Highway Fraud Case Nets $30 Million Settlement
USDOT Office of the Inspector General
January 17, 2001
FOR IMMEDIATE RELEASE
Wednesday, January 17, 2001
Contact: Dave Barnes
BATON ROUGE, La. -- U.S. Department of Transportation (USDOT) Inspector General Kenneth M. Mead and L.J. Hymel, the United States Attorney for the Middle District of Louisiana, today announced the largest civil settlement involving substandard material in highway construction in the history of the United States Department of Transportation.
Mead and Hymel also announced the unsealing of criminal charges against five former employees of contractors who pleaded guilty to charges of providing nonapproved coated metal pipe used in more than 200 Louisiana highway construction projects between 1992 and 1997.
USDOT spends more than $40 billion a year on work in virtually every community in the nation. Legislation passed by Congress in 1998 authorizes the expenditure of $217 billion in surface transportation funds through 2003. "The USDOT's Office of Inspector General (OIG) is working with the Justice Department, state transportation officials and recipients of Federal funds around the country to protect the nations’ taxpayers and help to ensure that our nation’s transportation system remains the best in the world," Mead said. Since January 1997 OIG’s initiative to detect and prevent contract and grant fraud in USDOT related programs has resulted in 123 indictments, 96 convictions, and $28.5 million in fines, restitution, and recoveries, not counting today's settlement.
"This investigation demonstrates OIG's commitment to prosecuting fraud against our highway programs and deterring others who might consider engaging in similar acts of fraud," Mead said. "With the billions of taxpayers dollars being spent throughout the U.S. and the hundreds of millions being spent in Louisiana, it has never been more important than now for government and citizens to work together to make sure that these tax dollars are protected from fraud."
Former employees of Ispat-Inland, Inc., (formerly known as Inland Steel Company of Chicago) and Contech Construction Products, Inc., of Middletown, Ohio, the successor in interest to Caldwell Culvert Company of Greenville, Miss., pleaded guilty to charges of concealing the nonapproved pipe from USDOT's Federal Highway Administration and the Lousiana Department of Transportation and Development (LADOTD) through false certifications of compliance and false information stenciled on the exterior of the coated steel to indicate the pipe met the required standards.
Bill Lovelace, of Greenville, Miss., former president of Caldwell; Don Gee, of Clinton, Mich., and Keith Wingfield, of Little Rock, Ark., both former vice presidents of Caldwell; and Roger McDowell, of Hinsdal, Ill., a former employee of Inland Steel, pleaded guilty to federal felony charges involving the substitution of the unapproved steel to LADOTD. In addition, a federal grand jury in Baton Rouge indicted Richard Wall of St. Louis, a former regional sales manager of Inland Steel, on charges of making false statements with respect to the quality of construction materials used in Federally funded highway projects approved by the USDOT, among other charges.
OIG opened an investigation in March 1997 at the request of the U.S. Attorney’s Office in Baton Rouge based upon allegations that arose under the Federal False Claims Act. In October of 1997, more than 100 OIG and FBI agents executed four search warrants in four states simultaneously, seizing over 400 boxes of records and evidence. Since then, approximately 200 interviews were conducted nationwide, numerous subpoenas were issued, and over 1.5 million documents were reviewed and indexed to complete this complex contract fraud investigation.
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