2003 TUG Conference – Converting 2003 TUG Conference – Converting Statistics into Cases Statistics into Cases Antitrust fraud in highway construction: Antitrust fraud in highway construction: Converting Converting Statistics into Statistics into Cases Cases Turner Bond Office of Inspector General, Missouri Dept. of Transportation
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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
2003 TUG Conference – Converting Statistics into 2003 TUG Conference – Converting Statistics into CasesCases
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
2003 TUG Conference – Converting Statistics into 2003 TUG Conference – Converting Statistics into CasesCases
Starting with Starting with StatisticsStatistics
2003 TUG Conference – Converting Statistics into 2003 TUG Conference – Converting Statistics into CasesCases
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
WIN LOSS BID & SUB SUB ONLY FACILITY
COUNTY DIVISIONS
B
A
ACTIVITY OF: PACE CONSTRUCTION COMPANY
WIN LOSS BID & SUB SUB ONLY FACILITY
DISTRICT DIVISIONS
ACTIVITY OF: WEST CONTRACTING COMPANY INC., N. B.
WIN LOSS BID & SUB SUB ONLY FACILITY
DISTRICT DIVISIONS
C
ACTIVITY OF: LEAD BELT MATERIALS CO. INC.
WIN LOSS BID & SUB SUB ONLY FACILITY
COUNTY DIVISIONS
ACTIVITY OF: LEAD BELT MATERIALS CO. INC.
WIN LOSS BID & SUB SUB ONLY FACILITY
DISTRICT DIVISIONS
D
E
ACTIVITY OF: GIRARDEAU CONTRACTORS INC.
WIN LOSS BID & SUB SUB ONLY FACILITY
DISTRICT DIVISIONS
Overlay Territories
2003 TUG Conference – Converting Statistics into 2003 TUG Conference – Converting Statistics into CasesCases
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:
2003 TUG Conference – Converting Statistics into 2003 TUG Conference – Converting Statistics into CasesCases
Coming out of Coming out of the Ivory Tower the Ivory Tower
2003 TUG Conference – Converting Statistics into 2003 TUG Conference – Converting Statistics into CasesCases
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.
2003 TUG Conference – Converting Statistics into 2003 TUG Conference – Converting Statistics into CasesCases
Reality check your theories
2003 TUG Conference – Converting Statistics into 2003 TUG Conference – Converting Statistics into CasesCases
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.
2003 TUG Conference – Converting Statistics into 2003 TUG Conference – Converting Statistics into 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)
•Restructure contracts.Restructure contracts.
•Bring in competing Bring in competing industries.industries.
2003 TUG Conference – Converting Statistics into 2003 TUG Conference – Converting Statistics into CasesCases
Developing Developing CasesCases
2003 TUG Conference – Converting Statistics into 2003 TUG Conference – Converting Statistics into CasesCases
Bridging the gap between Statistics . . . . . . . . and
Investigations
2003 TUG Conference – Converting Statistics into 2003 TUG Conference – Converting Statistics into CasesCases
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?
2003 TUG Conference – Converting Statistics into 2003 TUG Conference – Converting Statistics into CasesCases
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