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This page explains how to identify anticompetitive conduct that occurs after a natural disaster and how to report possible violations to the Antitrust Division. On this page:
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Anticompetitive Conduct After a Natural Disaster In the wake of devastation caused by a natural disaster, the Federal Emergency Management Agency (FEMA) works with state and local government agencies to solicit competitive bids for cleanup and rebuilding contracts. Anticompetitive conduct that subverts the competitive bidding process includes:
These agreements are generally secret, and the participants defraud customers by holding themselves out as competitors despite their agreement not to compete. They harm consumers and taxpayers by causing them to pay more for products and services and by depriving them of other byproducts of true competition. Related document: Preventing and Detecting Bid Rigging, Price Fixing, and Market Allocation in Post-Disaster Rebuilding Projects The Role of the Antitrust Division in Disaster Recovery Efforts The Division’s role in disaster recovery efforts is to assist Federal, state, and local government agencies in preventing and deterring violations of criminal antitrust laws, such as bid rigging and collusion in the competitive bidding process.
Related Prosecution: Bid Rigging After Typhoon Paka in Guam In 2002, a record-breaking ten-year sentence was imposed on Austin "Sonny" Shelton, a former Guam government official, for orchestrating a bid-rigging, bribery, and money-laundering scheme involving FEMA-funded contracts in Guam. After Typhoon Paka hit Guam in 1997, leaving thousands of people homeless, FEMA made more than $70 million in federal funds available to Guam for disaster relief. The Antitrust Division conducted a bid-rigging and public corruption investigation jointly with the U.S. Attorney’s Office in Guam and agents from the FEMA Office of Inspector General, the FBI, the IRS, and the Department of Interior. This investigation resulted in numerous convictions, including that of Austin J. “Sonny” Shelton, who was the Director of Guam’s Department of Parks and Recreation and was responsible for awarding contracts for FEMA-funded construction projects to repair typhoon damage. Shelton was convicted after trial of 12 counts of criminal activity for orchestrating three separate bid-rigging conspiracies, soliciting and receiving over $100,000 in bribes in return for the award of contracts, committing wire fraud, and conspiring to launder money. Related page: U.S. v. Austin J. "Sonny" Shelton case filings If you have information about possible anticompetitive activity related to disaster recovery efforts, please contact us:
We recommend that you use these questions as a guideline for reporting the activity:
Related page: Reporting Antitrust Concerns Special Information Related to Hurricane Katrina As a member of DOJ's Hurricane Katrina Fraud Task Force, the Antitrust Division is committed to offering our expertise and assistance in the wake of the devastation caused by Hurricanes Katrina, Rita, and Wilma. If you would like us to give a presentation to your group on antitrust laws and detection of criminal antirust violations, please contact us:
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