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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA
TARGET CORPORATION,
Plaintiff,
vs.
LCH PAVEMENT CONSULTANTS, LLC; UNITED PAVING COMPANY, a division of SUPERIOR PAVING CO, INC.; AMERICAN PAVEMENT SOLUTIONS INC.; ASPHALT MAINTENANCE INC.; ROSE PAVING COMPANY; LESLIE J. BAILEY; KEITH HEUTZENROEDER; SABAS TRUJILLO; TIMOTHY HELSTAD; and JAMES STINSON;
Defendants.
Civil Action No. __________
COMPLAINT
JURY TRIAL DEMANDED
Plaintiff Target Corporation (“Target”), through its undersigned counsel, hereby alleges
as follows for its Complaint against the above-named Defendants:
PARTIES
1. Plaintiff Target is a Minnesota corporation with its principal place of business in
Minneapolis, Minnesota.
2. Defendant LCH Pavement Consultants, LLC (“LCH”) is a Texas limited liability
company with its principal place of business in Pearland, Texas. Defendant Leslie J. Bailey
(“Bailey”) is, on information and belief, one of the owners of LCH. Defendant Keith
Heutzenroeder (“Heutzenroeder”) was the General Manager of LCH at times relevant to this
Complaint. Bailey is a resident of the State of Texas and, upon information and belief,
Heutzenroeder is a resident of the State of Colorado.
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3. Defendant United Paving Company (“United Paving”) is a division of Superior
Paving Co., Inc., a California corporation with its principal place of business in La Mirada,
California. Defendant Sabas Trujillo (“Trujillo”) is the President of United Paving Company and,
upon information and belief, resides in the State of California.
4. Defendant American Pavement Solutions Inc. (“American Pavement”) is a
Wisconsin corporation with its principal place of business in Green Bay, Wisconsin. Defendant
Timothy Helstad (“Helstad”) is the President of American Pavement and, upon information and
belief, resides in the State of Wisconsin.
5. Defendant Asphalt Maintenance Inc. (“Asphalt Maintenance”) is a Texas
Corporation with its principal place of business in Pearland, Texas. Defendant James Stinson
(“Stinson”) is the President of Asphalt Maintenance and, upon information and belief, resides in
the State of Texas.
6. Defendant Rose Paving Company (“Rose Paving”) is an Illinois corporation with
its principal place of business in Bridgeview, Illinois.
JURISDICTION AND VENUE
7. This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. §
1332 because this is a matter in controversy between citizens of different states and exceeding
the sum or value of $75,000, exclusive of interest and costs. This Court also has subject matter
jurisdiction over this action pursuant to 28 U.S.C. § 1331 because Plaintiff asserts claims that
arise under the laws of the United States, and over Plaintiff’s state law claims pursuant to 28
U.S.C. § 1367.
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8. This Court has personal jurisdiction over all Defendants, and venue is proper in
this District pursuant to 28 U.S.C. § 1391 because a substantial part of the events or omissions
giving rise to the claims occurred in this judicial district. Defendants United Paving, American
Pavement and Asphalt Maintenance have stipulated contractually to personal jurisdiction and
venue in this District. Personal jurisdiction and venue in this District are also proper pursuant to
18 U.S.C. § 1965(b).
FACTUAL ALLEGATIONS
9. Target is a retailer that operates more than 1,700 stores, located throughout the
United States. Target stores have parking lots that require periodic maintenance and repair. For
some years, Target has used consultants to manage its parking lot repair and maintenance needs.
These consultants inspect Target store parking lots and advise the company as to which parking
lots are most in need of repair. They recommend needed repairs and maintenance and identify
the quantities and types of repairs to be performed. Along with other responsibilities, the
consultants function as construction managers. They schedule the performance of the work,
coordinate with personnel employed at the Target stores, oversee the performance of the work by
the contractors, and certify that the work has been completed and satisfactorily performed. Until
2011, they solicited bids from paving contractors. The consultants are paid a fixed fee to inspect
each parking lot, and a percentage of the cost of each project.
10. Beginning in 2009, LCH was retained by Target as a consultant and was assigned
responsibility for assessing and managing asphalt pavement work for Target throughout the
majority of the United States, excepting only the Upper Midwest. Since that time, LCH has been
responsible for managing contracts worth approximately $100 million for parking lot
maintenance and repair for Target.
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11. At some point after it began working for Target as a consultant, LCH, through
Bailey, Heutzenroeder, and perhaps others employed by that company, in conjunction with other
Defendants named herein, devised a scheme to defraud Target. That scheme involved the
knowing participation of a number of paving companies, and various principals and employees
of those companies, including United Paving, American Pavement, Asphalt Maintenance, Rose
Paving, Trujillo, Helstad, and Stinson, and perhaps others not yet known to Target. These
paving companies and their respective principals and employees collaborated with each other
and with LCH to defraud Target, as described more fully below.
12. The fraudulent scheme which is the subject of this action involved at least the
following elements:
a. When LCH identified for Target the types and quantities of work that
needed to be carried out at each store (e.g., 10,000 square feet of 2-inch asphalt overlay; 20,000
square feet of 6-inch asphalt removal and replacement; etc.), LCH would, at times, overstate the
quantities and types of work to be performed.
b. Prior to 2011, rather than supervising a competitive bidding process as it
represented to Target, LCH in fact organized, with the knowing participation of the Defendant
paving contractors, their principals and employees, and perhaps others, a bid-rigging scheme.
