn-Chem, Inc., et al., v. Agrium Inc., No. 10-1712, slip op. (7th Cir. June 27, 2012)).
Executive Agrees to Go to Jail for Submitting Falsified Documents to the Antitrust Agencies During the Merger Review Process
On May 3, 2012, the Antitrust Division of the Department of Justice (“DOJ”) announced that an executive of Hyosung Corporation, an affiliate of Nautilus Hyosung Holdings Inc. (“Nautilus”), agreed to plead guilty and serve five months in prison in the United States for obstruction of justice charges in connection with the antitrust agencies’ merger investigation of its proposed acquisition of U.S.-based Triton Systems. The transaction was abandoned.
On July 17, 2009, Patriot Services Inc. (“Patriot”), a temporary staffing company used by various government agencies and departments, and its owner/president, Stephanie Blackmon, pled guilty to making a false statement to the U.S. Small Business Association (“SBA”).
Although Ms. Blackmon was officially the owner/president of Patriot from November 2003, the operations of Patriot was actually run by Ms. Blackmon’s former employer who also ran other temporary staffing companies. Specifically, Ms. Blackmon admitted to providing false statements so that Patriot could receive a certification under Section 8(a) of the Small Business Act. This certification, designated for small businesses run by economically and socially disadvantaged people, qualified Patriot to receive government contracts specifically set aside for 8(a) companies. Since Ms. Blackmon is an African-American, Patriot qualified for the certification. In addition, Patriot also used Ms. Blackmon’s status as a service-disabled veteran to receive other contracts as well. The government had awarded Patriot $5.4 million in contracts.
On July 6, 2009, Robert P. Griffiths, a former executive at Bennett Environmental Inc (“BEI”), a Canadian company that provides soil treatment, pled guilty to charges for paying kickbacks and committing fraud at the U.S. Environmental Protection Agency (“EPA”) Superfund-site Federal Creosote in New Jersey. Mr. Griffiths also pled guilty to money laundering charges and obstruction of an impeding proceeding by the U.S. Securities and Exchange Commission.
On July 1, 2009, First Lieutenant Robert Moore (Ret.), plead guilty to conspiracy and bribery charges. Mr. Moore accepted money from contracts in exchange for Department of Defense (“DOD”) contracts at the Bagram Airfield, Afghanistan (“Bagram”). He also falsified the number of bunkers and barriers delivered to Bagram, causing the DOD to pay for bunkers and barriers it never received. Mr. Moore also falsified the damages to leased vehicles at Bagram causing the DOD to pay for repairs performed or not needed.
On June 30, 2009, Franch A. March, a chief executive officer of a former Virginia marine products company, pled guilty for his role in conspiracy to rig bids and allocate customers with respect to foam-filled fenders and buoys bought by the U.S. Navy, U.S. Coast Card, and other private companies. Mr. March has also agreed to pay a fine of $100,000 and serve jail time, the amount of time still to be determined by a court.
On June 25, 2009, Tijani Ahmed Saani, a contracting officer at the Department of Defense, plead guilty to filing false tax returns from 2003 to 2007.
While working on detail at Camp Arifjan, Kuwait, he failed to properly file tax returns by not reporting overseas bank accounts in the United States and Jersey Channel Islands.
On June 25, 2009, Frederick Landgraber, a co-owner of a New Jersey landscaping company, plead guilty to his role in a fraud conspiracy at the Environmental Protection Agency (“EPA”)-Superfund site, Federal Creosote.
Mr. Landgraber was involved in the conspiracy from March 2002 to June 2005. Mr. Landgraber paid $30,000 to an employee prime contractor at Federal Creosote so that employee would steer contracts to Mr. Landgraber’s landscaping company. He and his co-conspirator intentionally bid increased cover bids from fictitious companies to secure the bids for their companies. His company received $1.5 million in sub-contracts at the Superfund-site.
THREE MILITARY OFFICERS, FOUR DEFENSE CONTRACTORS AND THEIR COMPANIES CHARGED FOR DEFRAUDING DOD IN AFGHANISTAN
On June 19, 2009, Christopher P. West, a U.S. Army Major, and Patrick W. Boyd, a U.S. Air Force Master Sergeant pled guilty to various bribery, fraud, and conspiracy charges related to Department of Defense contracts in Afghanistan. Charles Patton, a U.S. Army Sergeant pled guilty for receiving stolen property connected to the bribery conspiracy. Assad John Ramin and Tahir Ramin, both U.S. citizens, and their companies AZ Corporation and Top's Construction, Noor Alam, an Afghan citizen, and his company Northern Reconstruction Organization, and Abdul Qudoos Bakhshi, an Afghan citizen, and his company Naweed Bakhshi Company were all indicted for bribing military officials and defrauding the U.S. Department of Defense (“DOD”).
