Antitrust fraud in highway construction: Converting Statistics into Cases

1. Antitrust fraud in highway construction: Converting Statistics into Cases Turner Bond Office of Inspector General, Missouri Dept. of Transportation

2. Converting Statistics into Cases • Starting with Statistics • Coming out of the Ivory Tower • Developing your Cases • Marketing your Cases

3. Starting with Statistics

4. Northeast Assign Markets Northwest I-70 Kansas City Truman Reservoir St. Louis - Iron Mt. Jeff. City - Rolla MARIES Southern Bootheel

5. 50% 40% 30% 20% 10% 0% 70% 60% 50% 40% 30% 20% 10% 0% 87 88 89 90 91 92 93 94 95 96 97 98 Market Shares show supra-competitive influences. Kansas City Mkt. Normal Variation 87 88 89 90 91 92 93 94 95 96 97 98 Northeast Mkt. Unnaturally Even 58% 54% 53% 51% 51% 51% 50% 47% 44% 42% 40% 36%

6. Healthy Highlight Problem Areas Northeast Northwest I-70 Kansas City Truman Reservoir St. Louis-Iron Mt. Jeff. City - Rolla MARIES Southern Bootheel Patterns to Analyze Targeted Invest. Monitor Patterns

7. A B • C D E Overlay Territories

8. Statistics and graphs aren’t enough: If I had a witness, what would I need you for? ANTI-TRUST ANALYST: My computer models indicate collusion in the South. Will you investigate? LAW ENFORCEMENT: Sorry. I can’t help you if you don’t have a witness. Oh.

9. Coming out of the Ivory Tower

10. Look for the Underlying Mechanics • Vertical Market Control – the origin of our anti-trust laws. • Losing Entity is a tax dodge or bidding signal • Schill bidder just wants aggregate sales. • Who knew what – and when.

11. Reality check your theories

12. Broaden your Perspective • Imbed yourself: Talk with materials inspectors, field inspectors, testing staff. • Network: fraud investigators from other fields, DBE certifiers, municipal contracting agents, law enforcement, etc. • Cross-train: computer science, engineering, anti-trust law, economics, statistics, etc.

13. Become your Department’s Advocate for Competition • Restructure contracts. • Bring in competing industries.

14. Developing Cases

15. . . . . and Investigations Bridging the gap between Statistics . . . .

16. Use Case Profiling Summarize Case • Scope of transactions • Date of first awareness • Theory of corruption • Mechanics of the deal • Assess Viability: find 3 out of 4 markers • Is there a definable system of exchange? • Is the consumer damaged? • Is there irrational business behavior? • Is there a history of concern with these players?

17. Create Briefing Books • Generic, reusable, and short. • Theory of the mechanics behind the deal. • Potential contacts • Injured competitors • Disgruntled employees • Attachments profiling current evidence

18. Marketing Cases

19. Market Your Cases • Good ideas don’t sell themselves. • Develop contacts and keep them open. • Send them usable information. • Be persistent. If, at first you don’t succeed …

20. Summary • Start with Statistics • Reality Check your Work • Develop your Cases • Market your Cases

24. Profile Vendors

25. Converting Statistics into Cases • Starting with Statistics • Coming out of the Ivory Tower • Developing your Cases • Marketing your Cases

26. . . . . and Investigations Developing Cases Bridging the gap between Statistics . . . .

27. Become your Department’s Advocate for Competition

28. Force Competition Where it’s Needed • Restructure contracts. • Bring in competing industries.