December 20, 2007

Gohmann Asphalt and Construction Inc. settles asphalt fraud allegations

Indiana company pays US$8.2M

A Clarksville, Ind., highway contractor will pay US$8.2 million to settle federal allegations it cheated on samples it provided state highway officials to show it was putting the proper amount of asphalt on Kentucky and Indiana roads.

Gohmann Asphalt and Construction Inc. entered the settlement with federal and state authorities over US$99 million worth of asphalt work between 1997 and 2006, said Dave Huber, U.S. attorney in Louisville.

In a statement released by its lawyer, the company said it co-operated with federal investigators and reached the settlement to avoid “further expense and inconvenience,” according to an article in The Indianapolis Star.

“We believe that our efforts and ethical practices allowed us to achieve a practical resolution to these claims,” Gohmann President Richard L. Cripe said in the statement.

The civil settlement — in which the company admits no wrongdoing—includes repayment of a controversial US$5.3 million bonus Kentucky and the federal government paid Gohmann in 2001 for early completion of a US$21 million job to resurface part of Interstate 64 in Louisville.

Huber said federal authorities allege the company swapped core samples of asphalt that were too thin with those of the required thickness on roads the company had resurfaced. Huber said the alleged fraud was fairly simple — the state would mark portions of newly laid asphalt for sampling in which a small core would be drawn to check for thickness. But the company would replace samples that were too thin with some that matched contract specifications, he said.

In Kentucky, the alleged swapping occurred under the noses of state workers who were supposed to oversee the company’s sampling of asphalt but didn’t, officials said yesterday.

“There’s a lot of conduct we would like an explanation for,” said James R. Wood, director of legal services for the Kentucky Transportation Cabinet.

Wood said some state highway workers have been counseled or retrained, but no one has been disciplined or fired, and no further action is planned.

The settlement follows a “whistle-blower” complaint filed under seal in federal court in Louisville in 2003 by a former Gohmann worker.

The company also has agreed to an extended three-year warranty on 66 of its most recent road projects in which it will repair any damage to roads — such as cracks or potholes —at no cost. And it will pay for an outside inspector to oversee future work, including sampling, officials said.

Highway officials said yesterday that they have found no safety hazards on the 132 federally funded roads they examined but said that skimping on asphalt could result in early deterioration.

“It’s not a safety issue,” Huber said. “It’s an issue of substandard work.”

DCN News Services

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