U.S. Says Two Electrical Firms Admit Rigging Competitive Bids

Two Los Angeles-area firms have agreed to plead guilty and pay fines that could total more than $1.5 million for rigging competitive bids on electrical contracting projects, federal prosecutors said Monday.

The firms, Kirkwood Electric Service Corp. of Cerritos and Amelco Industries of Gardena, were charged Monday in complaints stemming from an 18-month investigation of the electrical contracting industry in Southern California, authorities said. The companies agreed to assist in an investigation that could lead to additional charges against other companies, assistant U.S. Atty. Leon W. Weidman said.

“These are very significant cases,” Weidman said after a press conference in downtown Los Angeles. He called the cases--which involve multimillion-dollar contracts for constructing private industrial plants--the largest bid-fixing cases filed in California in several years.

The charges, for violating bidding regulations of the Sherman Antitrust Act, are the first filed in California as part of a federal crackdown on the electrical contracting industry, authorities said. So far, authorities have prosecuted 83 cases in 14 states, exacting fines of more than $20 million, according to figures released Monday.

The effort, begun in the early 1980s, is aimed at reversing a pattern of bid-fixing within the industry, federal prosecutors said.

“We’ve been told by a number of (industry) executives that bid-rigging was a way of life in the electrical construction industry,” Justice Department prosecutor Robert J. Staal said.

According to the federal complaint, Kirkwood Electric Service Corp. conspired with other companies to rig bids for electrical work at a battery manufacturing plant in Vernon, a few miles southeast of downtown Los Angeles. Several bidders, seeking the contract from Gould Inc. of Chicago, submitted bids that ranged from $3.5 million to $4 million, authorities said.

The contract ultimately was awarded to a firm at a cost believed to have been substantially higher than might have been awarded under truly competitive bids, investigators said.

In such bid-rigging schemes, Weidman explained, companies typically share available jobs on a quid pro quo basis.

“Normally, (firms) get together and talk about several cases at once,” Weidman said. “They say, ‘I’ll get this one, you’ll get the next one.’ ”

Weidman declined to discuss details of the Kirkwood case, pending further grand jury investigation. As part of its plea agreement, Kirkwood has agreed to pay a fine up to $1 million--the maximum under federal law--and to cooperate in the investigation. The actual amount of the fine will be determined by a federal judge at a hearing in several weeks, Weidman said.

‘Serious Matter’

Attorney Richard Kirschner, representing Kirkwood, said, “The company regards this as a serious matter” and has “cooperated fully” with federal prosecutors. In addition, he said, “The company has taken remedial measures. The employee who handled the bid has been terminated.”

Kirschner stressed that the case is the only incident Kirkwood was involved in.

The case against Amelco Industries involved the modernization of the Powerine Oil Co. refinery in Santa Fe Springs, where bidders allegedly rigged bids for a contract ultimately worth nearly $5.3 million. As a result of that investigation, Amelco has agreed to pay a fine of $550,000 if so ordered by the court. Company Vice President Joseph P. Grana, 56, has agreed to serve a three-month jail term, federal prosecutors said.

Attorneys for Amelco and Grana could not be reached Monday for comment.

The bid in the Amelco case was awarded to Fischbach & Moore Inc. of Los Angeles, which has not been charged. Asked about the case Monday, operations manager Boyce Ringer of Fischbach & Moore said he was aware of the federal investigation, but said he has not talked to investigators.

“That was all before my time,” he said of the bids, which were submitted in early 1981. “I wasn’t here when that job went on.”