LCH and the Defendant paving contractors allocated projects on a territorial basis. The
Defendants would ensure that the contractor that had been allocated a given territory would be
the successful bidder by: (1) not inviting other local companies that were likely to be low-cost
competitors to bid; (2) having contractors who were part of the bid-rigging scheme but who were
not allocated the project in question submit uncompetitively high bids; and/or (3) when a
contractor who was not part of the scheme submitted a competitive, low-cost bid, falsely
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reporting an inflated bid amount to Target so that the company that participated in the bid-
rigging scheme appeared to be the low bidder. The Defendant paving companies collaborated
with each other and with LCH by refraining from submitting competitive bids reflecting actual
market pricing on any project that had been allocated to another member of the bid rigging
scheme, e.g., Rose Paving submitted non-competitive bids for projects allocated to United
Paving; Asphalt Maintenance submitted non-competitive bids for projects allocated to American
Pavement, etc. As a result of Defendants’ bid-rigging scheme, Target paid prices for paving
work that were substantially higher than competitive rates in the relevant geographic areas.
c. With the knowledge and cooperation of the other Defendants, LCH
abdicated its contractual responsibility to oversee the work of the paving contractors. In
numerous instances, LCH appointed an employee of the contractor itself (or a subcontractor) to
oversee and certify the completion of its own work.
d. Rather than ensuring that the work on which the Defendants had bid was
fully performed, LCH agreed with the Defendant contractors that they would perform only a
portion of the work, but would invoice Target as though all of the work which they contracted to
do had been performed. In many cases, the most costly work in the contracts—the removal and
replacement of asphalt all the way down to the subgrade—was either not performed at all or was
performed in amounts far less than those called for in the contract. This fraud was concealed by
applying a surface overlay of asphalt, which provided the outward appearance of completely new
pavement.
e. LCH and the Defendant contractors would falsely certify to Target that all
of the work had been completed; the Defendant contractor would submit a fraudulent invoice
seeking payment from Target for all of the work called for in the contract; and LCH would
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submit a fraudulent invoice to Target based upon a percentage of the entire project cost,
including that portion of the work which was not in fact performed by the Defendant contractors.
As a result, on multiple projects, in multiple states, Target paid LCH and Defendant contractors
hundreds of thousands of dollars for work that was never actually performed.
f. On information and belief, LCH demanded and received kickbacks from
the Defendant contractors as further compensation for its role in the fraudulent scheme.
13. In June 2011, Target conducted a “sourcing event” relating to its parking lot
maintenance program in Minneapolis, Minnesota. Leslie Bailey of LCH, along with
representatives of the Defendant contractors, including Sabas Trujillo and David Brown of
United Paving, Tim Helstad and Roger Myers of American Pavement, and Dave Rivers and C.B.
Kuzlik of Rose Paving, traveled to Minnesota and participated in the event on behalf of their
respective companies. Upon information and belief, the Defendant contractors conspired both in
advance of the sourcing event and during the event itself to fix prices among themselves for
Target’s paving work. At the sourcing event, each contractor was asked to prepare proposed
“archetype prices” (i.e., unit-prices—$X per square foot for task A; $Y per square foot for task
B, etc.) for the various types of work that are involved in parking lot repair and maintenance.
Subsequent to the sourcing event, Target changed its asphalt procurement practices so that
contracts were awarded on the basis of each contractor’s archetype pricing. Contractors were
assigned primary responsibility for stores on a geographic basis. As a result, the bid rigging
scheme that Defendants had engaged in could no longer be carried out in the same manner. The
remainder of the scheme, with respect to non-performance of the work, continued to operate.
The Defendant paving contractors participated in the scheme with knowledge of the participation
of the other Defendant paving contractors, pursuant to a single, common enterprise, the purpose
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of which was to defraud Target in connection with Target’s parking lot repair and maintenance
projects.
14. The archetype pricing approach resulted in significantly lower unit prices for
asphalt work, thus confirming that Defendants’ bid rigging scheme had caused inflated and non-
competitive prices to be paid by Target in the years prior to 2011.
United Paving: Cypress, CA (T-0229), Billings, MT (T-0171), and Peoria, AZ (T-0825).
15. Defendants implemented their fraudulent scheme on at least the following
projects that were performed by United Paving: Cypress, California (T-0229), Billings, Montana
(T-0171), and Peoria, Arizona (T-0825).
Cypress, California (T-0229)
16. On the Cypress project, Defendant Heutzenroeder submitted a “Pavement
Assessment” to Target in Minnesota, via interstate mail or wire, on or about May 18, 2010. This
Pavement Assessment defined the scope of work to be done on the Cypress parking lot and
defined the quantities of work to be performed in square feet, inches and so on. This Pavement
Assessment fraudulently overstated the size of parking lot area “Zone B” by over 90,000 square
feet. The Pavement Assessment, with its grossly overstated work quantities, was used as the
basis for bids submitted by contractors, including United Paving.
17. LCH represented to Target that United Paving was the low bidder on the project,
based on United Paving’s unit prices as applied to the work quantities identified by LCH. United
Paving’s bid proposal for Phase 1 of the project, in the amount of $590,345, and for Phase 2 of
the project, in the amount of $409,304, were transmitted to Target in Minnesota by interstate
mail or wire, on or about August 17, 2010, pursuant to Defendants’ fraudulent scheme. United
Paving’s proposal for both phases was subsequently accepted by Target.
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18. On or about July 27, 2010, LCH submitted an estimate for its work on Phase 1 of
the project via interstate mail or wire to Target in Minnesota, in the amount of $47,228. On or
about August 23, 2010, LCH submitted an estimate for its work on Phase 2 of the project via
interstate mail or wire to Target in Minnesota, in the amount of $32,744.
19. United Paving carried out the work on the Cypress project in August and
September 2010, ostensibly under the oversight of LCH. However, the quantity of work that
United Paving actually performed was far less than that which it had agreed to do and for which
it sought and received payment from Target. In addition to not performing over 90,000 square
feet of asphalt overlay work, United Paving also performed only a small fraction of the nearly
40,000 square feet of 6” asphalt removal and replacement work that it had contracted to perform.
20. On or about October 15, 2010 and November 3, 2010, at the direction or with the
consent of Defendant Trujillo, United Paving submitted to Target in Minnesota, via interstate
mail or wire, invoices for Phase 1 and Phase 2 of the Cypress project in the amounts of $590,345
and $409,304, respectively. These invoices misrepresented the scope of work that United Paving
had carried out on the Cypress project and the quantities of asphalt and other materials that it had
installed. This was done pursuant to the Defendants’ fraudulent scheme. LCH knew that all of
the work on the Cypress project had not been completed by United Paving, but nevertheless
certified falsely to Target that the work was complete.
