Caltrans bribery scandal

[skluth]

It looks like this will get bigger, so I thought I'd start a thread for this scandal. Wondering who Contractor A and B are. Link in headline.

Guilty plea part of ongoing US probe into Caltrans bribery

SACRAMENTO, Calif. –
A former contract manager for California's transportation agency pleaded guilty Monday in what federal prosecutors said is an ongoing investigation into a bid rigging and bribery scam involving millions of dollars worth of contracts.

Choon Foo "Keith" Yong agreed to cooperate with the investigation into what prosecutors said was a conspiracy to rig the competitive bidding process for improvement and repair contracts at California Department of Transportation facilities.

The scheme ensured that companies controlled by his co-conspirators submitted the winning bid and won the contracts, prosecutors said.

The contracts were cumulatively worth more than $8 million, and Yong's agreement called for him to be awarded at least 10% of the value, according to his plea agreement.

He received cash bribes and other payments in the form of furniture, wine and remodeling services on his home, valued together at more than $800,000, prosecutors said.

He agreed to pay restitution as part of his plea deal in a scam that ran from early 2015 through late 2019, prosecutors said.

Assistant Attorney General Jonathan Kanter of the U.S. Justice Department's Antitrust Division described Yong's guilty plea as "the first in the Antitrust Division's ongoing investigation into bribery and bid rigging at Caltrans."

Caltrans officials did not immediately comment.

The plea deal says Yong worked with "Contractor A, Contractor B and other co-conspirators," without naming them. He would "submit the agreed upon bidders' names – which always included Contractor A" for consideration. Another company would submit a "sham bid" so that Contactor A or another co-conspirator's company would win the contract.

Contractor A would then pay money or provide other benefits to the co-conspirator bidders.

The agreement allowed Contractor A or another conspiring company "to win the Caltrans contracts at inflated prices," according to the plea deal.

Yong was introduced to Company A in early 2015 by "Caltrans Employee A," who then worked with him on the bid rigging, the plea deal says. He then paid her $500 a month in cash through at least early 2017 from his share of the take.

Yong retired from Caltrans in 2019, after starting work there in 1990, and the investigation began after his retirement, said his defense attorney, Tom Johnson.

"He's looking forward to getting this behind him and moving on to the next chapter in his life. That's why we entered the plea early," Johnson said.

The joint investigation includes federal prosecutors and FBI investigators operating under the Justice Department's Procurement Collusion Strike Force, created in November 2019. Kanter said its role has grown in importance since Congress last year approved the $1.2 trillion Infrastructure Investment and Jobs Act.

Yong is set for sentencing in August. The charges carry a maximum penalty of 10 years in prison plus a $1 million fine or twice the financial loss.

As part of the plea deal, prosecutors agreed to recommend a sentence at the low end of the federal sentencing guidelines, plus an additional reduction for his cooperation.

Other links
Justice Department announcement
Another local news story

[Rothman]

Egads.  How blatant do you need to be?

I mean, NY suspects collusion amongst contractors, but actually bribing someone in the DOT?  That's insane and it's incredible it went on for so long.

[kkt]

Jeeze.

[J N Winkler]

Egads.  How blatant do you need to be?

I mean, NY suspects collusion amongst contractors, but actually bribing someone in the DOT?  That's insane and it's incredible it went on for so long.

I am curious as to how they could get such a scheme to work.  It seems to me that the conspirators would need some assurance that a company not involved in the collusion would not steal the contract from under them by putting in a low bid.  In principle, having someone in Office Engineer who can rule such bids non-responsive would give them that, but such rulings would need a basis in fact in order for awkward questions not to be asked.

The coverage uses just the word "facilities," not highways.  This makes me wonder if Yong was involved not with highway contracts, but rather building construction, as the procurement processes used for the latter can be different and in some respects more amenable to tampering.

[heynow415]

Egads.  How blatant do you need to be?

I mean, NY suspects collusion amongst contractors, but actually bribing someone in the DOT?  That's insane and it's incredible it went on for so long.

I am curious as to how they could get such a scheme to work.  It seems to me that the conspirators would need some assurance that a company not involved in the collusion would not steal the contract from under them by putting in a low bid.  In principle, having someone in Office Engineer who can rule such bids non-responsive would give them that, but such rulings would need a basis in fact in order for awkward questions not to be asked.

