Prosecutions
Michigan Bid-Rig Plea Lands Former Asphalt Paving Executive in Prison
Cases involving other contractors remain unresolved
Photo: kozmoat98/Getty Images
A federal judge has sentenced one of several people charged in a Michigan asphalt paving price-fixing scheme to prison.
Timothy Baugher, a former president of Pontiac, Mich.-based Asphalt Specialists Inc., pleaded guilty to conspiring to violate federal antitrust law by colluding with F. Allied Construction Co. on driveway, parking lot and private roadway projects. A judge sentenced him to six months in prison and ordered him to pay a fine of $20,000.
Federal prosecutors filed a criminal complaint against the firm in September in federal court in Detroit. The US Dept. of Justice charged Baugher with orchestrating a conspiracy from July 2017 to May 2021 that along with co-conspirators "coordinated each other’s bid prices so that the agreed-upon losing company would submit intentionally non-competitive bids" that were deliberately expensive to ensure the “winning” company secured the deal.
"The bids gave customers the false impression of competition when, in fact, the co-conspirators had already decided among themselves who would win the contracts” federal prosecutors charge.
By designating a winner and sharing pricing information, the co-conspirators secured $17.3 million in sales and victimized 46 organization, prosecutors claimed.
According to the department, four other individuals have pleaded guilty for their roles in the scheme and await sentencing. Asphalt Specialists Inc. former owners, brothers Bruce Israel and Daniel Israel, could be sentenced as soon as May or June. Two employees of a third asphalt paving contractor also pleaded guilty for their roles in the scheme.
The department is likely to seek prison sentences, previous cases have shown, with the term dependent on the amount of cooperation provided to prosecutors and dollar amounts of the illegally won profits.
Looking for quick answers on construction and engineering topics?
Try Ask ENR, our new smart AI search tool.
Ask ENR →
Baugher waived his rights to a jury trial and certain appeals and agreed to cooperate with federal investigations. His plea agreement describes a career arc that began at Asphalt Specialists Inc in sales and rose to president and part owner. In 2019 he held 4% of the non-voting stock.
The firm earned $3.8 million from projects rigged with Allied and $13.5 million from other illegal price fixing conspiracies, totaling $17.3 million.
As of late April, none of the 46 victimized organizations appear to have filed civil lawsuits seeking to recover overcharges. Federal anti-trust law allows victims four years from the date the victims discovered or should have discovered the bid-rigging to file a civil antitrust lawsuit.
Due to Baugher's important role in the alleged crimes, prosecutors incorporated in his plea deal a sentencing guideline range of 10 to 16 months of imprisonment and a fine of $173,00 to $867,000.
However, Judge Gershwin Drain's sentencing memorandum recommended a six-month prison term, a $20,000 fine and a $100 special assessment. The sentence reflected a substantial reduction because of Baugher’s cooperation.
Other individuals involved in the Michigan asphalt paving bid-rigging have also pleaded guilty. As a company, Asphalt Specialists Inc. pleaded guilty to two counts and was fined $6.5 million. In a separate but concurrent scheme with Allied, another company, Al’s Asphalt Paving, last year pleaded guilty and received a $796,000 fine. The Justice Dept. has recommended a $733,000 fine for Allied.
