Antitrust fraud in highway construction: Converting Statistics into Cases

2003 TUG Conference – Converting Statistics into 2003 TUG Conference – Converting Statistics into CasesCases

Antitrust fraud in highway construction:Antitrust fraud in highway construction:

Converting Converting Statistics into Statistics into

CasesCases

Turner BondOffice of Inspector General, Missouri Dept. of Transportation


Starting with StatisticsStarting with Statistics

Converting Statistics Converting Statistics into Casesinto Cases

Developing your CasesDeveloping your Cases

Marketing your CasesMarketing your Cases

Coming out of the Coming out of the Ivory TowerIvory Tower


Starting with Starting with StatisticsStatistics


MARIES

AREAS DEFINITION

AREA Bootheel I-70 JC-Rolla K.C. N. EastN. West S. Louis Southern Truman R

Truman Reservoir

Kansas City

Northwest

I-70

St. Louis - Iron Mt.

Assign Markets

Northeast

Jeff. City - Rolla

Bootheel

Southern

0%

10%

20%

30%

40%

50%

87 88 89 90 91 92 93 94 95 96 97 98

Kansas City Mkt.Normal Variation

Market Shares show supra-competitive influences.

51%44% 42%

47%51%54%51%58%53%

40%36%

50%

0%10%20%30%40%50%60%70%

87 88 89 90 91 92 93 94 95 96 97 98

Northeast Mkt. Unnaturally Even

MARIES

AREAS DEFINITION

AREA Bootheel I-70 JC-Rolla K.C. N. EastN. West S. Louis Southern Truman R

Kansas City

St. Louis-Iron Mt.

BootheelHealthy

Monitor Patterns

Patterns to Analyze

Targeted Invest.

Northeast

I-70

Northwest

Truman Reservoir

Southern

Jeff. City - Rolla

Highlight

Problem

Areas

ACTIVITY OF: CENTRAL MISSOURI PAVING CO.,INC.-MOBERLY

WIN LOSS BID & SUB SUB ONLY FACILITY

COUNTY DIVISIONS

ACTIVITY OF: 0010306/WEBER INC., FRED


COUNTY DIVISIONS

B

A

ACTIVITY OF: PACE CONSTRUCTION COMPANY


DISTRICT DIVISIONS

ACTIVITY OF: WEST CONTRACTING COMPANY INC., N. B.


DISTRICT DIVISIONS

C

ACTIVITY OF: LEAD BELT MATERIALS CO. INC.


COUNTY DIVISIONS

ACTIVITY OF: LEAD BELT MATERIALS CO. INC.


DISTRICT DIVISIONS

D

E

ACTIVITY OF: GIRARDEAU CONTRACTORS INC.


DISTRICT DIVISIONS

Overlay Territories


ANTI-TRUST ANALYST: My computer models

indicate collusion in the South. Will you

investigate?

If I had a witness, what

would I need you for?

LAW ENFORCEMENT: Sorry. I can’t help you if you don’t have a witness.

Oh.

Statistics and graphs aren’t enough:


Coming out of Coming out of the Ivory Tower the Ivory Tower


Foriegn ConglomerateConstruction

Materials SupplyFirm

Construction

Contracting FirmHeavy

Construction

Oil Distributor

Asphalt Plant

Quarry A Quarry B

Trucking ATrucking C

Trucking B

Look for the Underlying Mechanics

• Vertical Market Control – the Vertical Market Control – the origin of our anti-trust laws. origin of our anti-trust laws.

• Losing Entity is a tax dodge Losing Entity is a tax dodge or bidding signalor bidding signal

• Schill bidder just wants Schill bidder just wants aggregate sales.aggregate sales.

• Who knew what – and when.Who knew what – and when.


Reality check your theories


Broaden your Perspective

• Imbed yourself:Imbed yourself: Talk with materials Talk with materials inspectors, field inspectors, testing staff. inspectors, field inspectors, testing staff.

•Network: Network: fraud investigators from fraud investigators from other fields, DBE certifiers, municipal other fields, DBE certifiers, municipal contracting agents, law enforcement, contracting agents, law enforcement, etc.etc.

•Cross-train:Cross-train: computer science, computer science, engineering, anti-trust law, economics, engineering, anti-trust law, economics, statistics, etc.statistics, etc.


Become your Department’s Advocate for Competition

Asphalt Paving

0

2

4

6

8

10

$0 $2 $4 $6 $8 $10 $12 $14 $16

Millions

Contract Size

Nu

mb

er

of

Bid

de

rs

Poly. (Rural) Poly. (Urban)

•Restructure contracts.Restructure contracts.

•Bring in competing Bring in competing industries.industries.


Developing Developing CasesCases


Bridging the gap between Statistics . . . . . . . . and

Investigations


Use Case Profiling

Summarize Case Summarize Case • Scope of transactionsScope of transactions• Date of first awarenessDate of first awareness• Theory of corruptionTheory of corruption• Mechanics of the dealMechanics of the deal

Assess Viability: find 3 Assess Viability: find 3 out of 4 markersout of 4 markers

• Is there a definable system of Is there a definable system of exchange?exchange?

• Is the consumer damaged?Is the consumer damaged?• Is there irrational business Is there irrational business

behavior?behavior?• Is there a history of concern Is there a history of concern

with these players?with these players?


Create Briefing Books

• Generic, reusable, and short.Generic, reusable, and short.• Theory of the mechanics behind Theory of the mechanics behind

the deal. the deal. • Potential contactsPotential contacts

– Injured competitorsInjured competitors– Disgruntled employeesDisgruntled employees

• Attachments profiling current Attachments profiling current evidenceevidence


Marketing Cases Marketing Cases


Market Your Cases

•Good ideas don’t sell Good ideas don’t sell themselves.themselves.

•Develop contacts and keep Develop contacts and keep them open.them open.

•Send them usable information.Send them usable information.•Be persistent. If, at first you Be persistent. If, at first you

don’t succeed …don’t succeed …


Start with StatisticsStart with Statistics

Develop your CasesDevelop your Cases

Market your CasesMarket your Cases

Reality Check Reality Check your Workyour Work

SummarySummary





Profile Vendors


Starting with StatisticsStarting with Statistics

Converting Statistics Converting Statistics into Casesinto Cases

Developing your CasesDeveloping your Cases

Marketing your CasesMarketing your Cases

Coming out of the Coming out of the Ivory TowerIvory Tower


Bridging the gap between Statistics . . . .

. . . . and Investigations

Developing Developing CasesCases


Become your Department’s Advocate for Competition

Asphalt Paving

0

2

4

6

8

10

$0 $2 $4 $6 $8 $10 $12 $14 $16

Millions

Contract Size

Nu

mb

er

of

Bid

de

rs

Poly. (Rural) Poly. (Urban)


Force Competition Where it’s Needed

•Restructure contracts.Restructure contracts.

•Bring in competing Bring in competing industries.industries.

Documents

Antitrust fraud in highway construction: Converting Statistics into Cases