TWO MORE INDIVIDUALS INDICTED IN ONGOING INVESTIGATION INTO BIDDING VIOLATIONS IN MARYLAND TAX-LIEN AUCTIONS
On June 16, 2009, Harvey N. Nusbaum and Jeff W. Stollof, two Baltimore, MD businessmen, were indicted for conspiring to rig bids in tax lien auctions in Maryland.
If a property owner in Maryland fails to pay his/her property taxes, the State government imposes a lien. If the taxes are still unpaid, the tax liens are sold at auction. The winner of the auction then gets the right to collect the taxes plus interest owed on the property along with foreclosure rights if taxes are still unpaid. Mr. Nusbaum and Mr. Stollof conspired with co-conspirators to rig these bids in Baltimore between 2002-2007. Both businessmen and their co-conspirators agreed to which specific tax liens they would bid for and agreed on specific bid amounts in certain auctions.
On June 3, 2008, Steven L. Berman, a Maryland tax lien agent, pled guilty and agreed to pay $750,000 for his role in rigging bids in tax lien auctions in several Maryland counties. He is awaiting sentencing.
On June 11, 2009, Anthony M. Tesvich, a former Home Depot employee, was sentenced to serve six years in federal prison for charges of conspiracy to commit wire fraud and filing false tax returns.
According to the Department of Justice (“DOJ”), the conspiracy took place from October 2002 to October 2007. Mr. Tesvich took kickbacks from various foreign vendors seeking to do business with Home Depot. Mr. Tesvich also provided kickbacks, which he referred to as “milk shakes” and “French fries”, to other employees of Home Depot during and after his employment at Home Depot. Furthermore, the DOJ charged Mr. Tesvich with evading taxes for his income between the years 2003-2005 amounting to approximately $1.3 million.
On June 2, Bradley J. Hansen, the former superintendent of the Montcalm Area Intermediate School District in Grand Rapids, MI, was indicted by a grand jury for conspiring to commit bribery and deprive the school district and the citizens of Michigan of his honest services in relation to the Federal Communication Commission’s (“FCC”) E-Rate Program. He was also charged with obstruction of justice into Department of Justice’s ongoing investigation into bidding violations related FCC E-Rate program.
On May 19, 2009, Ronald Douglas Matheny II, the former product merchant in Home Depot’s flooring department, pled guilty to his role in a conspiracy to commit wire and mail fraud and a conspiracy to commit money laundering connected to a scheme to defraud his former employer, Home Depot.
Mr. Matheny was employed with Home Depot from May 1987 to July 2007. He was responsible for locating outside firms to facilitate the displays of flooring merchandise in all of Home Depot’s retail stores. He and un-named co-conspirators sold items for re-sale to Home Depot and supplied services to Home Depot on less than advantageous terms. For this Mr. Matheny received approximately $1.5 million in kickbacks from his co-conspirators.
On May 14, 2009, Melissa Deaton Tesvich, ex-wife of former Home Depot employee, Anthony Tesvich, who pled guilty for one count of wire fraud, herself pled guilty to one count of filing a false tax return.
According to the Department of Justice, Ms. Tesvich filed a joint federal tax return for 2005 where she underreported her taxable income by $1.07 million and underreported taxes owed to the U.S. government by approximately $385,000. Ms. Tesvich was also served as a bookkeeper and assisted her husband in his side businesses.
PRESIDENT OF DEFENSE CONTRACTOR PLEADS GUILTY TO CONSPIRACY TO DEFRAUD U.S. NAVY IN ONGOING INVESTIGATION INTO MILITARY RESTRAINT INDUSTRY
On May 1, 2009, Thomas J. DeGirolamo, owner and president of a designing and manufacturing firm, pled guilty for his role in a conspiracy to allocate a U.S. Navy contract for navy straps.
Navy straps are a type of equipment used by the U.S. Navy to tiedown munitions and other equipment for transport on ships and airplanes.