The coverage uses just the word "facilities," not highways.  This makes me wonder if Yong was involved not with highway contracts, but rather building construction, as the procurement processes used for the latter can be different and in some respects more amenable to tampering.

Agreed.  $8 million in contracts (plural) would be really small-scale roadway work.  Building/rehabbing offices and yards is more likely.

[Henry]

Well, that's Caltrans for you.

[kphoger]

My friend, who is a contract engineer who works with DOTs and local agencies, blames it on the fact that agencies are full of people who have the exact same credentials–offices full of PEs, basically–a situation which occasionally prompts one of them to seek a way to get ahead by less-than-legal means.

What do y'all think of that assessment?

[Max Rockatansky]

Well, that's Caltrans for you.

Is it though?  I don't see many semi-notable fraud cases like this pop up on the forum all that often with Caltrans much less any DOT. 

[Rothman]

My friend, who is a contract engineer who works with DOTs and local agencies, blames it on the fact that agencies are full of people who have the exact same credentials–offices full of PEs, basically–a situation which occasionally prompts one of them to seek a way to get ahead by less-than-legal means.

What do y'all think of that assessment?

I'm still not seeing it.  At NYSDOT, misbehavior on behalf of the State is kept in check through stringent regulation/enforcement.  I'm not aware of one case of this kind of overt bribery that has happened at NYSDOT while I've been here (coming up on a couple of decades) and I have been involved in a couple of other investigations regarding other types of misconduct, albeit not bribery or embezzlement (which is as far as I'll talk about that), both internal to NYSDOT and through the IG.

I don't think the lack of upward mobility is due to everyone having the same title as much as it is just a steep organizational pyramid -- even moreso in regional offices or maintenance shops.  Fewer slots to move into.  So, mixing up engineers and analysts and whoever else (again, which NYSDOT does already, although there is a current emphasis on getting depleted engineering staff positions restocked) wouldn't solve that problem.

I just think bringing the enforcement resources to bear is the answer.  As far as I know, that is what has worked here.

[J N Winkler]

My friend, who is a contract engineer who works with DOTs and local agencies, blames it on the fact that agencies are full of people who have the exact same credentials–offices full of PEs, basically–a situation which occasionally prompts one of them to seek a way to get ahead by less-than-legal means.

What do y'all think of that assessment?

I don't see lack of opportunities for advancement as a primary driver, simply because most people who remain in state employment are, or should be, aware of the tradeoffs.  Yes, pay and the odds of moving up to the next tier are both low, but there is greater job security than in the private sector, which tends to promote a more collegial working environment.

My perspective, as someone who has served on a RFP evaluation committee, though not for a construction project, is that the key variable is the opportunity and motivation to form inappropriate relationships with a potential business partner.  The precondition for opportunity is assurance on both sides that each won't report the other, as each is ethically and legally obligated to do.  Motivation is typically increased profit for the outside partner and increased income (often translating into relief from some type of financial crunch) for the insider.

The psychology involved has much in common with recruiting spies.  The CIA has an acronym for the possible mechanisms:  MICE (money, ideology, compromise, ego).  Ideology tends to be less important for DOT employees because service to country is not part of the overt sell like it is for intelligence agency officers, but the other three can potentially come into play in bribery cases--money to settle crippling debts or propitiate a spouse with expensive tastes, compromise from the initial steps in building the illicit relationship (if you so much as accept a free sandwich, you are on the road to hell), and ego from a perceived mismatch between role and self-estimation (can happen if the DOT employee has narcissistic tendencies or as a result of broader management dysfunction within the agency).  (Because federal pay scales are fixed and foreign intelligence agencies are only too ready to use money as an enticement, the CIA's recruitment process includes detailed assessment of potential candidates' credit files and a search for any outward signs of tendencies toward financial risk-taking, such as problem gambling.)

[Alps]

My friend, who is a contract engineer who works with DOTs and local agencies, blames it on the fact that agencies are full of people who have the exact same credentials–offices full of PEs, basically–a situation which occasionally prompts one of them to seek a way to get ahead by less-than-legal means.

What do y'all think of that assessment?

A lot of agencies AND consultants are, and you still don't see that. It's the person, not the situation. Bad apple.