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U.S. Department of Transportation Office of Inspector General Investigations SA Ryan Lefort USDOT-OIG, JRI-4 –

U.S. Department of Transportation Office of Inspector General

Investigations

U.S. Department of Transportation Office of Inspector General Investigations SA Ryan Lefort USDOT-OIG, JRI-4 – NOLA
U.S. Department of Transportation Office of Inspector General Investigations SA Ryan Lefort USDOT-OIG, JRI-4 – NOLA

SA Ryan Lefort

USDOT-OIG, JRI-4 NOLA

www.oig.dot.gov

www.oig.dot.gov OIG Investigations Division  U.S. DOT and OIG’s Mission  Authority  Role of OIG
www.oig.dot.gov OIG Investigations Division  U.S. DOT and OIG’s Mission  Authority  Role of OIG

OIG Investigations Division

www.oig.dot.gov OIG Investigations Division  U.S. DOT and OIG’s Mission  Authority  Role of OIG
www.oig.dot.gov OIG Investigations Division  U.S. DOT and OIG’s Mission  Authority  Role of OIG

U.S. DOT and OIG’s Mission

Authority

Role of OIG Investigations Division

Investigative Regions

Investigations Breakdown

Enforcement Mechanism/Tools

USDOT “Modes”

Enforcement Priority Areas

Antitrust/Bid Rigging Defined

Case Examples

DOT/OIG Hotline

Contacts

 Enforcement Priority Areas  Antitrust/Bid Rigging Defined  Case Examples  DOT/OIG Hotline  Contacts

www.oig.dot.gov

www.oig.dot.gov U.S. DOT Mission “Serve the United States by ensuring a fast, safe, efficient, accessible and
www.oig.dot.gov U.S. DOT Mission “Serve the United States by ensuring a fast, safe, efficient, accessible and

U.S. DOT Mission

www.oig.dot.gov U.S. DOT Mission “Serve the United States by ensuring a fast, safe, efficient, accessible and
www.oig.dot.gov U.S. DOT Mission “Serve the United States by ensuring a fast, safe, efficient, accessible and

“Serve the United States by ensuring a fast,

safe, efficient, accessible and convenient transportation system that meets our vital

national interests and enhances the quality

of life of the American people, today and into the future.”

www.oig.dot.gov

www.oig.dot.gov U.S. DOT/OIG Mission  To conduct objective audits and investigations of DOT’s programs and
www.oig.dot.gov U.S. DOT/OIG Mission  To conduct objective audits and investigations of DOT’s programs and

U.S. DOT/OIG Mission

www.oig.dot.gov U.S. DOT/OIG Mission  To conduct objective audits and investigations of DOT’s programs and
www.oig.dot.gov U.S. DOT/OIG Mission  To conduct objective audits and investigations of DOT’s programs and

To conduct objective audits and investigations of DOT’s programs and operations

To promote economy, effectiveness, and efficiency within DOT

To prevent and detect fraud, waste, and abuse in the Department’s programs

To review existing and proposed laws or regulations affecting the Department and make recommendations about them

To keep the Secretary of Transportation and Congress fully informed about problems in departmental programs and operations

www.oig.dot.gov

www.oig.dot.gov OIG Authority The Inspector General Act of 1978 • Establishes the OIG as responsible for

OIG Authority

The Inspector General Act of 1978

OIG Authority The Inspector General Act of 1978 • Establishes the OIG as responsible for conducting
OIG Authority The Inspector General Act of 1978 • Establishes the OIG as responsible for conducting

Establishes the OIG as responsible for conducting criminal, civil and administrative

investigations concerning allegations of fraud

waste and abuse against DOT programs, operations and personnel.

5

Establishes a Hotline Center to receive and coordinate complaints of fraud, waste and abuse from employees and public citizens.

www.oig.dot.gov

www.oig.dot.gov OIG Authority (cont’d) • Gives the Office of Inspector General autonomy to do its work

OIG Authority (cont’d)

www.oig.dot.gov OIG Authority (cont’d) • Gives the Office of Inspector General autonomy to do its work
www.oig.dot.gov OIG Authority (cont’d) • Gives the Office of Inspector General autonomy to do its work

Gives the Office of Inspector General autonomy to do its work without interference.

Requires the IG to keep the Secretary of Transportation and Congress informed of

findings.

www.oig.dot.gov

www.oig.dot.gov Role of OIG Investigations Division  Conduct investigations of allegations and complaints regarding

Role of OIG Investigations Division

www.oig.dot.gov Role of OIG Investigations Division  Conduct investigations of allegations and complaints regarding
www.oig.dot.gov Role of OIG Investigations Division  Conduct investigations of allegations and complaints regarding

Conduct investigations of allegations and complaints regarding fraud, waste, and abuse.

Coordinate with other Federal & State law

enforcement agencies.

Refer matters for criminal and civil prosecution

or suspension/debarment action.

