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CA Official Charged in Bid-Rigging Scheme

Wednesday, April 12, 2017

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Federal prosecutors have charged a former high-ranking official in California's Veterans Affairs department and seven others after an investigation of alleged bid-rigging on public construction contracts in San Francisco.

Unsplash, Public Domain; via Pixabay

The six other defendants—all contractors in the San Francisco Bay area—face fraud charges stemming from bids on a contract for renovations at a building owned by the U.S. Department of Energy at Lawrence Berkeley National Laboratory, prosecutors said.

According to the Associated Press, Eric Worthen, a former assistant deputy secretary for the California Department of Veterans Affairs, and seven other defendants were indicted Friday (April 7).

An earlier probe led to prison terms for former California state Sen. Leland Yee and San Francisco Chinatown gang member Raymond "Shrimp Boy" Chow.

Worthen, 45, and Taj Armon Reid, 46, accepted $12,000 in bribes for agreeing to help an FBI informant posing as a developer win two construction contracts: for residential facilities at a veteran's home in Ventura, California; and to remodel a kitchen at a veteran's home in Los Angeles.

The federal grand jury indictment was filed on Thursday (April 6), according to the U.S. Attorney's Office for the Northern District of Calfornia.

The six other defendants—all contractors in the San Francisco Bay area—face fraud charges stemming from bids on a contract for renovations at a building owned by the U.S. Department of Energy at Lawrence Berkeley National Laboratory, prosecutors said.

The bid-rigging probe began after officials intercepted a phone call during a major organized crime investigation in San Francisco's Chinatown, which led to the charges against Yee and Chow, prosecutors said. An FBI informant who worked on the Chow case posed as the developer in the bid-rigging investigation, according to the U.S. Attorney's Office.

A federal judge sentenced Chow, 58, to two life terms in August 2016 after jurors convicted him of 162 counts, which included murder, racketeering, aiding and abetting the laundering of drug money and robbery.

© istock.com/Bill Oxford

Eric Worthen, 45, and Taj Armon Reid, 46, accepted $12,000 in bribes for agreeing to help an FBI informant posing as a developer win two construction contracts: for residential facilities at a veteran's home in Ventura, California; and to remodel a kitchen at a veteran's home in Los Angeles.

Yee, 68, received a five-year sentence in February 2016 after taking a plea deal. He admitted he accepted thousands of dollars in bribes.

Long Line of Scandal

According to constructiondive.com, the indictments in California are the latest stemming from a series of bid-rigging scandals that have plagued the construction industry:

  • In February, Atlanta contractors Charles P. Richards Jr. and Elvin “E.R.” Mitchell Jr. were charged by federal prosecutors with bribery and fraud-related charges for allegedly paying city officials to help them win contracts. Richards and Mitchell allegedly paid $185,000 and more than $1 million, respectively, to a person working in the city contracting office. That individual would then give the money to others who wielded influence in awarding project bids.
  • In March 2016, Washington, D.C., architect Mark Farmer, 55, received for 33 months in prison for bribery. Authorities said Farmer, an employee of international architecture firm CannonDesign, paid a former U.S. Department of Veterans Affairs official for information that would help the company secure VA construction projects. CannonDesign paid $12 million to settle federal liability for its alleged role in the bribery and kickback scheme.
  • In July, South El Monte, California, Mayor Luis Aguinaga was charged by the U.S. Attorney’s office in the Central District of California and agreed to plead guilty to taking bribes from a contractor. Aguinaga, 48, faces up to 10 years in federal prison.
  • In December, Brazilian authorities accused five of the country's largest contractors of conspiring to overbill for work on soccer stadiums for the 2014 World Cup, which inflated the venue’s cost to $900 million in public funds. One of the contractors also provided evidence that the contractors engaged in bid-rigging on at least eight of the 12 stadium projects. NPR reported the area surrounding the stadiums is being used as a municipal bus parking lot.

   

Tagged categories: Bidding; Business matters; Construction; Fraud

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