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Press Release

Bay Area Contractors Convicted In Scheme To Rig Bids For Department Of Energy Building Contract

For Immediate Release
U.S. Attorney's Office, Northern District of California
Clifton Burch and Peter McKean Convicted After Trial of Submitting False Bid for Construction of Lawrence Berkeley Lab Facility

SAN FRANCISCO - Clifton Burch and Peter McKean were convicted by a federal jury today of conspiring to defraud the United States in connection and conspiracy to commit mail and wire fraud all in connection with a federal construction contract, announced United States Attorney David L. Anderson, Federal Bureau of Investigation Special Agent in Charge John F. Bennett, and Department of Energy Inspector General Teri L. Donaldson.  The guilty verdicts follow a two-week trial before the Honorable Charles R. Breyer, U.S. District Judge.

The jury found that Burch, 50, of San Lorenzo, and McKean, 50, of San Mateo, conspired with Derf Butler to submit fraudulent bids to construct a building at Lawrence Berkeley National Laboratory (LBNL).  

The investigation arose out of the investigation of Senator Leland Yee, Raymond “Shrimp Boy” Chow, and others.  In the course of that investigation, Derf Butler was overheard discussing a bid-rigging opportunity.  Butler stated that he had contractors who would “play ball” and help with a scheme to commit bid-rigging.  Butler’s comments led to an undercover investigation of bid-rigging in the Bay Area.  Building contracts at LBNL are paid for and overseen by the U.S. Department Energy (DOE).  Contractors seeking construction work with LBNL and the DOE are legally required to obtain work through a competitive bidding process.  In this case, Burch and McKean agreed with Butler to submit, or participate in the submission of, fraudulent and non-competitive bids to perform the renovation of LBNL Building 84.  Specifically, Butler agreed to take steps to ensure that a particular “developer” – in reality, an undercover agent – won the contract by ensuring the lowest bid on the renovation project was provided by the developer.  Butler helped to orchestrate the submission of bids by Burch and McKean in amounts dictated by Butler and the developer.  The evidence at trial showed that Burch and McKean understood the bids were not genuine bids and were intended to be higher than the bid submitted to the DOE by the developer.  Burch and McKean expected to get payment and work after the developer secured the contract.

Butler met with the developer in July of 2013, at which time Butler agreed to locate contractors to submit bids for the DOE contract in amounts higher than the contractor’s bid.  On July 30, 2013, Butler met with Burch and McKean, each of whom agreed to submit a separate bid that would be higher than $5.7 million, the amount of the bid that would be submitted by the developer.  

Butler also was given additional payments after Burch and McKean submitted the fraudulent bids.  Specifically, on August 26, 2013, Burch mailed a bid for the contract to the LBNL in the amount of $7,125,000 and on October 3, 2013, McKean emailed a bid in the amount of $6,300,000.  Burch and McKean both were told they would be given work as a sub-contractor and the construction manager on the project after the developer was awarded the bid.

A federal grand jury handed down a superseding indictment on November 8, 2018. Burch and McKean both were charged with one count of conspiracy to defraud the Unite States, in violation of 18 U.S.C. § 371, and one count of conspiracy to commit mail and wire fraud, in violation of 18 U.S. C. § 1349.  Pursuant to today’s verdict, the defendants were convicted on all counts.

Butler pleaded guilty to his role in the scheme on October 17, 2018.  Judge Breyer scheduled Butler’s sentencing hearing for March 27, 2019.

Judge Breyer scheduled the defendants’ sentencing hearing for June 19, 2019.  The maximum statutory penalty for conspiring to defraud the United States is five years in prison and a $250,000 fine.  The maximum statutory penalty for the conspiracy to commit mail and wire fraud count is 20 years in prison and a $250,000 fine.  Further, additional periods of supervised release, fines, and restitution also may be imposed, however, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.   

Assistant U.S. Attorneys Cynthia Frey and William Frentzen are prosecuting the case with the assistance of Helen Yee, Rosario Calderon, Bridget Kilkenny, and Danielle Allison.  The prosecution is the result of an investigation by the Federal Bureau of Investigation and the DOE Office of the Inspector General.

Updated February 21, 2019

Financial Fraud