Conduct pro-active reviews unrelated to any investigation.

www.oig.dot.gov

DOT-OIG Criminal Investigative Regions

Alaska Utah California Arizona Hawaii
Alaska
Utah
California
Arizona
Hawaii

(Includes Wake, Samoa, and Guam)

Maine Vermont Washington Montana NH 1 Mass Oregon Idaho Rhode Island Connecticut 9 Nevada New
Maine
Vermont
Washington
Montana
NH
1
Mass
Oregon
Idaho
Rhode Island
Connecticut
9
Nevada
New Jersey
Delaware
North Dakota Minnesota South Dakota Wisconsin New York 2 Wyoming Michigan Nebraska 5 Iowa Pennsylvania
North Dakota
Minnesota
South Dakota
Wisconsin
New York
2
Wyoming
Michigan
Nebraska
5 Iowa
Pennsylvania
Ohio
Illinois
Kansas
Indiana
Maryland
Colorado
Missouri
West
Virginia
3
Kentucky
Virginia
Oklahoma
Arkansas
New Mexico
Tennessee
North Carolina
6
M 4
South
i
Carolina
s
Texas
s Alabama
Georgia
Louisiana
Florida
6 M 4 South i Carolina s Texas s Alabama Georgia Louisiana Florida (Includes Puerto Rico,

(Includes Puerto Rico, Virgin Islands)

8

www.oig.dot.gov

www.oig.dot.gov Enforcement Mechanism/Tools • Code of Federal Regulations (CFR 49) • IG Subpoenas • Federal
www.oig.dot.gov Enforcement Mechanism/Tools • Code of Federal Regulations (CFR 49) • IG Subpoenas • Federal

Enforcement Mechanism/Tools

www.oig.dot.gov Enforcement Mechanism/Tools • Code of Federal Regulations (CFR 49) • IG Subpoenas • Federal
www.oig.dot.gov Enforcement Mechanism/Tools • Code of Federal Regulations (CFR 49) • IG Subpoenas • Federal

Code of Federal Regulations (CFR 49)

IG Subpoenas

Federal Search Warrant

Federal Grand Jury Subpoenas

Federal Criminal Code (Titles 18 and 49, U.S. Criminal Code)

Undercover Operations

Consensual Monitoring

www.oig.dot.gov

www.oig.dot.gov Federal Criminal Statutes  18 USC 287/286 Criminal False Claims/Conspiracy  18 USC § 371
www.oig.dot.gov Federal Criminal Statutes  18 USC 287/286 Criminal False Claims/Conspiracy  18 USC § 371

Federal Criminal Statutes

www.oig.dot.gov Federal Criminal Statutes  18 USC 287/286 Criminal False Claims/Conspiracy  18 USC § 371
www.oig.dot.gov Federal Criminal Statutes  18 USC 287/286 Criminal False Claims/Conspiracy  18 USC § 371

18 USC 287/286 Criminal False Claims/Conspiracy

18 USC § 371

18 USC § 1001

Conspiracy to Defraud the U.S. False Statements (including on USDOT contracts/grants) Highway Projects False Statements Mail Fraud

Wire Fraud

Obstruction of Justice

18 USC § 1020

18 USC § 1341

18 USC § 1343

18 USC § 1519

www.oig.dot.gov

www.oig.dot.gov Federal Criminal Statutes  18 USC § 201  18 USC § 207 & 208
www.oig.dot.gov Federal Criminal Statutes  18 USC § 201  18 USC § 207 & 208

Federal Criminal Statutes

www.oig.dot.gov Federal Criminal Statutes  18 USC § 201  18 USC § 207 & 208
www.oig.dot.gov Federal Criminal Statutes  18 USC § 201  18 USC § 207 & 208

18 USC § 201

18 USC § 207 & 208 Conflict of Interest

18 USC § 209

18 USC § 641

18 USC § 666

Bribery

Gratuities Theft of Government Property

Theft or Bribery Concerning Programs

Receiving Federal Funds Obstruction of Proceedings before an Agency or Department Obstruction of Criminal Investigation

Obstruction of a Federal Audit (must be of

program receiving more that $100K)

18 USC § 1505

18 USC § 1510

18 USC § 1516

www.oig.dot.gov

www.oig.dot.gov USDOT “Modes”  Federal Aviation Administration  Federal Motor Carrier Safety Administration
www.oig.dot.gov USDOT “Modes”  Federal Aviation Administration  Federal Motor Carrier Safety Administration

USDOT “Modes”

www.oig.dot.gov USDOT “Modes”  Federal Aviation Administration  Federal Motor Carrier Safety Administration
www.oig.dot.gov USDOT “Modes”  Federal Aviation Administration  Federal Motor Carrier Safety Administration