21. On or about September 13, 2010, LCH submitted to Target in Minnesota, via
interstate mail or wire, invoices for Phase 1 and Phase 2 of the Cypress project in the amounts of
$47,228 and $32,744, respectively. These invoices sought payment from Target for work that
LCH did not perform, including the oversight and certification of completion of work that United
did not actually perform. Upon information and belief, LCH submitted its fraudulent invoices
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for the Cypress project with the knowledge and at the direction of Bailey, pursuant to
Defendants’ scheme to defraud Target.
22. Target has paid United Paving $999,649 and LCH $79,972, representing payment
in full for the Cypress project. Target would not have made these payments if it had known of
Defendants’ fraudulent scheme and Defendants’ misrepresentations regarding the status of
completion of the work.
Billings, Montana (T-0171)
23. On the Billings project, Defendant Heutzenroeder submitted a “Pavement
Assessment” to Target in Minnesota, via interstate mail or wire, on or about April 13, 2011. This
Pavement Assessment defined the scope of work to be done on the Billings parking lot and
defined the quantities of work to be performed in square feet, inches and so on.
24. By the date of the Billings project, Target had converted to the archetype pricing
system, so United Paving was automatically selected as the contractor for the Billings project
based on geography.
25. United Paving carried out its work on the Billings project, using the services of a
subcontractor, during August and September 2011. This work was ostensibly done under the
oversight of LCH. However, the quantity of work that United Paving actually performed was far
less than that which it had agreed to do and for which it sought and received payment from
Target. In fact, United directed its subcontractor to install less than one-half of the asphalt and
other materials required for the project as defined by LCH and included in United Paving’s
contract with Target.
26. On or about September 7, 2011, LCH submitted to Target in Minnesota, via
interstate mail or wire, as-built drawings for the Billings project that represented falsely that all
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of the work on the project was complete. Upon information and belief, this was done with the
knowledge and at the direction of Bailey.
27. On or about September 13, 2011, at the direction or with the consent of Defendant
Trujillo, United Paving submitted to Target in Minnesota, via interstate mail or wire, its invoice
for the Billings project in the amount of $395,889. This invoice misrepresented the scope of
work that United Paving had carried out on the Billings project and the quantities of asphalt and
other materials that it installed. This was done pursuant to the Defendants’ fraudulent scheme.
LCH knew that all of the work on the Billings project had not been completed by United Paving,
but nevertheless certified falsely to Target that the work was complete.
28. On or about September 28, 2011, LCH submitted to Target in Minnesota, via
interstate mail or wire, an invoice for the Billings project in the amount of $26,143. This invoice
sought payment from Target for work that LCH did not perform, including the oversight and
certification of completion of work that United did not actually perform. Upon information and
belief, LCH submitted its fraudulent invoices for the Billings project with the knowledge and at
the direction of Bailey, pursuant to Defendants’ scheme to defraud Target.
29. Target has paid United Paving $395,889 and LCH $26,143, representing payment
in full for the Billings project. Target would not have made these payments if it had known of
Defendants’ fraudulent scheme and Defendants’ misrepresentations regarding the status of
completion of the work.
Peoria, Arizona (T-0825)
30. On the Peoria project, LCH submitted a “Pavement Assessment” to Target in
Minnesota, via interstate mail or wire, on or about February 21, 2011. This Pavement
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Assessment defined the scope of work to be done on the Peoria parking lot and defined the
quantities of work to be performed in square feet, inches and so on.
31. On or about September 13, 2011, United Paving transmitted by interstate mail or
wire to Target in Minnesota its bid proposal to perform the Peoria work as defined by LCH’s
Pavement Assessment, and agreed to carry out that work.
32. United Paving carried out its work on the Peoria project, using the services of a
subcontractor, American Asphalt, during September 2011. This work was ostensibly done under
the oversight of LCH. However, the quantity of work that United Paving (via its subcontractor)
actually performed was far less than that which it had agreed to do and for which it sought and
received payment from Target. In fact, United directed its subcontractor to install less than one-
half of the asphalt and other materials required for the project as defined by LCH and included in
United Paving’s contract with Target.
33. On or about September 22, 2011, at the direction or with the consent of Defendant
Trujillo, United Paving submitted to Target in Minnesota, via interstate mail or wire, its invoice
for the Peoria project in the amount of $1,074,810, together with a representation that it had
completed all of the work within its contractual scope at the Peoria store. This invoice
misrepresented the scope of work that United Paving had carried out on the Peoria project and
the quantities of asphalt and other materials that it installed. This was done pursuant to the
Defendants’ fraudulent scheme. Trujillo, LCH, Bailey and Heutzenroeder knew that all of the
work on the Peoria project had not been completed by United Paving, but nevertheless certified
falsely to Target that the work was complete.
34. On or about October 3, 2011, LCH submitted to Target in Minnesota, via
interstate mail or wire, an invoice for the Peoria project in the amount of $69,624. This invoice
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sought payment from Target for work that LCH did not perform, including the oversight and
certification of completion of work that United did not actually perform. Upon information and
belief, LCH submitted its fraudulent invoice for the Peoria project with the knowledge and at the
direction of Bailey, pursuant to Defendants’ scheme to defraud Target.
35. Target has paid United Paving $1,074,810 and LCH $69,624, representing
payment in full for the Peoria project. Target would not have made these payments if it had
known of Defendants’ fraudulent scheme and Defendants’ misrepresentations regarding the
status of completion of the work.
American Pavement: Skyline, VA (T-1893), Neshaminy, PA (T-1183), and Monroeville, PA (T-1219) 36. Defendants implemented their fraudulent scheme on at least the following
projects that were performed by American Pavement: Skyline, Virginia (T-1893), Neshaminy,
Pennsylvania (T-1183), and Monroeville, Pennsylvania (T-1219).