The conspiracy took place between March 2004 and November 2007. This is the 11th indictment to arise from an ongoing investigation into the military restraint industry. Military restraint equipment is used to tie down and secure vehicles, aircraft, munitions, shipping containers, and other specialized military cargo requirements for transportation.
On April 27, 2009, Bock Kwon, a high level executive at LG Display Co. Ltd. (“LG”) pled guilty, agreed to serve one year in prison in the United States and pay a criminal fine of $30,000 for his role in a conspiracy to suppress and eliminate competition in the Thin Film Transistor-Liquid Crystal Display (TFT-LCD) industry by fixing prices of TFT-LCD panels.
On April 8, 2009, Stephen E. McAnulty, a former owner of an asbestos monitoring contractor that provided services to New York Presbyterian Hospital (“NYPH”), pled guilty to making false statements to agents and representatives of the Federal Bureau of Investigation and Department of Justice’s Antitrust Division.
On April 2, 2009, Durwanda Elizabeth Morgan Heinrich, a dirt, sand, and gravel subcontractor, and Kern Carver Bernard Wilson, a former contract employee of the U.S. Army Corps of Engineers were convicted on charges of conspiring to commit bribery. Additionally, Heinrich was found guilty of two counts of offering a bribe to a public official and Wilson was found guilty of one count of demanding and agreeing to accept a bribe as a public official.
On March 31, 2009, Sakae Someya, an executive at Hitachi Displays, Ltd. (“Hitachi”) was charged for participating in a conspiracy to suppress and eliminate competition in the Thin Film Transistor-Liquid Crystal Display (“TFT-LCD”) industry by fixing prices of TFT-LCD panels sold to Dell, Inc (“Dell”) for its use in notebook and desktop computers.
On March 10, 2009, Hitachi Displays, Ltd (“Hitachi”), a subsidiary of Hitachi Ltd (a Japanese electronics manufacturer), pled guilty and agreed to pay a fine of $31 million for its role in a conspiracy to fix the prices of Thin Film Transistor-Liquid Crystal Display panels (“TFT-LCD”) sold to Dell Inc. (“Dell”).
On January 22, 2009, three air cargo airlines, LAN Cargo S.A. (“LAN”), a Chilean company, Aerolinhas Brasileiras S.A. (“ABSA”), a Brazilian company, and EL AL Israel Airlines Ltd. (“EL AL”), an Israeli company, each pled guilty for their role in a worldwide conspiracy to fix prices in the air cargo industry and agreed to pay criminal fines totaling $124.7 million. LAN, which owns a substantial portion of ABSA, agreed to pay a criminal fine of $109 million while EL AL agreed to pay a criminal fine of $15.7 million.
On January 15, 2009, Chang Suk (“C.S.”) Chung, former Vice President of Monitor Sales for LG Display Co. Ltd. (“LG”), Chieng-Hon Lin (“Frank”), former Chairman and Chief Executive Officer for Chunghwa Picture Tubes Ltd. (“Chunghwa”), Chih-Chun Liu (“C.C.”), former Vice President of LCD Sales for Chunghwa, and Hseuh-Lung Lee (“Brian”), former executive of Chunghwa, all pled guilty to their roles in a global conspiracy to fix prices in the sale of Thin Film Transistor-Liquid Crystal Display (“TFT-LCD”) panels. They also agreed to serve jail time and pay criminal fines.
On December 18, 2008, Zul Tejpar, a former employee at Bennett Environmental Industries (“BEI”), a Canadian soil treatment company, pled guilty for defrauding the U.S. Environmental Protection Agency (“EPA”) at the EPA-designated Superfund site, Federal Creosote in Manville, NJ and agreed to pay a criminal fine of $1 million and help in the ongoing investigation.
NINTH INDIVIDUAL PLEADS GUILTY TO RIGGING BIDS AND VIOLATING THE FCPA IN DOJ’S ONGOING INVESTIGATIO IN MARINE HOSE INDUSTRY
On December 10, 2008, Misao Hioki, general manager of International Engineered Products, pled guilty to his role in a conspiracy to rig bids, fix prices and allocate market shares of marine hose in the United States. He also pled guilty for his role in another conspiracy to violate the Foreign Corrupt Practices Act (“FCPA”) by making corrupt payments to government officials in Latin America and elsewhere to obtain and retain business. He has agreed to serve two years in jail, pay a criminal fine of $80,000 and help in the Department of Justice’s (“DOJ”) investigation.