Federal Aviation Administration

Federal Motor Carrier Safety Administration

Federal Highway Administration

Federal Railway Administration

Federal Transit Administration

Maritime Administration

National Highway Traffic Safety Administration

Saint Lawrence Seaway Development Corporation

Research and Special Projects Administration

www.oig.dot.gov

www.oig.dot.gov Enforcement Priority Areas • Transportation Safety • Aviation Safety and Security • Motor Carrier

Enforcement Priority Areas

www.oig.dot.gov Enforcement Priority Areas • Transportation Safety • Aviation Safety and Security • Motor Carrier
www.oig.dot.gov Enforcement Priority Areas • Transportation Safety • Aviation Safety and Security • Motor Carrier

Transportation Safety

Aviation Safety and Security

Motor Carrier Safety

HazMat Violations

Contract & Grant Fraud

DBE Fraud

Anti-Trust

Bid Rigging

Procurement Integrity Act Violations

Qui Tams

Employee Integrity

Other Investigations

Consumer Fraud HHG Investigations

Motor Fuel Tax Evasion

Congressional Requests

Computer Fraud

Odometer Rollback Fraud

Gray Market Vehicle Fraud

www.oig.dot.gov

www.oig.dot.gov Shared Roles in Fraud Detection and Investigation  State or Local Engineers and Inspectors –

Shared Roles in Fraud Detection and Investigation

Shared Roles in Fraud Detection and Investigation  State or Local Engineers and Inspectors – Front
Shared Roles in Fraud Detection and Investigation  State or Local Engineers and Inspectors – Front

State or Local Engineers and Inspectors

Front Line

Observe fraud indicators

Listen to disgruntled employees

Report concerns to FHWA and/or OIG

OIG Special Agents

Interview witnesses, obtain and analyze documents and

other physical evidence, and present facts to Federal

prosecutor

Assistant U.S. Attorney

Assess case facts and prosecute cases when warranted

www.oig.dot.gov

www.oig.dot.gov Common Goal in Fraud Detection and Investigation Most contractors, LADOTD personnel, FHWA personnel, and

Common Goal in Fraud Detection and Investigation

Common Goal in Fraud Detection and Investigation Most contractors, LADOTD personnel, FHWA personnel, and OIG
Common Goal in Fraud Detection and Investigation Most contractors, LADOTD personnel, FHWA personnel, and OIG

Most contractors, LADOTD personnel, FHWA personnel, and OIG Special Agents

have the same overall objectives

To spend the limited transportation $$$$ to improve roads and bridges

Not to line the pockets of the small % of unscrupulous contractors

To remove the “bad apples” from the transportation

construction industry

Criminal/civil prosecution, suspension/debarment

www.oig.dot.gov

www.oig.dot.gov Common Types of DOT Fraud Schemes  Bid Rigging and Collusion (Antitrust)  Materials Overcharging
www.oig.dot.gov Common Types of DOT Fraud Schemes  Bid Rigging and Collusion (Antitrust)  Materials Overcharging

Common Types of DOT Fraud Schemes

www.oig.dot.gov Common Types of DOT Fraud Schemes  Bid Rigging and Collusion (Antitrust)  Materials Overcharging
www.oig.dot.gov Common Types of DOT Fraud Schemes  Bid Rigging and Collusion (Antitrust)  Materials Overcharging

Bid Rigging and Collusion (Antitrust)

Materials Overcharging

Time Overcharging

Product Substitution

DBE Fraud Quality Control Testing Fraud

Kickbacks

Bribery

www.oig.dot.gov

www.oig.dot.gov What is Antitrust?  Main Entry: an·ti·trust Pronunciation: "an-ti-'tr&st,
www.oig.dot.gov What is Antitrust?  Main Entry: an·ti·trust Pronunciation: "an-ti-'tr&st,

What is Antitrust?

www.oig.dot.gov What is Antitrust?  Main Entry: an·ti·trust Pronunciation: "an-ti-'tr&st,
www.oig.dot.gov What is Antitrust?  Main Entry: an·ti·trust Pronunciation: "an-ti-'tr&st,

Main Entry: an·ti·trust

Pronunciation: "an-ti-'tr&st, "an-"tI-

Pronunciation: "an-ti-'tr&st, "an-"tI- Function: adjective : of, relating to, or being

Function: adjective

: of, relating to, or being legislation against or

opposition to trusts or combinations; specifically

: consisting of laws to protect trade and

commerce from unlawful restraints and

monopolies or unfair business practices

www.oig.dot.gov

www.oig.dot.gov The Sherman Act, 15 U.S.C. 1  Every contract, combination, in the form of a
www.oig.dot.gov The Sherman Act, 15 U.S.C. 1  Every contract, combination, in the form of a

The Sherman Act, 15 U.S.C. 1

www.oig.dot.gov The Sherman Act, 15 U.S.C. 1  Every contract, combination, in the form of a
www.oig.dot.gov The Sherman Act, 15 U.S.C. 1  Every contract, combination, in the form of a