Skyline, Virginia (T-1893)
37. On the Skyline project, LCH submitted a “Pavement Assessment” to Target in
Minnesota, via interstate mail or wire. This Pavement Assessment defined the scope of work to
be done on the Skyline parking lot and defined the quantities of work to be performed in square
feet, inches and so on.
38. American Pavement prepared bids for the two phases of the Skyline project,
totaling $488,203, and transmitted them to Target in Minnesota via interstate mail or wire on or
about July 6, 2010 and August 24, 2010. American Pavement’s proposals for both phases were
subsequently accepted by Target.
39. American Pavement carried out the work on the Skyline project in September
2010, ostensibly under the oversight of LCH. However, the quantity of work that American
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Pavement actually performed was far less than that which it had agreed to do and for which it
sought and received payment from Target. In fact, American Pavement installed less than one-
half of the asphalt and other materials required for the project as defined by LCH and included in
American Pavement’s contract with Target.
40. On or about September 21, 2010, at the direction or with the consent of Defendant
Helstad, American Pavement submitted to Target in Minnesota, via interstate mail or wire, its
invoice for the Skyline project in the amount of $488,203. This invoice misrepresented the
scope of work that American Pavement had carried out on the Skyline project. This was done
pursuant to the Defendants’ fraudulent scheme. Upon information and belief, LCH, American
Pavement, Bailey, Heutzenroeder, and/or Helstad knew that all of the work on the Skyline
project had not been completed by American Pavement, but nevertheless certified falsely to
Target that the work was complete.
41. On or about September 21, 2010, LCH submitted to Target in Minnesota, via
interstate mail or wire, invoices for Phase 1 and Phase 2 of the Skyline project in the amounts of
$31,884 and $7,972, respectively. These invoices sought payment from Target for work that
LCH did not perform, including the oversight and certification of completion of work that
American Pavement did not actually perform. Upon information and belief, LCH submitted its
fraudulent invoices for the Skyline project with the knowledge and at the direction of Bailey,
pursuant to Defendants’ scheme to defraud Target.
42. Target has paid American Pavement $488,203 and LCH $39,856, representing
payment in full for the Skyline project. Target would not have made these payments if it had
known of Defendants’ fraudulent scheme and Defendants’ misrepresentations regarding the
status of completion of the work.
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Neshaminy, Pennsylvania (T-1183)
43. On the Neshaminy project, LCH submitted a “Pavement Assessment” to Target in
Minnesota, via interstate mail or wire. This Pavement Assessment defined the scope of work to
be done on the Neshaminy parking lot and defined the quantities of work to be performed in
square feet, inches and so on.
44. Helstad, on behalf of American Pavement prepared bids for the two phases of the
Neshaminy project, totaling $476,085, and transmitted them to Target in Minnesota via interstate
mail or wire on or about July 9, 2010 and August 24, 2010, respectively. American Pavement’s
proposals for both phases were subsequently accepted by Target.
45. American Pavement carried out the work on the Neshaminy project in August and
September 2010, ostensibly under the oversight of LCH. However, the quantity of work that
American Pavement actually performed was far less than that which it had agreed to do and for
which it sought and received payment from Target. In fact, American Pavement installed only
one-half of the asphalt and other materials required for the project as defined by LCH and
included in American Pavement’s contract with Target.
46. On or about September 16, 2010 and October 4, 2010, at the direction or with the
consent of Defendant Helstad, American Pavement submitted to Target in Minnesota, via
interstate mail or wire, invoices for the Neshaminy project in the total amount of $476,085.
These invoices misrepresented the scope of work that American Pavement had carried out on the
Neshaminy project. This was done pursuant to the Defendants’ fraudulent scheme.
47. On or about August 30, 2010 and September 20, 2010, LCH submitted to Target
in Minnesota, via interstate mail or wire, its invoices for the Neshaminy project in the total
amount of $38,087. These invoices sought payment from Target for work that LCH did not
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perform, including the oversight and certification of completion of work that American
Pavement did not actually perform. Upon information and belief, LCH submitted its fraudulent
invoices for the Neshaminy project with the knowledge and at the direction of Bailey, pursuant
to Defendants’ scheme to defraud Target.
48. Target has paid American Pavement $476,085 and LCH $38,087, representing
payment in full for the Neshaminy project. Target would not have made these payments if it had
known of Defendants’ fraudulent scheme and Defendants’ misrepresentations regarding the
status of completion of the work.
Monroeville, PA (T-1219)
49. On the Monroeville project, LCH submitted a “Pavement Assessment” to Target
in Minnesota, via interstate mail or wire. This Pavement Assessment defined the scope of work
to be done on the Monroeville parking lot and defined the quantities of work to be performed in
square feet, inches and so on.
50. Helstad, on behalf of American Pavement, prepared a bid for the Monroeville
project, totaling $307,444, and transmitted it to Target in Minnesota via interstate mail or wire.
American Pavement’s bid proposal for the Monroeville project was subsequently accepted by
Target.
51. American Pavement carried out the work on the Monroeville project in August
2010, ostensibly under the oversight of LCH. However, the quantity of work that American
Pavement actually performed was far less than that which it had agreed to do and for which it
sought and received payment from Target. In fact, American Pavement installed only
approximately one-half of the asphalt and other materials required for the project as defined by
LCH and included in American Pavement’s contract with Target.
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52. On or about August 30, 2010, American Pavement submitted to Target, via
interstate mail or wire, a Waiver of Lien form that represented that work on the Monroeville
project had been completed and requested payment of $314,671. On or about September 16,
2010, at the direction or with the consent of Defendant Helstad, American Pavement submitted
to Target in Minnesota, via interstate mail or wire, an invoice for the Monroeville project in the
total amount of $314,671. This invoice misrepresented the scope of work that American
Pavement had carried out on the Monroeville project. This was done pursuant to the Defendants’
fraudulent scheme.
53. On or about August 31, 2010, LCH certified to Target in Minnesota, via interstate
mail or wire, that American Pavement had satisfactorily completed its work on the Monroeville
project. This certification was false.
