DOJ’s Antitrust Division Targets Commercial Flooring Industry for Criminal Cartel Activity
DOJ’s Antitrust Division is increasing criminal antitrust enforcement. After two relatively slow years of criminal enforcement, the Antitrust Division’s criminal enforcement program is steadily increasing. The next five years promises to be a time of aggressive criminal cartel enforcement.
DOJ’s Antitrust Division has been racking up indictments and guilty pleas in a long-time cartel operating in the commercial flooring and services industry in the Chicago area. Nine companies were involved in the long-running conspiracy involving bid-rigging for flooring contracts.
DOJ has identified at least 15 instances of bid-rigging for certain jobs valued from $11,000 to more than $3.3 million. The contracts involved not only public schools but also hospitals, an electronics company, a professional services firm and a broadband provider.
In its latest prosecution, Vortex Commercial Flooring, a commercial flooring contractor agreed to pay $1.4 million for its role in a criminal antitrust conspiracy. During the period of 2009 to 2017, Vortex agreed with competing bidders to submit coordinated bids so that pre-selected companies would win the bidding process.
Vortex is the largest company netted by DOJ in its ongoing criminal antitrust investigation in the commercial flooring industry. Vortex was acquired by NY-based Consolidated Carpet in 2019.
In August 2019, PCI FlorTech, Inc. agreed to plead guilty and pay a $150,000 fine for its role in the conspiracy over an eight-year period. PCI FlorTech submitted complementary bids so that a designated contractor would win the bidding competition. PCI FlorTech is cooperating with the ongoing antitrust criminal investigation.
Before the recent Vortex guilty plea, DOJ’s Antitrust Division secured guilty pleas from several flooring executives.
In February 2020, Carter Brett, a flooring contractor executive, plead guilty to two criminal charges of antitrust conspiracy and money laundering based on his activities during the period 2013 to 2017. Brett participated in 15 rigged bids related to a state-funded community college. The money laundering charge was based on Brett’s acceptance of kickbacks from his co-conspirators. Breet created a shell company for the sole purpose of receiving illegal kickbacks.
Weeks later, in March 2020, Kevin Smith, an executive vice president of another unnamed Illinois-based commercial flooring company, plead guilty to bid-rigging after he was charged with participating in a bid-rigging conspiracy between 2009 and 2017. Two weeks prior to Smith’s guilty plea, Robert Patrey, the company’s co-owner, plead guilty to the same antirust conspiracy over an eight-year period, 2009 to 2017.
Kevin Smith and Robert Patrey coordinated with competing bidders to ensure that a designated company would win a specific commercial flooring project. The companies engaged in complementary bidding on a number of construction projects, most of which involved publicly-funded projects for schools. Smith and Patrey are cooperating with the ongoing investigation.
Earlier, in April 2019, Michael Gannon, former Vice President of Sales at Mr. David’s Flooring International, a Chicago-based commercial flooring contractor, was charged with participating in a bid-rigging conspiracy.