Every contract, combination, in the form of a trust or otherwise, or conspiracy, in restraint of

trade or commerce among the several States, or

with foreign nations, is declared to be illegal… [a violator] shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by a fine

not exceeding $100 million if a corporation, or if

any other person, $1 million, or by imprisonment not exceeding ten years.

www.oig.dot.gov

www.oig.dot.gov Additional Statutes  General Fraud  Mail Fraud, 18 U.S.C. § 1341  Wire Fraud,
www.oig.dot.gov Additional Statutes  General Fraud  Mail Fraud, 18 U.S.C. § 1341  Wire Fraud,

Additional Statutes

www.oig.dot.gov Additional Statutes  General Fraud  Mail Fraud, 18 U.S.C. § 1341  Wire Fraud,
www.oig.dot.gov Additional Statutes  General Fraud  Mail Fraud, 18 U.S.C. § 1341  Wire Fraud,

General Fraud

Mail Fraud, 18 U.S.C. § 1341

Wire Fraud, 18 U.S.C. § 1343

Crimes of Other Principals

Aiding and Abetting, 18 U.S.C. § 2

Conspiracy to Defraud, 18 U.S.C. § 371

Fraud Against the Federal Government

Bribery of a Public Official , 18 U.S.C. § 201

False Claims Against the Government , 18 U.S.C. § 287

Tax Fraud , 26 U.S.C. § 7201

Theft/Bribery on Federally Funded Programs, 18 U.S.C. § 666

Crimes Relating to Hindering an Investigation

19

Perjury , 18 U.S.C. § 1621

Subornation of Perjury , 18 U.S.C. § 1622

Obstruction of Justice , 18 U.S.C. § 1503

False Statements to the Grand Jury , 18 U.S.C. § 1623

www.oig.dot.gov

www.oig.dot.gov Who Investigates?  U.S. Department of Justice  U.S. Department of Transportation-OIG  Federal
www.oig.dot.gov Who Investigates?  U.S. Department of Justice  U.S. Department of Transportation-OIG  Federal

Who Investigates?

www.oig.dot.gov Who Investigates?  U.S. Department of Justice  U.S. Department of Transportation-OIG  Federal
www.oig.dot.gov Who Investigates?  U.S. Department of Justice  U.S. Department of Transportation-OIG  Federal

U.S. Department of Justice

U.S. Department of Transportation-OIG

Federal Bureau of Investigation

State Attorneys General Often Joint Investigations

Other Countries

www.oig.dot.gov

www.oig.dot.gov Criminal Antitrust Offices  Field Offices – Chicago – New York – Dallas – San
www.oig.dot.gov Criminal Antitrust Offices  Field Offices – Chicago – New York – Dallas – San

Criminal Antitrust Offices

www.oig.dot.gov Criminal Antitrust Offices  Field Offices – Chicago – New York – Dallas – San
www.oig.dot.gov Criminal Antitrust Offices  Field Offices – Chicago – New York – Dallas – San

Field Offices

Chicago

New York

Dallas

San Francisco

National Criminal Enforcement Section

(NCES) Washington, DC

www.oig.dot.gov

www.oig.dot.gov Antitrust Criminal Prosecutions by Industry Road Building Electrical Contracting School Milk

Antitrust Criminal Prosecutions by Industry

www.oig.dot.gov Antitrust Criminal Prosecutions by Industry Road Building Electrical Contracting School Milk
Road Building Electrical Contracting School Milk Graphics Displays Chemicals Utilities Construction Food
Road Building Electrical Contracting School Milk Graphics Displays Chemicals Utilities Construction Food

Road Building

Electrical Contracting

School Milk

Graphics Displays

Chemicals

Utilities Construction

Food Brokers

68 65 51 50
68 65 51 50
68 65 51 50
68 65 51 50

68

65

51

50

Displays Chemicals Utilities Construction Food Brokers 68 65 51 50 195 165 0 200 400 600
Displays Chemicals Utilities Construction Food Brokers 68 65 51 50 195 165 0 200 400 600
Displays Chemicals Utilities Construction Food Brokers 68 65 51 50 195 165 0 200 400 600
Displays Chemicals Utilities Construction Food Brokers 68 65 51 50 195 165 0 200 400 600

195

165

0

200

400

600

Number of Defendants

Construction Food Brokers 68 65 51 50 195 165 0 200 400 600 Number of Defendants

800

668

668

www.oig.dot.gov

www.oig.dot.gov Investigations into Antitrust  Antitrust Violations  Identifiers  Case Examples 
www.oig.dot.gov Investigations into Antitrust  Antitrust Violations  Identifiers  Case Examples 

Investigations into Antitrust

www.oig.dot.gov Investigations into Antitrust  Antitrust Violations  Identifiers  Case Examples 
www.oig.dot.gov Investigations into Antitrust  Antitrust Violations  Identifiers  Case Examples 

