Antitrust Law Daily Wrap Up, ANTITRUST NEWS: $1.7 million fine, prison sentence imposed in Con Edison fraud, bribery suit, (Feb 2, 2016)

By Edward L. Puzzo, J.D.

A New Jersey industrial pipe supply company and its owner have been fined more than $1.7 million, with the owner sentenced to 32 months in prison, as the result of engaging in a conspiracy to bribe electric utility officials and commit fraud in order to obtain pipe supply contracts, the Department of Justice has announced.

As the result of an ongoing federal antitrust investigation into bid rigging, bribery and fraud in the power generation industry, the Justice Department Antitrust Division charged American Pipe Bending and Fabrication Co. Inc. of Edison, New Jersey, and its owner Andrew Martingano, with conspiring to commit fraud and pay bribes to a purchasing manager at Consolidated Edison of New York (Con Ed) in return for the manager’s efforts to steer contracts to the company. The company and its owner pleaded guilty to committing wire fraud and conspiring to defraud Con Ed on Aug. 15, 2012. This week, Judge Deborah A. Batts of the federal district court in New York City ordered American Pipe to pay a $150,000 fine, Martingano and American Pipe to pay over $1.6 million in restitution to Con Ed, and sentenced Martingano to 32 months in prison.

According to the charges, Martingano and others agreed to pay approximately $510,000 in cash bribes to James M. Woodason, a department manager of the purchasing department at Con Ed. In exchange for the bribes, Woodason steered Con Ed industrial pipe supply contracts to American Pipe by secretly providing Martingano with confidential competitor bid information, thereby causing Con Ed to pay higher, non-competitive prices for materials. At the time of Woodason’s arrest in August 2010, Woodason had already received approximately $45,000 in cash bribes from Martingano and American Pipe.

The department said the conspiracy took place from approximately January 2009 to August 2010. In addition, Martingano and American Pipe defrauded Con Ed by requesting a 14 percent price increase and basing that request on a fake email purporting to document a “Steel Mill” price increase that American Pipe was passing on to Con Ed. These false and fraudulent price increase requests caused actual losses to Con Ed in the amount of approximately $1.4 million and intended losses of approximately $9.4 million.

Companies: American Pipe Bending and Fabrication Co. Inc.; Consolidated Edison, Inc.

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