On December 10, 2008, Randall Lee Rahal, the owner and president of Intramark USA Inc., a New Jersey wholesaler of food ingredients, was charged for his role in conspiracies involving racketeering, price fixing, bid rigging and contract allocation, and with money laundering, in the processed tomato products industry. Mr. Rahal agreed to forfeit $600,000 as well.
On December 1, 2008, Dunlop Oil & Marine Ltd (“Dunlop”), located in Grimsby, England, pled guilty to rigging bids, fixing prices and allocating market shares of marine hose sold in the United States. Dunlop also agreed to pay a $4.54 million criminal fine and cooperate with the DOJ’s ongoing antitrust investigation.
One November 17, 2008, Andrew Barmakian, the former president of a California-based marine products company, pled guilty and agreed to serve a sentence and pay a criminal fine for his role in a conspiracy to rig bids for contracts for marine products purchased by the U.S. Navy, the U.S. Coast Guard, and other private companies.
On November 10, 2008, Val M. Northcutt, an executive at Manuli Rubber Industries SpA (“Manuli”) and Francesco Scaglia, , an Italian National employed as a product manager for marine hoses for Manuli’s factory, were each found not guilty by a twelve member jury sitting in the United States District Court for the Southern District of Florida.
EL PASO BUSINESSMAN PLEADS GUILTY TO ROLE IN CONSPIRACY TO RIG BIDS AND ALLOCATE CUSTOMERS FOR THE DOOR AND HARDWARE CONTRACTS
On October 28, 2008, Humberto “Beto” Lopez, vice president of El Paso Steel Doors and Frames Inc., pled guilty to conspiring to rig bids and allocate customers for certain contracts for sales of doors and other hardware for various construction projects in the El Paso area. Mr. Lopez has also agreed to cooperate in the ongoing investigation.
On October 23, 2008, American Composite Timbers (“ACT”), a plastic marine pilings supplier located in Commack, NY, pled guilty and agreed to pay a criminal fine for its role in a conspiracy to commit bribery in connection with a project to repair New York’s Pier 86 where the Intrepid Sea, Air, and Space Museum is located.
FORMER BRITISH AIRWAYS EXECUTIVE CHARGED FOR HIS ROLE IN THE ONGOING INVESTIGATION INTO THE AIR CARGO SHIPPING INDUSTRY
On September 30, 2008, Keith Packer, former executive of British Airways World Cargo, agreed to plead guilty, serve eight months in prison, and pay a $20,000 criminal fine for his role in a wide-ranging conspiracy to fix rates for international air cargo shipments including to and from the United States.
On Septmeber 19, 2008, Kwik-Chek Food Stores, Inc., a Texas based convenience store and one of its agents, Jarrod Thomas, were charged for conspiring to fix retail gasoline and diesel fuel prices sold in Antler, OK. The conspiracy took place from early 2002 to June 2007. Kwik-Chek, based in Bonham, Texas, distributes and sells gasoline and diesel products at convenience stores located in Oklahoma and Texas, including two stores in Antlers.
TWO EL PASO BUSINESSMAN AND COMPANIES CHARGED WITH CONSPIRACY TO RIG BIDS AND ALLOCATE CUSTOMERS FOR DOOR AND HARDWARE INSTALLATION
On September 10, 2008, the Department of Justice (“DOJ”) charged Lindsey B. Holt, president of Architectural Products Co. Inc., Humberto Lopez, vice president of El Paso Steel Doors and Frames, Inc. and their respective companies with conspiracy to rig bids and allocate customers for certain contracts for sale of doors and other hardware for various construction projects in the El Paso area. Ms. Holt is also charged with obstruction of justice for encouraging co-conspirators to lie about the existence of the conspiracy.
On August 26, 2008, Edward P. Goldblatt pled guilty to fraud and tax evasion as a former purchasing warehouse assistant at the New York Power Authority (“NYPA”). Headquartered in Albany, NY, the NYPA is a non-profit energy corporation established by the State of New York providing low cost power to government agencies, municipalities, and private entities.
On July 31, 2008, Bennet Environmental Inc. (“BEI”), a Canadian soil treatment company, pled guilty and agreed to pay $1 million criminal fine for its role in a conspiracy to defraud the U.S. Environmental Protection Agency (“EPA”) at a EPA designated Superfund site, Federal Creosote in Manville, NJ.