Antitrust Violations

Identifiers Case Examples

Investigative Practices and Techniques

www.oig.dot.gov

www.oig.dot.gov Collusion  Conspiracies are often lengthy  The result is overcharging, higher prices, and limited
www.oig.dot.gov Collusion  Conspiracies are often lengthy  The result is overcharging, higher prices, and limited

Collusion

www.oig.dot.gov Collusion  Conspiracies are often lengthy  The result is overcharging, higher prices, and limited
www.oig.dot.gov Collusion  Conspiracies are often lengthy  The result is overcharging, higher prices, and limited

Conspiracies are often lengthy The result is overcharging, higher prices, and limited competition

Collusion  Conspiracies are often lengthy  The result is overcharging, higher prices, and limited competition

www.oig.dot.gov

www.oig.dot.gov Elements of a Sherman Act Violation  Agreement  Interstate Commerce 25

Elements of a Sherman Act Violation

www.oig.dot.gov Elements of a Sherman Act Violation  Agreement  Interstate Commerce 25
www.oig.dot.gov Elements of a Sherman Act Violation  Agreement  Interstate Commerce 25

Agreement

Interstate Commerce

www.oig.dot.gov

www.oig.dot.gov Criminal Violations  Acts that are considered illegal agreements – Price Fixing – Market
www.oig.dot.gov Criminal Violations  Acts that are considered illegal agreements – Price Fixing – Market

Criminal Violations

www.oig.dot.gov Criminal Violations  Acts that are considered illegal agreements – Price Fixing – Market
www.oig.dot.gov Criminal Violations  Acts that are considered illegal agreements – Price Fixing – Market

Acts that are considered illegal agreements

Price Fixing

Market Allocation

Bid Rigging

www.oig.dot.gov

www.oig.dot.gov What is Price Fixing?  Agreement to raise, lower, or maintain prices  Agreement not
www.oig.dot.gov What is Price Fixing?  Agreement to raise, lower, or maintain prices  Agreement not

What is Price Fixing?

www.oig.dot.gov What is Price Fixing?  Agreement to raise, lower, or maintain prices  Agreement not
www.oig.dot.gov What is Price Fixing?  Agreement to raise, lower, or maintain prices  Agreement not

Agreement to raise, lower, or maintain prices

Agreement not to negotiate on price Agreement to limit discounts, rebates, or promotions

Agreement on price formulas or guidelines

27

on price  Agreement to limit discounts, rebates, or promotions  Agreement on price formulas or

www.oig.dot.gov

www.oig.dot.gov What are Market Allocation Schemes?  Any agreement not to compete for specific: – Territories

What are Market Allocation Schemes?

www.oig.dot.gov What are Market Allocation Schemes?  Any agreement not to compete for specific: – Territories
www.oig.dot.gov What are Market Allocation Schemes?  Any agreement not to compete for specific: – Territories

Any agreement not to compete for specific:

Territories

Customers

Products

Volume

28

Schemes?  Any agreement not to compete for specific: – Territories – Customers – Products –

www.oig.dot.gov

www.oig.dot.gov What is Bid Rigging?  An agreement to rotate bids  An agreement to submit
www.oig.dot.gov What is Bid Rigging?  An agreement to rotate bids  An agreement to submit

What is Bid Rigging?

www.oig.dot.gov What is Bid Rigging?  An agreement to rotate bids  An agreement to submit
www.oig.dot.gov What is Bid Rigging?  An agreement to rotate bids  An agreement to submit

An agreement to rotate bids

An agreement to submit “complementary” or

inflated bids

An agreement not to bid or engage in bid suppression

29

An agreement to submit “complementary” or inflated bids  An agreement not to bid or engage

www.oig.dot.gov

www.oig.dot.gov Bid Rigging & Collusion Definition  Contractors misrepresent that they are competing against
www.oig.dot.gov Bid Rigging & Collusion Definition  Contractors misrepresent that they are competing against

Bid Rigging & Collusion

www.oig.dot.gov Bid Rigging & Collusion Definition  Contractors misrepresent that they are competing against
www.oig.dot.gov Bid Rigging & Collusion Definition  Contractors misrepresent that they are competing against

Definition

Contractors misrepresent that they are competing against each other when, in fact, they agree to cooperate on the winning bid to increase job profit.

Example

Three asphalt-paving contractors agreed at the beginning of the

construction season on which company would win each job. They

then shared “winning bids” by telephone immediately in advance of electronic bidding, so the other two contractors could ensure their bids were higher than the winning bid.

www.oig.dot.gov

www.oig.dot.gov Sources of Antitrust Cases  Employees  Contracting Officials  Competitors  Self reporting
www.oig.dot.gov Sources of Antitrust Cases  Employees  Contracting Officials  Competitors  Self reporting

Sources of Antitrust Cases

www.oig.dot.gov Sources of Antitrust Cases  Employees  Contracting Officials  Competitors  Self reporting
www.oig.dot.gov Sources of Antitrust Cases  Employees  Contracting Officials  Competitors  Self reporting

