Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Employee of military provider charged for destroying text messages in military bid rigging investigation in Korea, (Jan 31, 2025)

By Wendy Biddle, J.D.

The indictment is related to a federal grand jury investigation concerning bid rigging and price fixing for subcontract work for Army installations in South Korea.

An employee of Texas-based J&J Maintenance, Inc., which provided operations and support services to the U.S. government has been charged in a criminal information for destroying, concealing and covering up text messages with the intent to impede the investigation into bid rigging and price fixing at U.S. military installations in South Korea. This indictment comes after four individuals and a company were previously indicted by a federal grand jury in Texas in 2024 (US v. Cruz, No. 1:25-cr-00020-RP (W.D. Tex. Jan. 27, 2025)).

J&J Maintenance was the prime contractor to the United States Army Corps of Engineers (USACE) on an indefinite delivery contract to address operation and maintenance needs for U.S. Department of Defense medical facilities, including medical facilities in Korea. The USACE Contract required a competitive process for awarding subcontract work whereby J&J Maintenance had to secure two or more quotes for subcontract work and submit those quotes to USACE and United States Army Medical Command (MEDCOM) for approval. J&J Maintenance was the majority owner of a Korea-based corporation called J&J Korea, Inc.

Cruz was responsible for soliciting quotes for subcontract work from Korean companies, including J&J Korea and Korean-based DESCA Co. Ltd., selecting a recommended subcontractor and submitting the recommended subcontractor to the government for approval. When Cruz needed additional quotes for subcontract work under the USACE contract, he asked Kwon and Shin for help getting those quotes from DESCA. Typically those requests were made by text message. Cruz was not included in the communications between Kwon, Shin, and Jo and was not aware that the three were coordinating quotes for subcontract work.

David Cruz and his co-conspirators allegedly agreed to provide each other complementary and rigged bid proposals for subcontract work to contractors servicing MEDCOM, the USACE, and the Defense Logistics Agency (DLA); exchange pricing information and bid proposals with each other in order to submit rigged bid proposals and fixing prices for subcontract work to contractors servicing these agencies; and cause the submission of rigged bids and fixed prices for subcontract work so that J&J Korea would win subcontract work under the USACE contracts and DESCA would win subcontract work under the DLA contracts. Over $1.5 million was transferred from J&J Maintenance to J&J Korea between April 2020 and October 2020 by interstate wire. Each transmission was listed as a separate count in the previous indictment.

Cruz’s indictment. After J&J Maintenance received a grand jury subpoena for records in 2021, they sent an email to Cruz not to destroy or delete any communications with J&J Korea, DESCA, or others who performed subcontract work under the USACE contract.

In July 2021, Cruz encountered Kwon and Shin in J&J offices in Korea, when he was told that Kwon deleted his text messages with Cruz and asked Cruz if he had done the same. Cruz replied he had done so even though he had not. After the conversation, Cruz deleted his text messages with Kwon and Shin. As a result of that action, Cruz was charged with knowingly destroying, concealing, and covering up records with the intent to impede an investigation in violation of 18 U.S.C. §1519.

Prior indictments. In March 2024, the Justice Department announced that a federal grand jury in Texas returned a superseding indictment charging three South Korean nationals and a South Korean company for their part in the bid-rigging conspiracy. Hyuk Jin Kwon and Hyun Ki Shin were previously indicted on March 16, 2022. The superseding indictment also named DESCA Co. Ltd. and its CEO, Hye Yeon Jo. (U.S. v. Kwon, Case No. 1:22-cr-00049-RP).

In 2024, J&J Korea was sentenced to pay fines and restitution of nearly $9 million following a guilty plea, the Department of Justice announced. The subsidiary was the first person or entity to accept responsibility for the criminal offenses involved (U.S. v. J&J Korea, Inc., Sept. 12, 2023, Pitman, R.).

The Case is No. 1:25-cr-00020-RP.

Judge: Pitman, R.

Attorneys: Daniel P. Chung, U.S. Department of Justice, for the U.S. David L. Botsford (Botsford & Roark) for David Cruz.

Companies: J&J Maintenance, Inc.; J&J Korea, Inc.; Desca Co Ltd.

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