Attorney General Busts Bid-Rigging Scheme
Posted April 28, 2003
RALEIGH, N.C. — Attorney General Roy Cooper charged Monday that a group of environmental consulting firms conspired to rig bids and inflate prices at taxpayers' expense to get state work cleaning land around underground storage tanks.
"These groups plotted together to raise prices and cheat taxpayers," Cooper said. "While North Carolina works to keep the environment clean, these bidders were working to line their own pockets."
In a suit filed Monday, Cooper and the Department of Environment and Natural Resources alleged that eight firms and their employees tried to dramatically increase fees that the state pays to clean sites contaminated by leaking petroleum tanks.
Cooper also announced Monday that six firms and six individual employees have agreed to pay $480,000 to settle charges that they colluded to fix prices and lie on bids.
In addition, the firms and employees have agreed not to bid on state contracts for two years, to cooperate in the state's investigation and to undergo ethics training. Cooper said he will continue to pursue claims against the remaining defendants.
The conspiracy began in 2002 as DENR tried to set so-called "reasonable rates" to pay firms that repair environmental damage from leaky petroleum tanks. Approximately 10,000 sites across North Carolina have suffered environmental damage from petroleum tanks. In June of 1988, the General Assembly created a trust fund with a portion of gasoline and kerosene taxes and tank fees to pay clean-up costs.
When tank owners disappear or fail to clean up, DENR requests proposals from environmental consultants, and the trust fund covers the cost. Using the fund, which takes in $30 million annually, the state also reimburses private landowners who clean land around leaky tanks.
As alleged Monday, the defendants manipulated the process repeatedly through 2003. First, they submitted a "survey" of average project costs after encouraging several firms to inflate rates and share data. Evidence shows that the defendants hoped the "survey" rates would become standard rates for future projects.
Second, the firms formed a trade association called North Carolina Environmental Service Providers Association to lobby DENR to accept the inflated rates for its "reasonable rates" determination. All defendant firms participated in NCESPA, with several firms' employees serving in leadership positions with the group.
Third, the trade association used e-mail to direct either a boycott of specific state-project bids or a submission of inflated rates. Firms that bid also lied by swearing that they had not colluded with other firms to peg prices, a felony violation of North Carolina law.
Defendants named in the complaint who continue to face charges include: Mid-Atlantic Associates of Raleigh, its president and co-owner, Darin M. McClure, and its vice president and co-owner, Thomas A. Proctor; CBM Environmental Services of Fort Mill, S.C., and its owner and CEO, Catherine A. Ross of Charlotte; and John A. Hill, former Almes&Associates employee and current Mid-Atlantic employee.
Also named as a defendant is the trade association NCESPA.
Defendants participating in the settlements announced Monday include: Shield Engineering of Raleigh and its vice president, Keith A. Anthony; S&ME of Raleigh and William A. "Al" Quarles, its assessment and remediation services manager, and Matthew R. Einsmann, its environmental engineering manager; SEI Environmental of Charlotte and senior geologist Michael D. Shaw; South Atlantic Environmental Drilling and Construction Company of Charlotte and Peter I. Byers; Almes & Associates, Inc., a Pennsylvania corporation doing business in Cary, NC; Environmental Conservation Laboratories, a Florida corporation that performs contract laboratory work for environmental consultants, and employee James H. Hays of Apex, NC.
Of the settlement money paid by the defendants, $360,000 in penalties goes to schools and $120,000 in damages goes to DENR.