Employees

Contracting Officials Competitors

Self reporting under the DOJ Amnesty Program

www.oig.dot.gov

www.oig.dot.gov The DOJ Corporate Leniency Program (a/k/a “The Amnesty Program”)  Unlike immunity, it provides

The DOJ Corporate Leniency Program (a/k/a “The Amnesty Program”)

Leniency Program (a/k/a “The Amnesty Program”)  Unlike immunity, it provides protection for
Leniency Program (a/k/a “The Amnesty Program”)  Unlike immunity, it provides protection for

Unlike immunity, it provides protection for corporations

Open to one corporation per conspiracy

Requires full cooperation

Requires a commitment to pay civil restitution

Cannot be the organizer of the conspiracy

Agrees to terminate its participation in the illegal conduct

www.oig.dot.gov

www.oig.dot.gov The DOJ Corporate Leniency Program (a/k/a “The Amnesty Program”)  NO CRIMINAL PROSECUTION!!! 33

The DOJ Corporate Leniency Program (a/k/a “The Amnesty Program”)

www.oig.dot.gov The DOJ Corporate Leniency Program (a/k/a “The Amnesty Program”)  NO CRIMINAL PROSECUTION!!! 33
www.oig.dot.gov The DOJ Corporate Leniency Program (a/k/a “The Amnesty Program”)  NO CRIMINAL PROSECUTION!!! 33

NO CRIMINAL PROSECUTION!!!

www.oig.dot.gov

www.oig.dot.gov Two Types of Amnesty:  No Open Antitrust Investigation – Amnesty almost automatic – Includes
www.oig.dot.gov Two Types of Amnesty:  No Open Antitrust Investigation – Amnesty almost automatic – Includes

Two Types of Amnesty:

www.oig.dot.gov Two Types of Amnesty:  No Open Antitrust Investigation – Amnesty almost automatic – Includes
www.oig.dot.gov Two Types of Amnesty:  No Open Antitrust Investigation – Amnesty almost automatic – Includes

No Open Antitrust Investigation

Amnesty almost

automatic

Includes all officers, directors, and employees who cooperate

Open Antitrust Investigation

Amnesty is discretionary

Open to the first

company that comes forward

Could not otherwise sustain a conviction

Not unreasonable

Individual immunity is not automatic

www.oig.dot.gov

www.oig.dot.gov Some things to look for…  What is the bidding history? Trends? – Is there
www.oig.dot.gov Some things to look for…  What is the bidding history? Trends? – Is there

Some things to look for…

www.oig.dot.gov Some things to look for…  What is the bidding history? Trends? – Is there
www.oig.dot.gov Some things to look for…  What is the bidding history? Trends? – Is there

What is the bidding history? Trends?

Is there competition?

Does the contractor subcontract a substantial portion

of work which they would normally perform?

Are there identical line items amongst competitors? Why?

Are there identical misspelled words among

competing bids?

If a search is conducted of the company’s bid files, is there supporting documentation of its number? How did the company arrive at the bid number?

www.oig.dot.gov

www.oig.dot.gov The Conspiracy…  Antitrust violations require an agreement to collude, not the actual act. 
www.oig.dot.gov The Conspiracy…  Antitrust violations require an agreement to collude, not the actual act. 

The Conspiracy…

www.oig.dot.gov The Conspiracy…  Antitrust violations require an agreement to collude, not the actual act. 
www.oig.dot.gov The Conspiracy…  Antitrust violations require an agreement to collude, not the actual act. 

Antitrust violations require an agreement to collude, not the actual act.

The agreement is the crime.

www.oig.dot.gov

www.oig.dot.gov The Complementary Bid…  The participants agree to submit complementary bids in an effort to
www.oig.dot.gov The Complementary Bid…  The participants agree to submit complementary bids in an effort to

The Complementary Bid…

www.oig.dot.gov The Complementary Bid…  The participants agree to submit complementary bids in an effort to
www.oig.dot.gov The Complementary Bid…  The participants agree to submit complementary bids in an effort to

The participants agree to submit complementary bids in an effort to provide

the appearance that there was competition.

www.oig.dot.gov

www.oig.dot.gov Case Example: Vinton et al  Company executives from Vinton Construction, Streu Construction, and an
www.oig.dot.gov Case Example: Vinton et al  Company executives from Vinton Construction, Streu Construction, and an

Case Example: Vinton et al

www.oig.dot.gov Case Example: Vinton et al  Company executives from Vinton Construction, Streu Construction, and an
www.oig.dot.gov Case Example: Vinton et al  Company executives from Vinton Construction, Streu Construction, and an

Company executives from Vinton Construction, Streu Construction, and an area manager from James Cape & Sons (unbeknownst to his

employer) agreed to rotate bids and submit

inflated bids on projects totaling over $100 million.

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The illegal activities spanned several years.

By engaging in a bid rotation and a complementary bid scheme, the trio gave the false perception of competition.

