Concrete company pleads out, settles
BOSTON - The Big Dig is digging a big hole in the pockets of a couple of companies.
Friday, Aggregate Industries Northeast Region agreed to plead guilty and pay $50 million to settle its criminal and civil liabilities as a result of allegations that it was conducting a fraudulent concrete scheme.
The Central Artery Tunnel Project, also known as the Big Dig, is designed to ease traffic congestion on Boston's main highways. Its construction began in 1991. AIG Insurance, the Workers' Compensation carrier for the project, recently paid $58.5 million to settle allegations that it did not turn over certain surplus funds to the Commonwealth.
Coakley said Aggregate, the largest asphalt and concrete supply company in New England, mixed leftover, recycled concrete that was more than 90 minutes old into concrete used for the Big Dig, then delivered the mix to the project.
This mix did not meet Big Dig specifications, and Aggregate concealed its fraud by falsifying concrete batch slips delivered to inspectors of the general contractors of the numerous construction crews, Coakley said. In order to conceal the old concrete, Aggregate added water to make the loads look fresh, she added.
"In the summer of 2005, State Police from the Attorney General's office executed search warrants in response to information that Aggregate was engaged in serious scheming and deception, and that they knowingly delivered concrete that did not meet quality standards," Coakley said.
"They then turned around and billed the government millions of dollars for goods that were literally not delivered upon. Today's resolution is one more step toward holding accountable those responsible for the many problems in the Central Artery Tunnel Project."
Aggregate must also insure the project for an additional $75 million in the event structural damage created by the mixed concrete exceeds the $50 million settlement payment. The $75 million will be available for the next 30 years.
Aggregate also agreed to:
-Divest itself of its largest asphalt plant in Boston;
-Pay for an independent monitor who will check up on its compliance with federal and state laws;
-Report for five years to the Federal Highway Administration and U.S. Attorney's Office; and
-Pay $500,000 to cover concrete testing;
The plea will keep Aggregate from being debarred by the FHWA. Six management-level employees of the company were charged for their alleged involvement in May 2006. They were charged with Conspiracy to Commit Highway Project Fraud and Mail Fraud; Conspiracy to Defraud the Government with Respect to Claims; and Making False Statements in Connection with Highway Projects and Mail Fraud.
Each defendant is still awaiting trial.