Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Canadian national convicted in Superfund Site fraud case, (Mar 17, 2016)

By Jeffrey May, J.D.

More than six years after being indicted for his role in fraud conspiracies related to contracts at a U.S. Environmental Protection Agency (EPA)-designated Superfund site, John Bennett—a Canadian national and a former chief executive officer of Bennett Environmental Inc.—has been convicted by a federal jury in Newark, New Jersey. Yesterday, after a three-week trial, the jury reached a verdict against Bennett on the two counts against him in the 2009 indictment, which also named two other individuals involved in the scheme—Gordon D. McDonald and James E. Haas Jr. (U.S. v. Bennett, Case 2:09-cr-00656-SDW).

In 2014, Bennett was extradited from Canada on a charge of participating in a conspiracy to pay kickbacks and commit fraud at the Federal Creosote site located in Manville, New Jersey. Bennett is a former chief executive officer of sub-contractor Bennett Environmental Inc. (BEI), a Canadian-based company that treats and disposes of contaminated soil. BEI pleaded guilty to its role in the conspiracy to defraud the EPA at the Federal Creosote site in 2008 and was fined $1 million and ordered to pay $1.66 million in restitution.

The government alleged that Bennett carried out the conspiracy by providing kickbacks to McDonald, a former project manager for a prime contractor and the project manager at the Federal Creosote site, in order to influence the award of sub-contracts at the site and inflate the prices charged to the EPA by the prime contractor. These kickbacks included money transferred by wire to a co-conspirator’s shell company, lavish trips and entertainment expenses, and personal gifts, according to the government.

In exchange for the gifts and cash payments, BEI employees gained access to “last looks” at their competitors’ confidential bids. The provision of these last looks allowed BEI to submit its own bid at the last minute and outbid its competitors without independently determining its price, thereby guaranteeing an award to the company and undermining the competitive bid process on this federally-funded project, the government asserted. As a result of the payment of these kickbacks, BEI was fraudulently awarded tens of millions of dollars in contracts between 2001 and 2004.

Other participants in the scheme. McDonald also was charged with accepting kickbacks from co-defendant Haas. Haas, a former representative of a subcontractor that provides common backfill, a type of soil material used to refill an excavation, was also named in the indictment.

A New Jersey jury convicted McDonald on 10 counts of the 12-count indictment in September 2013. McDonald was sentenced to serve 14 years in prison and ordered to pay a $50,000 fine and make restitution totaling $4,304,491 to victims, including the EPA. The hard-fought battle to convict McDonald was considered by the Antitrust Division to be one of the most significant criminal enforcement successes of 2013. Haas pleaded guilty for his role in the scheme in 2009.

Sentencing. Sentencing for Bennett has been scheduled for June 27. The fraud conspiracy for which Bennett was found guilty carries a maximum penalty of five years in prison and a $250,000 criminal fine. The major fraud against the United States conviction carries a maximum of ten years in prison and a $1 million criminal fine for individuals.

Attorneys: Helen Christodoulou, Daniel Tracer, and Mikhail Vanyo for U.S. Department of Justice. Robert J. Anello, Richard F. Albert, Jocelyn Courtney Kaoutzanis, and Jacob W. Mermelstein (Morvillo Abramowitz Grand Iason & Anello PC) for John Bennett.

Companies: Bennett Environmental Inc.

News: Antitrust AntitrustDivisionNews