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www.oig.dot.gov How it all began… 39
www.oig.dot.gov How it all began… 39
www.oig.dot.gov How it all began… 39
www.oig.dot.gov How it all began… 39

How it all began…

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www.oig.dot.gov  The FBI was notified by James Cape & Sons that it suspected one of
www.oig.dot.gov  The FBI was notified by James Cape & Sons that it suspected one of
www.oig.dot.gov  The FBI was notified by James Cape & Sons that it suspected one of
www.oig.dot.gov  The FBI was notified by James Cape & Sons that it suspected one of

The FBI was notified by James Cape & Sons that it suspected one of its employees was engaged in some kind of illegal

activity…

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www.oig.dot.gov  Based upon limited initial information, the FBI attended a bid workup session at James
www.oig.dot.gov  Based upon limited initial information, the FBI attended a bid workup session at James
www.oig.dot.gov  Based upon limited initial information, the FBI attended a bid workup session at James
www.oig.dot.gov  Based upon limited initial information, the FBI attended a bid workup session at James

Based upon limited initial information, the FBI attended a bid workup session at James

Cape & Sons in a covert capacity.

After observing furtive activities on behalf of the employee, the FBI confronted him.

Upon being confronted, the employee informed the FBI of a scheme to rig bids and agreed to co-operate with the Government.

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www.oig.dot.gov  The FBI notified the U.S. Department of Justice Antitrust Division (DOJ ATR) and U.S.
www.oig.dot.gov  The FBI notified the U.S. Department of Justice Antitrust Division (DOJ ATR) and U.S.
www.oig.dot.gov  The FBI notified the U.S. Department of Justice Antitrust Division (DOJ ATR) and U.S.
www.oig.dot.gov  The FBI notified the U.S. Department of Justice Antitrust Division (DOJ ATR) and U.S.

The FBI notified the U.S. Department of Justice Antitrust Division (DOJ ATR) and

U.S. Department of Transportation Office of

Inspector General.

A joint investigation began examining the methods used, contracts affected, and the on-going conspiracy.

www.oig.dot.gov

www.oig.dot.gov Methods used by the players…  The co-conspirators would talk via phone, cell phone, Nextel
www.oig.dot.gov Methods used by the players…  The co-conspirators would talk via phone, cell phone, Nextel

Methods used by the players…

www.oig.dot.gov Methods used by the players…  The co-conspirators would talk via phone, cell phone, Nextel
www.oig.dot.gov Methods used by the players…  The co-conspirators would talk via phone, cell phone, Nextel

The co-conspirators would talk via phone, cell phone, Nextel direct-connect, and in

person.

When talking over the phone, the co- conspirators would talk in code.

Additionally, in person meetings occurred to discuss who wanted what projects.

What the co-conspirators did not expect was… federal agents were there too

www.oig.dot.gov

www.oig.dot.gov • On several occasions the participants of the scheme met at various locations to discuss
www.oig.dot.gov • On several occasions the participants of the scheme met at various locations to discuss
www.oig.dot.gov • On several occasions the participants of the scheme met at various locations to discuss
www.oig.dot.gov • On several occasions the participants of the scheme met at various locations to discuss

On several occasions the participants of the scheme met at various locations to discuss

and agree upon what companies would

receive certain projects.

Including a situation at the Holiday Inn parking lot in Fond Du Lac, WI.

www.oig.dot.gov

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www.oig.dot.gov Upon learning of what was planned for the (then) upcoming January 13, 2004 bid letting,

Upon learning of what was planned for the (then) upcoming January 13, 2004 bid letting, several plans were put into action…

13, 2004 bid letting, several plans were put into action…  It was determined to initially
13, 2004 bid letting, several plans were put into action…  It was determined to initially

It was determined to initially let the rigged bids go through to WisDot and notify them the morning of the letting. At the same time the letting occurred, DOT OIG and FBI agents conducted simultaneous search warrants at Vinton Construction and

Streu Construction locations.

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DOT OIG and FBI agents also served arrest warrants on Ernest Streu, John Streu, James Maples and Michael Maples.

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www.oig.dot.gov  Streu Construction, Vinton Construction, and the five individuals pled guilty – All were removed
www.oig.dot.gov  Streu Construction, Vinton Construction, and the five individuals pled guilty – All were removed
www.oig.dot.gov  Streu Construction, Vinton Construction, and the five individuals pled guilty – All were removed
www.oig.dot.gov  Streu Construction, Vinton Construction, and the five individuals pled guilty – All were removed

Streu Construction, Vinton Construction, and the five individuals pled guilty

All were removed from bidding on Federally funded projects

Approximately $3 million in fines and restitution Three defendants jailed, one home confinement

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www.oig.dot.gov Techniques Utilzed  Extensive Market Research  Bid Analysis and Trends (Bid Analysis Management
www.oig.dot.gov Techniques Utilzed  Extensive Market Research  Bid Analysis and Trends (Bid Analysis Management

Techniques Utilzed

www.oig.dot.gov Techniques Utilzed  Extensive Market Research  Bid Analysis and Trends (Bid Analysis Management
www.oig.dot.gov Techniques Utilzed  Extensive Market Research  Bid Analysis and Trends (Bid Analysis Management

Extensive Market Research

Bid Analysis and Trends (Bid Analysis Management System (BAMS))

Undercover Work

Informants

Interviews The knowledge of bid rigging is often limited to the

executives (and estimators) of a company.

