CEO: Bridgeview paving company hopes to settle federal fraud suit
The chief executive officer of Bridgeview-based Rose Paving said Friday the company is trying to settle a multimillion-dollar federal lawsuit that Target Corp. filed against it and other paving businesses last year.
Alan Rose, who founded Rose Paving, said company president Edward Campbell and a team of attorneys will be in U.S. District Court in Minneapolis on Feb. 25 and 26 to discuss a settlement with Target Corp. attorneys and a judge.
The lawsuit, filed in August, alleges that work done by Rose Paving in Target parking lots in Cicero and Lake Zurich — as well as by other contractors in Target parking lots nationwide — was incomplete and fraudulent.
Target paid Rose Paving about $2.3 million for the work, according to the lawsuit.
Target alleges in the suit that Rose Paving schemed with other contractors to fix the bidding process, defrauding the national big-box retailer of millions of dollars.
LCH Pavement Consultants, of Pearland, Texas, worked with Rose Paving and three other companies in 2010 to defraud Target through a noncompetitive bid scheme, the lawsuit says. As part of the scheme, the businesses worked together to shut out low-cost competitors from the bids, submit high bids for the work and change the cost of any low bids to inflated amounts.
As such, the contractor that was selected to do the work could charge more than the market price while appearing to be the low bidder, according to the lawsuit.
In many cases, the companies concealed the fraud by not removing and replacing the asphalt down to the subgrade — the costliest work in the contracts, the lawsuit says. Instead, they would apply a surface coat of asphalt, which gave the appearance of new pavement.
When the work was completed, the companies fraudulently certified the work had been completed, submitted invoices for the full amount of the work, and collected full pay from Target, according to the lawsuit. In addition, LCH Pavement Consultants demanded and received kickbacks from its contractors and abdicated its project management duties — which Target paid it for — to the contractors.
According to the lawsuit, Target hired LCH Pavement Consultants in 2009 to assess and manage asphalt repair for Target throughout its U.S. locations. The company has overseen Target projects worth about $100 million.
Rose Paving used two-thirds of the asphalt and other materials required for the project in Cicero, the lawsuit says. Rose Paving also installed less than half of the asphalt and other materials required for a project in Henrietta, N.Y., and performed “far less” of the work than what Target paid it to do in Lake Zurich, the lawsuit said.
Rose previously attributed the lawsuit to a “difference of opinions.”
Similar schemes with other contractors were carried out in California, Montana, Arizona, Vermont, Pennsylvania, Texas and Georgia, according to the lawsuit.