Company Owner Sentenced to 21 Months in Prison For Paying Bribes to Geologist To Obtain Contracts with Lehigh Cement Company
Baltimore, Maryland - U.S. District Judge William D. Quarles, Jr. sentenced Larry D. Spann, age 62, of Madison, Indiana, today to 21 months in prison followed by two years of supervised release for wire fraud in connection with a scheme in which Spann paid bribes and kickbacks to a geologist to assist Spann’s company to obtain several excavating and hauling contracts with Lehigh Cement Company, and then substantially overbilled Lehigh on the last of the contracts after Spann’s company ran into financial difficulties.
Judge Quarles also ordered Spann to pay restitution of $988,675, the stipulated loss to Lehigh Cement Company as a result of the overbilling part of the scheme.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Postal Inspector in Charge Daniel S. Cortez of the U.S. Postal Inspection Service - Washington Division; and Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation.
According to his plea agreement, Spann was the owner and president of LMS Contracting, Inc., an Indiana corporation that provided excavating and hauling services. After December 2005, ownership of LMS was acquired by another company and Spann continued to be employed by LMS until it declared bankruptcy in 2007.
Michael Kilbourne was a geologist employed at Lehigh Cement Company to provide expert mining assistance at its facilities in the eastern United States, including the quarry and manufacturing plant located in Union Bridge, Maryland. Kilbourne also solicited and evaluated bids submitted by outside contractors in connection with various projects, and verified the accuracy of invoices submitted by the outside contractor once a contract was awarded.
In 2001, LMS successfully carried out an excavating project on behalf of Lehigh at its quarry and cement production plant in Mitchell, Indiana. Later that year, Lehigh sought bids
from hauling companies in connection with an excavation project at its quarry in Union Bridge, Maryland. Kilbourne invited Spann to submit a bid on the project, which Spann did. When Kilbourne called Spann to advise him that he intended to recommend that LMS be selected for the project, he suggested that Spann modify his bid by an additional $0.05 per cubic yard and kick that amount back to him. Spann agreed, after which LMS received the job.
Over the next several years, Kilbourne assisted LMS in obtaining two additional hauling projects with Lehigh – one at Lehigh’s Mitchell facility that was carried out between January and July 2004, and a very large project that was carried out at Lehigh’s Union Bridge facility between April 2005 and February 2006. In return, Spann provided Kilbourne with over $100,000 in cash and other benefits, including paying$19,554.35 on Kilbourne’s behalf to a Canadian geological services company in connection with a drilling project in which Kilbourne had an interest and spending $5,800 to purchase a motorcycle on eBay that Kilbourne wanted. Spann also admitted that during the second half of the final Union Bridge project in 2005-06, at a time when his company was under financial pressure, he submitted inflated bills to Lehigh that overstated the amount of limestone and other material that LMS had excavated, resulting in a loss to Lehigh of $988,675. Spann indicated that Kilbourne was not aware of the overbilling, although he recommended approval of the submitted bills when they were questioned by other Lehigh Cement employees.
Michael W. Kilbourne, age 49, formerly of Macungie, Pennsylvania, pleaded guilty to his role in the kickback part of the scheme and is currently serving a two year federal prison sentence. Kilbourne paid $180,000 in restitution to Lehigh at his sentencing.
United States Attorney Rod J. Rosenstein praised the U.S. Postal Inspection Service and the FBI for their work in the investigation and thanked Assistant United States Attorney Jefferson M. Gray, who prosecuted the case.