DOJ Enters Two More Guilty Pleas in Ongoing Criminal Investigation of Commercial Flooring Company | The Volkov Legal Group
The Justice Department’s antitrust division has had a tough year in the criminal arena. While the Antitrust Division has aggressively blocked several proposed mergers, it has lost several significant criminal cases.
The antitrust division has lost two major labor market price-fixing cases and is now in the midst of a third criminal trial against five defendants in the chicken production industry. The Division suffered two mistrials and persuaded the district judge to allow a third trial. The DOJ restructured the case and appointed new prosecutors for the third trial.
Last week, Commercial Carpet Consultants, Inc., a commercial flooring contractor, and Jerry Watson, its former president, pleaded guilty to bid-rigging and price-fixing charges and agreed to pay a fine. of $1.2 million. Commercial Carpet is the fourth company to plead guilty in an ongoing investigation into the commercial flooring industry. Watson is the sixth person to plead guilty to the charges arising from the investigation.
Commercial Carpet and Watson admitted to collusive agreements with competitors from 2009 to June 2017. Commercial Carpet and Watson agreed with competitors to remove competition in the award of contracts from competitive bidding procedures. The conspiracy members submitted complementary bids for the named company to win the contract.
Commercial carpet companies seek contracts with government agencies to remove flooring, prepare surfaces for new flooring, and install new flooring, including carpet, wood, vinyl , tile and laminate.
Three other companies have pleaded guilty in this investigation – Mr. David’s Flooring International, PCI FlorTech and Vortex Commercial Flooring.
The first lawsuit involved charges in April 2019 against Michael Gannon, the former vice president of sales for a flooring company. PCI FlorTech was the first company to plead guilty in August 2019. PCI FlorTech agreed to cooperate. The following year, Vortex pleaded guilty and agreed to pay $1.4 million and cooperate with the industry investigation.
Subsequently, Mr. David’s Flooring agreed to pay fines of $1.2 million after pleading guilty to bid-rigging and money laundering. Mr. David’s Flooring concealed bribes paid to an account manager of a flooring manufacturer in exchange for rebates.
The account manager pleaded guilty to antitrust and money laundering offenses in March 2020. Three former Vortex executives pleaded guilty to antitrust charges. In September 2021, Michael Zmijewski, the former president of Mr. David’s Flooring, was indicted for money laundering.
A violation of the Sherman Act carries a maximum legal penalty of a $100 million criminal fine for corporations. For individuals, a violation of the Sherman Act carries a maximum sentence of 10 years in prison and a criminal fine of $1 million.