News and Press Releases

Members of Long Island Asphalt Cartel Admit Scheme to Rig Suffolk County and Town of Brookhaven Road Paving Contracts

December 22, 2006

Three of Long Island’s largest asphalt producers and road paving contractors, JAMES KENNETH HANEY, WILLIAM LOUIS FEHR, JR., and FRANK GERALD SCHAMBRA, and their corporations, SUFFOLK ASPHALT SUPPLY, INC., PAV-CO ASPHALT, INC., PRIMA ASPHALT CONCRETE, INC., ALL-COUNTY PAVING CORP., and SUNDIAL ASPHALT CO., INC., pled guilty today to federal mail fraud charges in connection with a bid rigging scheme against Suffolk County and the Town of Brookhaven.

The individual defendants face a maximum term of 40 years’ imprisonment. All of the defendants have agreed to forfeit a total of $2.3 million and to pay restitution to the county and town in the amount of $326,343.20. Each corporate defendant also faces fines to be set by the Court, which could reach approximately $1 million. The guilty plea proceedings were held before United States Magistrate Judge William D. Wall at the U.S. Courthouse in Central Islip, New York.

The guilty pleas were announced by Roslynn R. Mauskopf, United States Attorney for the Eastern District of New York, and Mark J. Mershon, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office.

New York State law requires that public works projects be awarded in a competitive-bidding process to the lowest responsible bidder. Companies seeking to win contracts must certify that they have not colluded or shared information about their bids with potential competitors.

HANEY, FEHR, and SCHAMBRA were arrested in November 2005, following a 24-month investigation during which the defendants were secretly recorded fixing the price of asphalt charged to the county and town and dividing various road paving projects among the members of the cartel. Their scheme is estimated to have artificially inflated the price of asphalt by as much as $10 per ton.

In December 2005, a federal grand jury returned an indictment charging the individual defendants and their five corporations with conspiring to commit mail fraud in connection with two contracts set to be awarded in 2005. In May 2006, the grand jury returned a superseding indictment charging that the defendants’ conspiracy had begun as early as July 2003 and resulted in fraudulently rigging contracts let in 2004, for which Suffolk County and Brookhaven paid a combined $2.3 million to the defendants.

“Today’s convictions are a victory for the people of Suffolk County and Brookhaven, who deserve honest prices and services from government contractors,” stated United States Attorney Mauskopf. “This case demonstrates that federal law enforcement will not tolerate collusion and bid-rigging by those who would line their pockets at the expense of taxpayers.”

FBI Assistant Director-in-Charge Mershon stated, “Public works are so called not only because they benefit the public, but also because they are directly or indirectly paid for by the public. The collusive scheme of these defendants was effectively one to steal from their neighbors. The fair market price that would have been the result of competitive bidding was sacrificed on the altar of this greedy conspiracy.”

The government’s case is being prosecuted by Assistant United States Attorneys James Miskiewicz, Cynthia Monaco, and Richard Lunger.

The Individual Defendants:

James Kenneth Haney

Frank Gerald Schambra

William Louis Fehr, Jr.

The Corporate Defendants:

Suffolk Asphalt Supply, Inc.
100 Rogers Avenue
Westhampton, New York, and
242 Rabro Dr.
Hauppauge, N.Y.

Prima Asphalt Concrete, Inc., and
Pav-Co Asphalt, Inc.
615 Furrows Road
Holtsville, New York

All-County Paving Corp.
205 Peconic Avenue
Medford, New York

Sundial Asphalt Co., Inc.
56 Comsewogue Road
East Setauket, New York

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