ITALIAN MARINE HOSE MANUFACTURERS AND MARINE HOSE EXECUTIVES PLEAD GUILTY FOR ROLE IN WORLDWIDE SCHEME TO RIG BIDS
On June 28, 2008, Manuli Rubber Industries SpA (“Manuli”), an Italian marine hose manufacturer, and Robert L. Furness, the former president of Manuli’s subsidiary Plantation, pled guilty for their role in a worldwide conspiracy to rig bids, fix prices, and allocate market share in the marine hose industry. Manuli agreed to pay $2 million in criminal fines, while Mr. Furness will pay $75,000 and serve a two year prison sentence. Mr. Furness is the third executive at Manuli to be charged for his role in the conspiracy. Additionally, Giovanni Scodeggio, manager of Parker ITR S.r.l.'s Oil & Gas Business Unit, another Italian marine hose manufacture, pled guilty for his role in the same conspiracy. Mr. Scodeggio agreed to let the court decide his prison sentence, to pay a criminal fine of $20,000, and to cooperate with the Department of Justice in their ongoing investigation.
On July 28, 2008, Timothy Pfeil, a former executive for SAS Cargo Group A/S (“SAS”), pled guilty to serve six months in prison for his role in a worldwide conspiracy to fix air cargo rates for shipments to and from the United States. Mr. Pfeil, the second airline executive charged in this conspiracy, will cooperate in the Department of Justice’s ongoing investigation. Earlier this month, SAS pled guilty and agreed to pay a criminal fine of $52 million for its role in the conspiracy. So far nine other airlines, including British Airways, Korean Air Lines, Quantas Airways, Japan Airlines, Cathay Pacific Airways, Martinair Cargo, Air France, and KLM Royal Dutch Airlines, and a former Quantas executive have been charged in the DOJ’s ongoing investigation in the air cargo industry. More than $1.2 billion in criminal fines have been imposed.
On June 30, 2008, Joel M. Gostomelsky, the director of the Hines, IL Department of Veteran Affairs (“VA”) Consolidated Mail Outpatient Pharmacy (“CMOP”) pled guilty to one count of conspiring to allow a subordinate to participate in decisions directly affecting the financial interests of the subordinate's spouse and one count of accepting illegal gratuities.
U.S. ARMY OFFICER AND WIFE PLEAD GUILTY TO CHARGES OF CONSPIRACY TO COMMIT BRIBERY AND MONEY LAUNDERING INVOLVING DOD CONTRACTS AT U.S. BASE IN KUWAIT
On June 24, 2008, John Cockerham, a U.S. Army office, and his wife, Melissa Cockerham, of San Antonio pled guilty to charges of conspiracies to commit bribery and money laundering. Mr. Cockerham pled guilty to one count of conspiracy to commit bribery and one count of money laundering. Mrs. Cockerham pled guilty to one count of money laundering.
NEW YORK CITY EMPLOYEE PLEADS GUILTY FOR HIS ROLE IN A CONSPIRACY TO COMMIT BRIBERY ON NEW YORK PIER 86 PROJECT
On June 20, 2008, Charles N. Kriss, a former New York City Department of Citywide Administrative Services engineer, pled guilty to conspire to commit bribery in connection with a repair project to reconstruct Pier 86 where the Intrepid Sea, Air, and Space Museum is located. Mr. Kriss agreed to serve a sentence and pay a fine (yet to be determined) and cooperate with the ongoing investigation.
On June 13, 2008, Frank Granizo, a former president of a licensed freight forwarding company based in Florida, pled guilty to wire fraud related to paying kickbacks to an unnamed executive at an unnamed manufacturing company. Mr. Granizo also agreed to help the Department of Justice (“DOJ”) in its ongoing investigation.
On June 12, 2008, James P. Robinson of Atlanta, GA was charged with two counts of income tax evasion and one count of conspiracy to commit wire fraud in a kickback scheme against Home Depot. After appearing in court, the presiding judge granted Mr. Robinson a $10,000 bond. Allegedly, Mr. Robinson took kickbacks from foreign vendors who were interested in doing business with Home Depot. Also, he evaded taxes for the years 2005 and 2006 in the hundreds of thousands of dollars.