Consensual Recordings

Surveillance

Things to note: Where do contractors stay before lettings? Although relationships are established long before lettings, the

sharing of numbers often occurs the night before, or the day of,

lettings.

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Subpoenas (telephone records, credit cards, etc.) and Search Warrants

Body Wires

Computer Forensics

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www.oig.dot.gov Common Excuses of Conspirators  But, no one was harmed  But, the state received
www.oig.dot.gov Common Excuses of Conspirators  But, no one was harmed  But, the state received

Common Excuses of Conspirators

www.oig.dot.gov Common Excuses of Conspirators  But, no one was harmed  But, the state received
www.oig.dot.gov Common Excuses of Conspirators  But, no one was harmed  But, the state received

But, no one was harmed

But, the state received a lower price But, our bid was within the engineer’s estimate

But, other companies could still beat us

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www.oig.dot.gov The Reality…  Collusion always causes higher prices by reducing competition.  Reducing
www.oig.dot.gov The Reality…  Collusion always causes higher prices by reducing competition.  Reducing

The Reality…

www.oig.dot.gov The Reality…  Collusion always causes higher prices by reducing competition.  Reducing
www.oig.dot.gov The Reality…  Collusion always causes higher prices by reducing competition.  Reducing

Collusion always causes higher prices by reducing competition.

Reducing competition is after all the

definition of collusion.

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www.oig.dot.gov Agencies involved in the case:  U.S. Department of Justice - Antitrust Division  U.S.
www.oig.dot.gov Agencies involved in the case:  U.S. Department of Justice - Antitrust Division  U.S.

Agencies involved in the case:

www.oig.dot.gov Agencies involved in the case:  U.S. Department of Justice - Antitrust Division  U.S.
www.oig.dot.gov Agencies involved in the case:  U.S. Department of Justice - Antitrust Division  U.S.

U.S. Department of Justice - Antitrust Division

U.S. Attorney’s Office

U.S. Department of Transportation - Office of Inspector General

Kent Byers, Senior Special Agent, Chicago

Office 312-353-0106; Kent.E.Byers@oig.dot.gov

Federal Bureau of Investigation

Wisconsin Department of Justice - Attorney General’s Office

Federal Highway Administration - Office of Chief Counsel

Federal Highway Administration - Wisconsin Division

Wisconsin Department of Transportation

www.oig.dot.gov

www.oig.dot.gov DOT/OIG Hotline  CALL: OIG Hotline 1-800-424-9071 or 202-366-1461  E-Mail: HOTLINE@OIG.DOT.GOV
www.oig.dot.gov DOT/OIG Hotline  CALL: OIG Hotline 1-800-424-9071 or 202-366-1461  E-Mail: HOTLINE@OIG.DOT.GOV

DOT/OIG Hotline

www.oig.dot.gov DOT/OIG Hotline  CALL: OIG Hotline 1-800-424-9071 or 202-366-1461  E-Mail: HOTLINE@OIG.DOT.GOV
www.oig.dot.gov DOT/OIG Hotline  CALL: OIG Hotline 1-800-424-9071 or 202-366-1461  E-Mail: HOTLINE@OIG.DOT.GOV

CALL: OIG Hotline 1-800-424-9071 or 202-366-1461

E-Mail: HOTLINE@OIG.DOT.GOV

Write: USDOT-OIG

P.O. Box 23178

Washington, DC 20026-0178

www.oig.dot.gov

www.oig.dot.gov Contacting Us: USDOT/OIG JRI-4 ATLANTA (Main Office): 61 Forsyth, SW 17T60 Atlanta, GA 30303 404-562-3875

Contacting Us:

USDOT/OIG JRI-4

www.oig.dot.gov Contacting Us: USDOT/OIG JRI-4 ATLANTA (Main Office): 61 Forsyth, SW 17T60 Atlanta, GA 30303 404-562-3875
www.oig.dot.gov Contacting Us: USDOT/OIG JRI-4 ATLANTA (Main Office): 61 Forsyth, SW 17T60 Atlanta, GA 30303 404-562-3875

ATLANTA (Main Office):

61 Forsyth, SW 17T60 Atlanta, GA 30303

404-562-3875

ASAC Ray Sanchez

LOUISIANA (Post of Duty)

504-816-3019

SA Ryan Lefort

QUESTIONS?

QUESTIONS? 59
QUESTIONS? 59
QUESTIONS? 59