54. On or about August 31, 2010, LCH submitted to Target in Minnesota, via
interstate mail or wire, its invoice for the Monroeville project in the amount of $25,174. This
invoice sought payment from Target for work that LCH did not perform, including the oversight
and certification of completion of work that American Pavement did not actually perform. Upon
information and belief, LCH submitted its fraudulent invoice for the Monroeville project with the
knowledge and at the direction of Bailey, pursuant to Defendants’ scheme to defraud Target.
55. Target has paid American Pavement $341,671 and LCH $25,174, representing
payment in full for the Monroeville project. Target would not have made these payments if it had
known of Defendants’ fraudulent scheme and Defendants’ misrepresentations regarding the
status of completion of the work.
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Asphalt Maintenance: Hurst, TX (T-1766), Augusta, GA (T-1090), and Irving, TX (T-0255) 56. Defendants implemented their fraudulent scheme on at least the following
projects that were performed by Asphalt Maintenance: Hurst, Texas (T-1766), Augusta, Georgia
(T-1090), and Irving, Texas (T-0255).
Hurst, Texas (T-1766)
57. On the Hurst project, LCH submitted a “Pavement Assessment” to Target in
Minnesota, via interstate mail or wire. This Pavement Assessment defined the scope of work to
be done on the Hurst parking lot and defined the quantities of work to be performed in square
feet, inches and so on.
58. Asphalt Maintenance transmitted its proposal for the Hurst project via interstate
wire to Target in Minnesota. Target approved Asphalt Maintenance’s proposal, also via interstate
wire.
59. Asphalt Maintenance carried out the work on the Hurst project in August 2010,
ostensibly under the oversight of LCH. However, the quantity of work that Asphalt Maintenance
actually performed was far less than that which it had agreed to do and for which it sought and
received payment from Target. In fact, Asphalt Maintenance installed less than one-half of the
asphalt and other materials required for the project as defined by LCH and included in Asphalt
Maintenance’s contract with Target.
60. On or about September 16, 2010, at the direction or with the consent of Defendant
Stinson, Asphalt Maintenance submitted to Target in Minnesota, via interstate mail or wire, an
invoice for the Hurst project in the amount of $277,335. This invoice misrepresented the scope
of work that Asphalt Maintenance had carried out on the Hurst project. This was done pursuant
to the Defendants’ fraudulent scheme.
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61. On or about September 14, 2010, LCH certified to Target in Minnesota, via
interstate mail or wire, that Asphalt Maintenance had satisfactorily completed its work on the
Hurst project. This representation was false and, upon information and belief, was known to be
false by Bailey and Heutzenroeder. These misrepresentations by Asphalt Maintenance and LCH
were made pursuant to Defendants’ scheme to defraud Target.
62. On or about August 31, 2010, LCH submitted to Target in Minnesota, via
interstate mail or wire, its invoice for the Hurst project in the amount of $24,102. This invoice
sought payment from Target for work that LCH did not perform, including the oversight and
certification of completion of work that Asphalt Maintenance did not actually perform. Upon
information and belief, LCH submitted its fraudulent invoice for the Hurst project with the
knowledge and at the direction of Bailey, pursuant to Defendants’ scheme to defraud Target.
63. On or about October 14, 2010 and September 24, 2010, respectively, Target paid
Asphalt Maintenance $277,335 and LCH $24,102, representing payment in full for the Hurst
project. Target would not have made these payments if it had known of Defendants’ fraudulent
scheme and Defendants’ misrepresentations regarding the status of completion of the work.
Augusta, Georgia (T-1090)
64. On the Augusta project, LCH submitted a “Pavement Assessment” to Target in
Minnesota, via interstate mail or wire. This Pavement Assessment defined the scope of work to
be done on the Augusta parking lot and defined the quantities of work to be performed in square
feet, inches and so on.
65. On or about July 2, 2010, Stinson, on behalf of Asphalt Maintenance, sent to
Target in Minnesota via interstate mail or wire a Revised Bid Proposal for the Augusta project of
$375,064. Stinson subsequently sent Target via interstate mail or wire a Bid Proposal for Phase 2
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of the Augusta project in the amount of $134,136.50. Asphalt Maintenance’s bid proposals for
the Augusta project were subsequently accepted by Target.
66. On or about July 21, 2010, LCH transmitted an estimate of its fee for Phase 1 of
the Augusta project, in the amount of $30,005, to Target in Minnesota via interstate mail or wire.
67. Asphalt Maintenance carried out the work on the Augusta project in September
2010, ostensibly under the oversight of LCH. However, the quantity of work that Asphalt
Maintenance actually performed was far less than that which it had agreed to do and for which it
sought and received payment from Target. In fact, Asphalt Maintenance installed only
approximately one-half of the asphalt and other materials required for the project as defined by
LCH and included in Asphalt Maintenance’s contract with Target.
68. On or about September 14, 2010, LCH certified to Target in Minnesota, via
interstate mail or wire, that Asphalt Maintenance had satisfactorily completed its work on the
Augusta project. This certification was false.
69. On or about On October 4, 2010, and October 15, 2010, respectively, Stinson, on
behalf of Asphalt Maintenance, submitted to Target in Minnesota, via interstate mail or wire,
invoices for the Augusta project in the total amount of $509,201. These invoices misrepresented
the scope of work that Asphalt Maintenance had carried out on the Augusta project. This was
done pursuant to the Defendants’ fraudulent scheme.
70. On or about September 14, 2010, LCH submitted to Target in Minnesota, via
interstate mail or wire, its invoice for the Augusta project in the amount of $40,736. This invoice
sought payment from Target for work that LCH did not perform, including the oversight and
certification of completion of work that Asphalt Maintenance did not actually perform. Upon
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information and belief, LCH submitted its fraudulent invoice for the Augusta project with the
knowledge and at the direction of Bailey, pursuant to Defendants’ scheme to defraud Target.
71. Target has paid Asphalt Maintenance $509,201 and LCH $40,736, representing
payment in full for the Augusta project. Target would not have made these payments if it had
known of Defendants’ fraudulent scheme and Defendants’ misrepresentations regarding the
status of completion of the work.
