Company Employee Pleads Guilty in Fraud Scheme Involving Highway Projects at the Woodrow Wilson Bridge And I-70/Baltimore National Pike

Precast Concrete Used at Federally –Funded Highway Projects Failed to Meet State Specifications

September 20, 2011

Baltimore, Maryland - Santos Eliazar Rivas, age 32, of Hagerstown, Maryland, pleaded guilty late yesterday to three counts of making false statements in a matter involving the Federal Highway Administration.

The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Kathryn Jones, U.S. Department of Transportation, Office of Inspector General, Washington Regional Office; Acting Administrator Darrell Mobley of the Maryland State Highway Administration and Special Agent in Charge William Winter of U.S. Immigration and Customs Enforcement, Homeland Security Investigations.

“Santos Eliazar Rivas falsely certified that his company was delivering the precast concrete the government was paying for, and the government relied on that certification,” said U.S. Attorney Rod J. Rosenstein. “Although the inferior quality of the concrete was concealed, a cracked structure led to an investigation that exposed a pattern of misrepresentations.”

According to Rivas’ plea agreement, Frederick Precast Concrete, Inc. produced precast concrete structures, including drainage structures, used in construction projects involving the Woodrow Wilson Bridge and the I-70/Baltimore National Pike Project. Rivas became the company’s director of quality control and assurance in 2002. Rivas’ duties included overseeing the manufacturing of the company’s precast products and ensuring the company’s compliance with state regulations.

On June 25, 2007, an employee of a prime contractor and a State Highway Administration inspector discovered that a precast structure produced by Frederick Precast for approach roadways and designated to be traffic-bearing had cracked open at the I-70/Baltimore National Pike job site. The piece was revealed to contain only two layers of steel rebar, when the state-approved design called for three layers. In addition, each layer was composed in part of smaller-gauge, weaker pieces of steel than required by specification.

Investigation over the summer of 2007 revealed that several Frederick Precast products delivered to federally-funded project sites failed to conform to state-approved specifications. Certain structures contained the wrong number and/or type of steel rebar pieces in their frames; others contained unapproved substitutions of wire mesh in place of steel rebar. Accordingly, none of these structures conformed to state-approved specifications, and all of them were materially weaker than if they had been produced according to design.

Federal agents further investigated the company’s production procedures, including the company’s concrete testing and shipping practices, and found that on numerous occasions, Rivas signed off on shipping tickets listing precast structures whose concrete mix either had not been tested at all, or had been tested and failed to reach the requirement that structures made from the concrete had to withstand at least 4,500 pounds per square inch (PSI). The 4,500 PSI threshold is a significant marker of a precast structure’s strength, durability and safety.

Based on the shipping tickets that Rivas falsely certified on behalf of Frederick Precast, listing structures that he claimed conformed to state specifications, the Maryland State Highway Administration paid three prime contractors at least $131,410 for the deficient materials, who then paid Frederick Precast.

Rivas faces a maximum penalty of five years in prison and a $250,000 fine on each of the three counts. As part of his plea agreement, Rivas has agreed to pay restitution in the amount of loss determined by the court. U.S. District Judge Richard D. Bennett has scheduled sentencing for December 19, 2011 at 3:00 p.m.

United States Attorney Rod J. Rosenstein commended the U.S. Department of Transportation, Office of Inspector General; Maryland State Highway Administration; and ICE-HSI for their work in the investigation. Mr. Rosenstein thanked the Federal Highway Administration for its assistance in the investigation and praised Assistant United States Attorney Sujit Raman, who is prosecuting the case.

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