NGI The Weekly Gas Market Report
A federal grand jury in Denver last Tuesday indicted a Eunice, NM-based construction company and two of its executives for participating in a bid-rigging conspiracy involving natural gas pipeline construction projects in Colorado. The company is the second pipeline contractor to be indicted for bid rigging in less than a year.
The indictment, filed in U.S. District Court in Denver, charges that B&H Maintenance & Construction Inc. (B&H) and two of its executives, Jon Paul Smith, vice president and regional manager, and Landon R. Martin, manager of marketing and business development, conspired with each other and another corporation and individual to submit rigged bids to BP America Production Co.
The defendants rigged bids for the construction of pipelines to transport natural gas from wells in the Upper San Juan Basin in Colorado between approximately June and December of 2005, according to the indictment. In addition, it charges Smith with witness tampering by attempting to persuade another individual involved in the scheme to lie to federal investigators and to the grand jury investigating possible federal criminal violations of antitrust laws.
This is the second case to arise from the Department of Justice’s (DOJ) ongoing probe of natural gas pipeline contractors in the San Juan Basin area. Last July, Tulsa, OK-based Flint Energy Services Inc. and a company general manager agreed to plead guilty in a Denver federal court to charges that they rigged the bids that they submitted to BP America Production to construct natural gas pipelines in the Upper San Juan Basin in Colorado (see NGI, Aug. 14, 2006). As in the B&H case, the conspiracy is alleged to have occurred between June and December of 2005.
The plea agreements with Flint Energy and Kenneth L. Rains, general manager and head of Flint’s Farmington, NM office, as well as the B&H indictments, were the result of an investigation by the DOJ’s Antitrust Division in Chicago with the assistance of the Federal Bureau of Investigation offices in New Mexico and Colorado. In October, Flint Energy was sentenced to pay a criminal fine of $150,000. Flint Energy also has repaid BP America the full $672,036 that the company was awarded under at least four contracts. Rains has not been sentenced yet, according to DOJ.
Bid rigging carries a maximum fine of $100 million for a corporation, the DOJ said. The maximum penalty for an individual is 10 years in prison, a $1 million fine, or both. Federal authorities said the maximum fine level may be increased to twice the gain derived from the crime or twice the loss suffered by the victim of the crime, if either of those amounts is greater than the statutory maximum fine. Witness tampering has a maximum penalty for an individual of 10 years in prison, a $250,000 fine, or both.
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