Irving, Texas (T-0255)
72. On the Irving project, LCH submitted a “Pavement Assessment” to Target in
Minnesota, via interstate mail or wire. This Pavement Assessment defined the scope of work to
be done on the Irving parking lot and defined the quantities of work to be performed in square
feet, inches and so on.
73. Subsequently, LCH purported to conduct a competitive bidding process for the
Irving project and received bids from two contractors. LCH and Bailey represented to Target in a
communication sent via interstate mail or wire that Asphalt Maintenance was the low bidder on
the Irving project. In fact, another contractor was the low bidder. Subsequently, LCH and Bailey
transmitted to Target via interstate mail or wire a spreadsheet that purported to show the bids that
LCH had obtained from contractors on various projects, including Irving. In that spreadsheet,
LCH altered the bid that was actually submitted by another contractor so that it would appear
that Asphalt Maintenance was the low bidder.
74. On or about July 2, 2010, Stinson, on behalf of Asphalt Maintenance, sent to
Target in Minnesota via interstate mail or wire a bid proposal for the Irving project of $332,896.
Asphalt Maintenance’s bid proposal for the Irving project was subsequently accepted by Target.
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75. On or about August 20, 2010, LCH transmitted an estimate of its fee for the
Irving project, in the amount of $26,632, to Target in Minnesota via interstate mail or wire.
76. Asphalt Maintenance carried out the work on the Irving project in August 2010,
ostensibly under the oversight of LCH. However, the quantity of work that Asphalt Maintenance
actually performed was far less than that which it had agreed to do and for which it sought and
received payment from Target. In fact, Asphalt Maintenance installed less than one-half of the
asphalt and other materials required for the project as defined by LCH and included in Asphalt
Maintenance’s contract with Target.
77. On or about August 22, 2010, Stinson transmitted to Target in Minnesota, via
interstate mail or wire, a waiver of lien form that represented, falsely, that Asphalt Maintenance
had completed its scope of work on the Irving project and was entitled to payment of its contract
price of $332,897.
78. On or about September 16, 2010, at the direction or with the consent of Defendant
Stinson, Asphalt Maintenance, submitted to Target in Minnesota, via interstate mail or wire, an
invoice for the Irving project in the amount of $332,897. This invoice misrepresented the scope
of work that Asphalt Maintenance had carried out on the Irving project. This was done pursuant
to the Defendants’ fraudulent scheme.
79. On or about August 23, 2010, LCH submitted to Target in Minnesota, via
interstate mail or wire, its invoice for the Irving project in the amount of $26,632. This invoice
sought payment from Target for work that LCH did not perform, including the oversight and
certification of completion of work that Asphalt Maintenance did not actually perform. Upon
information and belief, LCH submitted its fraudulent invoice for the Irving project with the
knowledge and at the direction of Bailey, pursuant to Defendants’ scheme to defraud Target.
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80. Target has paid Asphalt Maintenance $332,897 and LCH $26,632, representing
payment in full for the Irving project. Target would not have made these payments if it had
known of Defendants’ fraudulent scheme and Defendants’ misrepresentations regarding the
status of completion of the work.
Rose Paving: Cicero, IL (T-0732), Henrietta, NY (T-1157), and Lake Zurich, IL (T-1036)
81. Defendants implemented their fraudulent scheme on at least the following
projects that were performed by Rose Paving: Cicero, Illinois (T-0732), Henrietta, New York (T-
1157), and Lake Zurich, Illinois (T-1036).
Cicero, Illinois (T-0732)
82. On the Cicero project, LCH submitted a “Pavement Assessment” to Target in
Minnesota, via interstate mail or wire. This Pavement Assessment defined the scope of work to
be done on the Cicero parking lot and defined the quantities of work to be performed in square
feet, inches and so on.
83. Subsequently, LCH purported to conduct a competitive bidding process for the
Cicero project and received bids from two contractors. LCH and Bailey represented to Target in
a communication sent via interstate mail or wire that Rose Paving was the low bidder on the
Cicero project. In fact, another contractor was the low bidder. Subsequently, LCH and Bailey
transmitted to Target via interstate mail or wire a spread sheet that purported to show the bids
that LCH had obtained from contractors on various projects, including Cicero. In that spread
sheet, LCH altered the bid that was actually submitted by another contractor so that it would
appear that Rose Paving was the low bidder.
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84. On or about June 23, 2010, Rose Paving sent to Target in Minnesota via interstate
mail or wire its bid proposal for the Cicero project of $367,145. Rose Paving’s bid proposal for
the Cicero project was subsequently accepted by Target.
85. On or about July 21, 2010, LCH transmitted an estimate of its fee for the Cicero
project, in the amount of $29,372, to Target in Minnesota via interstate mail or wire.
86. Rose Paving carried out the work on the Cicero project in September 2010,
ostensibly under the oversight of LCH. However, the quantity of work that Rose Paving actually
performed was far less than that which it had agreed to do and for which it sought and received
payment from Target. In fact, Rose Paving only installed approximately two-thirds of the
asphalt and other materials required for the project as defined by LCH and included in Rose
Paving’s contract with Target.
87. On or about October 15, 2010, Rose Paving submitted to Target in Minnesota, via
interstate mail or wire, an invoice for the Cicero project in the amount of $367,145. This invoice
misrepresented the scope of work that Rose Paving had carried out on the Cicero project. This
was done pursuant to the Defendants’ fraudulent scheme.
88. On or about September 14, 2010, LCH submitted to Target in Minnesota, via
interstate mail or wire, its invoice for the Cicero project in the amount of $29,372. This invoice
sought payment from Target for work that LCH did not perform, including the oversight and
certification of completion of work that Rose Paving did not actually perform. Upon information
and belief, LCH submitted its fraudulent invoice for the Cicero project with the knowledge and
at the direction of Bailey, pursuant to Defendants’ scheme to defraud Target.
89. Target has paid Rose Paving $367,145 and LCH $29,372, representing payment
in full for the Cicero project. Target would not have made these payments if it had known of
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Defendants’ fraudulent scheme and Defendants’ misrepresentations regarding the status of
completion of the work.