On June 10, 2005, Levonda J. Selph, a retired colonel in the U.S. Army, pled guilty to charges of conspiracy and bribery for her role in influencing Department of Defense (“DOD”) contracts at Camp Victory, Iraq in 2004 and 2005. In addition to pleading guilty, Lieutenant Colonel Selph agreed to serve a term of imprisonment and pay the DOD a restitution fee of $9,000.
On June 5, 2008, Charles N. Kriss, a former New York City Department of Citywide Administrative Services engineer, was indicted for his role in a conspiracy to commit bribery by a federal grand jury in the U.S. District Court in Inslip, NY. The Department of Justice accused Mr. Kriss of accepting bribes from a co-conspirator company supplying New York City with plastic marine pilings for a project to reconstruct Pier 86 the home of the Intrepid Sea, Air, and Space Museum.
On June 3, 2008, Raman International Inc. (“Raman”), a defense contractor, pled guilty to one count of conspiracy to commit bribery. It agreed to pay the maximum criminal fine for a corporation charged with conspiracy to commit bribery of $500,000 and restitution fees amounting to $327,192 to the Department of Defense (“DOD”).
ANOTHER PECK & HALE, LLC EXECUTIVE PLEADS GUILTY TO CHARGES OF BID RIGGING AND TAKING KICKBACKS ON DOD CONTRACTS
On May 30, 2008, as a part of their ongoing investigation into the military restraints industry, the DOJ reached a plea agreement with Wilson Freire, a former government contracts manager at Peck & Hale LLC. Mr. Freire pled guilty to two separate conspiracies of bid rigging and taking kickbacks on contracts taken in connection with various equipment sold to the U.S. Department of Defense (“DOD”).
TWO INDIVIDUALS CHARGED WITH CONSPIRING TO COMMIT BRIBERY IN CONNECTION WITH A U.S. ARMY CORPS OF ENGINEERS NEW ORLEANS LEVEE RECONSTRUCTION PROJECT
On May 15, 2008, Durwanda Elizabeth Morgan Heinrich, a dirt, sand, and gravel subcontractor, and Kern Carver Bernard Wilson, a former contract employee of the U.S. Army Corps of Engineers, were each charged with one count of conspiring to commit bribery. Additionally, Heinrich was charged with two counts of offering a bribe to a public official and Wilson was charged with one count of demanding and agreeing to accept a bribe as a public official.
On April 23, 2008, the former senior vice president of Bristol-Myers Squibb Company (“BMS”), Andrew Bodnar, was indicted for his false statements to the federal government in its investigation into a patent settlement involving a blood-thinning drug used by patients of heart attack and stroke called Plavix. Mr. Bodnar agreed to plead guilty and pay a criminal fine of $1 million. Plavix is the most widely prescribed blood thinning drug in the world, earning BMS over $3.5 billion in the U.S. alone in 2005.
On April 17, 2008, Charles J. Gillespie, a former executive of Italy based Manuli Rubbers Industries SpA, pled guilty to participating in a conspiracy to rig bids, fix prices, and allocate market shares of marine hose in the United States. Mr. Gillespie also agreed to serve 12 months and one day in jail and pay a criminal fine of $20,000 as well as cooperate in the Department of Justice’s ongoing investigation.
On April 11, 2008, Aaron S. Weiner, of Aaron Weiner Construction Inc. (“AWC”), pled guilty for acting as a conduit for a million dollar kickback scheme to defraud the New York Presbyterian Hospital (“NYPH”). An owner of two construction companies located in New York paid Mr. Weiner to pose as a consultant as a means to provide kickbacks to a former senior purchasing official at NYPH in return for awarding contracts that totaled at least $20 million. An elaborate scheme was set up to further cover up the scheme by having the checks forwarded to AWC, who in turn wrote checks to a shell company under the name of the mother of the former senior official at NYPH.
On April 9, 2008 Matthew W. Bittenbender, a U.S. Department of Defense (“DOD”) contractor pled guilty to conspiring to steal competitive information regarding the supply of fuel to DOD aircraft around the world. Aviation fuel is obtained by the DOD through the Defense Energy Support Center (“DESC”) which lets contracts for a variety of products. The fuel is delivered worldwide to locations, including Croatia, Bulgaria and Afghanistan. Mr. Bittendender was an employee of Avcard, a division of Kropp Holdings LLC, that provided aviation products and services throughout the world.
