Connecticut Attorney General Richard Blumenthal today announced settlements and additional legal action involving industry-wide illegal bid rigging in the heating, ventilation and air-conditioning (HVAC) business.

Last October Blumenthal announced a $280,000 settlement with B-G Mechanical Services, Inc. (B-G Mechanical) for allegedly orchestrating bid rigging schemes from at least 1997 through 2004. The bids involved HVAC service contracts on behalf of state and municipal entities, and private companies. B-G has since relocated from Connecticut to Massachusetts.

Customers harmed by the alleged scheme include CTTransit, the State of Connecticut, Vernon Waste Water Pollution Control Authority and others.

In additional court action today, Blumenthal said one of the defendants, John J. Haggett, has allegedly transferred property and money market funds in an apparent attempt to hide hundreds of thousands of dollars in assets that could potentially be used to satisfy debts to the state if he is ultimately found liable under the lawsuit. The court action seeks to prevent this allegedly illegal transfer. Haggett is the former B-G president who allegedly orchestrated bid rigging schemes before he was fired in 2004.

Also today, Blumenthal announced settlements under the bid rigging lawsuit with two B-G employees named in the suit, George Pelletier and Francis J. Fallon. Each will pay a $15,000 civil penalty to the state, and cooperate with Blumenthal's ongoing investigation and legal action.

"Today's action advances our continuing fight against pervasive bid rigging in this industry," Blumenthal said. "B-G Mechanical and its employees conspired with competitors - choreographing bids to create the mirage of a free market. In reality, the illegal bid rigging compromised competition, robbing consumers of free choice.

"These two employees settling today - and B-G settling last year - are doing the right thing, and continuing to cooperate with my ongoing litigation. We will continue to vigorously pursue the other defendants in our lawsuit in court."

Haggett allegedly conceived and implemented the bid rigging schemes with his staff, either concocting false bids - or "cover bids" - on competitors' letterhead and then submitting them to customers along with B-G Mechanical's bids, or requesting that his competitors submit bids directly to the customers at prices higher than B-G Mechanical's. In either scenario, the alleged result was the same - customers believed that B-G Mechanical's bid was the lowest of three competitive bids, which was not the case.

Blumenthal is continuing to pursue Haggett and others in court who participated in the bid rigging. Blumenthal's lawsuit seeks civil penalties, and order prohibiting future bid rigging and collusion, and other legal relief.

Blumenthal thanked members of his office working on the litigation - and the ongoing HVAC investigation - Assistant Attorneys General Clare Kindall and Antonia Conti, and Paralegal Holly MacDonald, and Senior Investigator Jeffrey Meyers, under the direction of Assistant Attorney General Michael Cole, Chief of the Attorney General's Antitrust Department. 

Source: Connecticut Attorney General's Office

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