Henrietta, New York (T-1157)
90. On the Henrietta project, LCH submitted a “Pavement Assessment” to Target in
Minnesota, via interstate mail or wire. This Pavement Assessment defined the scope of work to
be done on the Henrietta parking lot and defined the quantities of work to be performed in square
feet, inches and so on.
91. On or about June 23, 2010, Rose Paving sent to Target in Minnesota via interstate
wire a bid proposal for Phase 1 of the Henrietta project in the amount of $824,000. Subsequently,
Rose Paving sent to Target in Minnesota via interstate wire a bid proposal for Phase 2 of the
Henrietta project in the amount of $504,610. Rose Paving’s bid proposals for the Henrietta
project were subsequently accepted by Target.
92. On or about July 21, 2010, LCH transmitted an estimate of its fee for Phase 1 of
the Henrietta project, in the amount of $65,920, to Target in Minnesota via interstate mail or
wire.
93. Rose Paving carried out the work on the Henrietta project in December 2010,
ostensibly under the oversight of LCH. However, the quantity of work that Rose Paving actually
performed was far less than that which it had agreed to do and for which it sought and received
payment from Target. In fact, Rose Paving installed less than one half of the asphalt and other
materials required for the project as defined by LCH and included in Rose Paving’s contract with
Target.
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94. On or about October 19, 2010, LCH certified to Target in Minnesota, via
interstate mail or wire, that Rose Paving had satisfactorily completed its work on the Henrietta
project. This certification was false.
95. On or about October 15, 2010 and November 18, 2010, respectively, Rose Paving
submitted to Target in Minnesota, via interstate mail or wire, invoices for the Henrietta project in
the total amount of $1,328,610. These invoices misrepresented the scope of work that Rose
Paving had carried out on the Henrietta project. This was done pursuant to the Defendants’
fraudulent scheme.
96. On or about October 19, 2010, LCH submitted to Target in Minnesota, via
interstate mail or wire, invoices for Phase 1 and Phase 2 of the Henrietta project in the amounts
of $65,920 and $43,598, respectively. This invoice sought payment from Target for work that
LCH did not perform, including the oversight and certification of completion of work that Rose
Paving did not actually perform. Upon information and belief, LCH submitted its fraudulent
invoice for the Henrietta project with the knowledge and at the direction of Bailey, pursuant to
Defendants’ scheme to defraud Target.
97. Target has paid Rose Paving $1,328,610 and LCH $109,518, representing
payment in full for the Henrietta project. Target would not have made these payments if it had
known of Defendants’ fraudulent scheme and Defendants’ misrepresentations regarding the
status of completion of the work.
Lake Zurich, Illinois (T-1036)
98. On the Lake Zurich project, LCH submitted a “Pavement Assessment” to Target
in Minnesota, via interstate mail or wire. This Pavement Assessment defined the scope of work
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to be done on the Lake Zurich parking lot and defined the quantities of work to be performed in
square feet, inches and so on.
99. Subsequently, LCH purported to conduct a competitive bidding process for the
Lake Zurich project and received bids from two contractors. LCH and Bailey represented to
Target in a communication sent via interstate mail or wire that Rose Paving was the low bidder
on the Lake Zurich project. In fact, another contractor was the low bidder. Subsequently, LCH
and Bailey transmitted to Target via interstate mail or wire a spread sheet that purported to show
the bids that LCH had obtained from contractors on various projects, including Lake Zurich. In
that spread sheet, LCH altered the bid that was actually submitted by another contractor so that it
would appear that Rose Paving was the low bidder.
100. On or about July 13, 2010, Rose Paving sent to Target in Minnesota via interstate
wire its bid proposal for the Lake Zurich project in the amount of $658,144. Rose Paving’s bid
proposal for the Lake Zurich project was subsequently accepted by Target.
101. On or about July 21, 2010, LCH transmitted an estimate of its fee for the Lake
Zurich project, in the amount of $52,652, to Target in Minnesota via interstate mail or wire.
102. Rose Paving carried out the work on the Lake Zurich project in October 2010,
ostensibly under the oversight of LCH. However, the quantity of work that Rose Paving actually
performed was far less than that which it had agreed to do and for which it sought and received
payment from Target.
103. On or about November 1, 2010, LCH certified to Target in Minnesota that Rose
Paving had satisfactorily completed its work on the Lake Zurich project. This certification was
false.
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104. On or about October 29, 2010, Rose Paving transmitted to Target in Minnesota
via interstate mail or wire a lien waiver form that represented that Rose Paving had completed its
work on the Lake Zurich project. On or about November 17, 2010, Rose Paving submitted to
Target in Minnesota, via interstate mail or wire, an invoice for the Lake Zurich project in the
total amount of $658,144. This invoice misrepresented the scope of work that Rose Paving had
carried out on the Lake Zurich project. This was done pursuant to the Defendants’ fraudulent
scheme.
105. On or about November 1, 2010, LCH submitted to Target in Minnesota, via
interstate mail or wire, its invoice for the Lake Zurich project in the amount of $52,652. This
invoice sought payment from Target for work that LCH did not perform, including the oversight
and certification of completion of work that Rose Paving did not actually perform. Upon
information and belief, LCH submitted its fraudulent invoice for the Lake Zurich project with the
knowledge and at the direction of Bailey and Heutzenroeder, pursuant to Defendants’ scheme to
defraud Target.
106. Target has paid Rose Paving $658,144 and LCH $52,652, representing payment
in full for the Lake Zurich project. Target would not have made these payments if it had known
of Defendants’ fraudulent scheme and Defendants’ misrepresentations regarding the status of
completion of the work.
107. Upon information and belief, Defendants’ scheme to defraud Target began shortly
after LCH became a consultant for Target in early 2009. It continued until May 2012, when
Target terminated its relationships with Defendants.
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108. Upon information and belief, the projects specifically identified herein are not the
only ones where Defendants perpetrated their scheme to defraud Target. Discovery will disclose
what other projects may also have been involved.