On March 26, 2008, Peck & Hale, LLC, a Long Island, NY defense firm, pled guilty to a two-count felony charge for rigging bids for U.S. Department of Defense (“DOD”) military restraints equipment contracts. This equipment is used to tie down and secure vehicles, aircraft, munitions, shipping containers, and other specialized military cargo requirements for transportation. Peck & Hale was accused of being a part of two separate conspiracies. The firm also agreed to a pay a criminal fine of $275,000 and to cooperate with the Department of Justice (“DOJ”) in their ongoing investigation.
On March 19, 2008, Judy N. Green, a former education consultant from Temecula, CA, was sentenced to 7 ½ years of prison by the U.S. District Court in San Francisco. The jury found her guilty on 22 counts of fraud, bid rigging, and conspiracy to commit wire fraud relating to technology projects funded by the E-Rate Program.
COMMERCIAL REFRIGERATION COMPANY AND EXECUTIVE PLEAD GUILTY TO PARTICIPATING IN BID-RIGGING CONSPIRACY
On March 6, 2008, Alliance Mechanical, an Arizona commercial refrigeration company, and Kendall Pope, president and co-owner of the company, pleaded guilty for their role in a conspiracy to rig bids on contracts for the installation of commercial refrigeration equipment in Safeway Inc. grocery stores in the Phoenix metropolitan area.
The Federal Trade Commission stopped a father, his two sons, and their network of companies from deceptively selling a healthcare business opportunity with false promises of earning up to a million dollars in profits. In addition, the FTC halted their sale of an herbal tea product, marketed with claims that it could prevent, treat, or cure a number of diseases, including AIDS, diabetes, cancer, arthritis, strokes, and heart disease. The defendants will turn over all of their frozen assets to settle the FTC’s charges.
DEPARTMENT OF DEFENSE CONTRACTORS ARRESTED FOR CONSPIRING TO STEAL INFORMATION ON FUEL SUPPLY CONTRACTS
Two U.S. Department of Defense (“DOD”) contractors were arrested in New York City on January 6, 2008, and charged with conspiring to steal information relating to DOD contracts to supply fuel to DOD aircraft worldwide. Two contractor firms and a third individual are also charged with participating in the conspiracies. The Department said the conspiracies took place from about February 2005 to about July 2006.
On September 20, 2007, Mr. Jacobi, the president and owner of Jacobi Industries Inc., pled guilty to a felony charge of conspiring to rig bids on U.S. Department of Defense (“DOD”) contracts for military tiedown equipment and cargo securing systems. Under the plea agreement, Mr. Jacobi agreed to pay a criminal fine of $20,000, and to cooperate with the Department's ongoing criminal investigation. Mr. Jacobi could also serve up to six months in prison.
FORMER SALES REPRESENTATIVE IN CALIFORNIA CONVICTED FOR ROLE IN SCHEMES TO DEFRAUD THE FEDERAL E-RATE PROGRAM
On September 14, a federal grand jury in San Francisco convicted Judy Green, of Temecula, California, a former sales representative for her role in schemes to defraud the federal E-Rate program. Ms. Green was convicted on all charges in a 22-count indictment involving fraud, collusion, aiding and abetting, and conspiracy in connection with E-Rate projects at schools in seven states — Arkansas, California, Michigan, New York, Pennsylvania, South Carolina, and Wisconsin.
On September 13, a Fort Lauderdale, Florida federal grand jury returned an indictment charging two individuals in a conspiracy to rig bids fix prices and allocate market shares for sales of marine hose used to transport oil.
The indictment, filed in the U.S. District Court in Fort Lauderdale, Florida, charged Francesco Scaglia and Val M. Northcutt with participating in a conspiracy to suppress and eliminate competition by rigging bids, fixing prices, and allocating market shares for sales of marine hose in the United States and abroad.
COMMERCIAL REFRIGERATION COMPANY AND EXECUTIVE INDICTED FOR RIGGING BIDS ON CONTRACTS TO SAFEWAY GROCERY STORES IN ARIZONA
On August 14, 2007, the DOJ announced that a federal grand jury in Phoenix returned an indictment charging a commercial refrigeration company and its co-owner with participating in a conspiracy to rig bids on contracts for the installation of commercial refrigeration equipment in Safeway Inc. grocery stores in the Phoenix metropolitan area.
The indictment, filed in the U.S. District Court in Phoenix, charged Alliance Mechanical LLC and its co-owner Kendall Pope, with participating in the conspiracy, which began in January 2005 and continued until May 16, 2005. At the time of the conspiracy, Mr. Pope also served as president of Alliance Mechanical LLC, a company engaged in the installation of commercial refrigeration in the Phoenix metropolitan area and elsewhere. Mr. Pope allegedly participated in the conspiracy with James Govostes, a former manager of another commercial refrigeration company.
Andre P. Barlow's most recent published article is now available on the Legal Times website. To read it, please visit: http://www.law.com/jsp/dc/PubArticleDC.jsp?id=1161075916475&hub=Commentary
On June 26, orthopedic device manufacturers revealed the issuance of federal subpoenas tied to potential violation of antitrust law from the Department of Justice. Zimmer Holdings Inc., Biomet Inc., Johnson & Johnson and Stryker Corp. all said they had received subpoenas from the Antitrust Division demanding documents related to the manufacture and sale of the companies' products, which include artificial hips and knees.
On June 23, the DOJ filed a petition asking the U.S. District Court for the District of Columbia to hold the American Bar Association (“ABA”) in civil contempt for violating multiple provisions of a 1996 antitrust consent decree. The consent decree prohibited the ABA from misusing the law school accreditation process. The DOJ also filed a proposed order and a stipulation in which the ABA acknowledges the violations alleged in the Division's petition and agrees to reimburse the United States $185,000 in fees and costs incurred in the Division's investigation.
On June 14, the DOJ charged Gerald Thermos, the president of a marine products company in California with conspiring to rig bids and allocate customers with respect to the sale of foam-filled marine fenders and buoys purchased by the U.S. Navy, the U.S. Coast Guard, and other public and private entities. Foam-filled marine fenders are used as a cushion between ships and fixed structures, such as docks, piers, or other ships. Foam-filled buoys are used in a variety of applications, including use as channel markers and navigational aids. Mr. Thermos agreed to plead guilty to the charge and serve an eight-month sentence, including four months in jail and four months in home detention, and to pay a criminal fine of $50,000.
On June 7, a federal grand jury in Portland, Oregon returned an indictment against Trevor Smith, a former Raisio Chemicals Northwest Inc. sales executive, charging him with two counts of filing false federal income tax returns in 1999 and 2000, understating his income by more than $332,000. The understated income consisted of payments he allegedly received from John R. Olsen, while employed at Raisio, relating to Raisio's purchases of dry anthraquinone, a pulping additive used to increase pulp yield. Mr. Olsen is the former general manager of Chemical Products Technologies (“CPT”), based in Cartersville, Georgia. The charges announced by the DOJ are the third to arise out of investigations in the Northern District of Georgia and the District of Oregon conducted by the Antitrust Division's Atlanta Field Office, with the assistance of the Internal Revenue Service Criminal Investigation Division.
On April 27, the DOJ announced Hughey Inc., which does business as Carmel Concrete Products (“Carmel”), and its president, Scott D. Hughey agreed to plead guilty and pay criminal fines for fixing the price of ready mixed concrete in the Indianapolis metropolitan area. Under the plea agreement, which must be approved by the court, Carmel and the DOJ agreed to allow the court to determine an appropriate fine for the company. Mr. Hughey's plea agreement, which is also subject to court approval, requires him to pay a fine of $30,000 to $50,000 and to serve a term of imprisonment to be determined by the court. In addition, Mr. Hughey has agreed to assist the government in its ongoing investigation. To date, four companies and nine executives have pleaded guilty or were charged for their roles in the price-fixing conspiracy. Fines totaling more than $30 million have resulted from the DOJ's ongoing antitrust investigation of the ready mixed concrete industry.
On April 11, 2006, a federal grand jury returned indictments charging MA-RI-AL Corporation, which does business as Beaver Materials Corp., Chris A. Beaver, Ricky J. Beaver and John J. Blatzheim for their roles in the ready mixed concrete price-fixing conspiracy. The individuals were also indicted on charges that they knowingly made false statements to federal law enforcement officials during the investigation. The trial is set for June 5, 2006 before Judge Larry J. McKinney. In March 2006, Builder's Concrete & Supply Co. Inc. and its president, Gus "Butch" Nuckols III pleaded guilty for their participation in the ready mixed concrete conspiracy in the Indianapolis metropolitan area.