109. Paving contractors and individuals other than those named as Defendants may
also have participated in Defendants’ fraudulent scheme.
110. While the full extent of Target’s damages are not yet known, Target believes that
Defendants have obtained millions of dollars from Target through the fraudulent scheme alleged
in this Complaint.
COUNT ONE
CIVIL RICO (ALL DEFENDANTS)
111. The allegations of paragraphs 1 through 110 are incorporated herein by reference
and realleged.
112. Target is a “person” within the meaning of 18 U.S.C. §1961(3).
113. Defendants are each “persons” within the meaning of 18 U.S.C. §1961(3).
114. Defendants are a group of corporations and individuals associated in fact so as to
form an “enterprise” for the purpose of defrauding Target and other victims and for other illicit
purposes (hereinafter the Paving Fraud Enterprise) within the meaning of 18 U.S.C. §1961(4).
115. The Paving Fraud Enterprise was engaged in, and its activities affected, interstate
commerce.
116. Defendants and other employees of the corporate Defendants participated directly
or indirectly in the conduct of the affairs of the Paving Fraud Enterprise through a pattern of
racketeering activity within the meaning of 18 U.S.C. §1961(5) as described herein, in violation
of 18 U.S.C. §1962(c) and (d).
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117. Defendants and other employees of the corporate Defendants conducted and
participated in the affairs of the Paving Fraud Enterprise in order to carry out a pattern of
racketeering with multiple aims:
(a) to fraudulently obtain money by committing various frauds;
(b) to defraud Target in order to enrich themselves; and
(c) to corruptly conceal their racketeering activity by creating false documents
and providing such false documents to Target and others.
118. The racketeering activity of the Paving Fraud Enterprise included, without
limitation, the use of interstate mails and wires for the purpose of executing a scheme to obtain
money or property by means of false pretenses, representations, or promises. The racketeering
activity thus constitutes multiple, related acts that are indictable under the federal mail and wire
fraud statutes, 18 U.S.C. §§1341 and 1343, and is within the scope of 18 U.S.C. §1961(1)(B)
and (5).
119. Each of the following mailings and/or interstate wire communications constitutes
a separate act of racketeering and were all undertaken with the specific intent to be part of and
in furtherance of the frauds perpetrated upon Target and others:
LCH and Heutzenroeder’s submission of a “Pavement Assessment” for the Cypress
project to Target on or about May 18, 2010.
United Paving’s submission of its bid proposals for the Cypress project to Target.
LCH’s submission of its estimates for its fees on the Cypress project to Target in July and
August 2010.
United Paving’s and Trujillo’s submission to Target of invoices for the Cypress project
on or about October 15, 2010, and November 3, 2000, which falsely represented that
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United Paving had completed its work on that project and was entitled to payment of
$999,649.
LCH’s false certification to Target that United Paving had properly performed all of the
work which it contracted to perform on the Cypress project and submission of its own
invoices for the Cypress project on or about September 13, 2010.
LCH and Heutzenroeder’s submission of a “Pavement Assessment” for the Billings
project to Target on or about April 13, 2011.
LCH’s submission of as-built drawings to Target on or about September 7, 2011, which
falsely represented that all of United Paving’s work on the Billings project was complete.
United Paving’s and Trujillo’s submission to Target, on or about September 13, 2011, of
its invoice for the Billings project in the amount of $395,889, which falsely represented
that United Paving had completed its work on the Billings project and had installed all
quantities of materials required for the Billings project.
LCH’s and Bailey’s submission to Target, on or about September 28, 2011, of LCH’s
invoice in the amount of $26,143 for its services in connection with the Billings project.
LCH’s submission of a “Pavement Assessment” for the Peoria project to Target on or
about February 21, 2011.
United Paving’s and Trujillo’s submission to Target of its bid proposal for the Peoria
project, on or about September 13, 2011.
United Paving’s and Trujillo’s submission to Target, on or about September 22, 2011, of
an invoice for $1,074,810, which falsely represented that United Paving had completed
its work on the Peoria project and had installed all quantities required for the Peoria
project.
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LCH’s and Bailey’s submission to Target, on or about October 3, 2011, of LCH’s invoice
in the amount of $69,624 for its services in connection with the Peoria project.
LCH’s submission of a “Pavement Assessment” for the Skyline project to Target.
American Pavement’s transmission of its two bid proposals for the Skyline project,
totaling $488,203, to Target, on or about July 6, 2010 and August 24, 2010.
American Pavement’s transmission to Target, on or about October 4, 2010, of its invoices
in the amount of $488,203 for the Skyline project.
LCH’s false certification to Target that American Pavement had properly performed all
of the work which it had contracted to perform on the Skyline project and invoices for its
services on the Skyline project in the amounts of $31,884 and $7,972, on or about
September 21, 2010.
LCH’s submission of a “Pavement Assessment” for the Neshaminy project to Target.
American Pavement’s and Helstad’s submission to Target of bids for the two phases of
the Neshaminy project, totaling $476,085, on or about July 9, 2010 and August 24, 2010.
American Pavement’s transmission to Target of invoices for the Neshaminy project
totaling $476,085, on or about September 16, 2010 and October 4, 2010.
LCH’s transmission to Target of invoices for the Neshaminy project in the amount of
$38,087, on or about August 30, 2010 and September 20, 2010.
LCH’s submission of a “Pavement Assessment” for the Monroeville project to Target.
Helstad’s and American Pavement’s transmission of a proposal for the Monroeville
project to Target in the amount of $307,444.
American Pavement’s transmission to Target of a lien waiver form and invoice for the
Monroeville project in the amount of $314,671.
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LCH’s false certification to Target that American Pavement had satisfactorily completed
its work on the Monroeville project and its invoice in the amount of $25,174, on or about
August 27, 2010.
LCH’s submission to Target of a “Pavement Assessment” for the Hurst project.
Asphalt Maintenance’s transmission to Target of its proposal for the Hurst project.
Asphalt Maintenance’s and James Stinson’s transmission to Target of an invoice for the
Hurst project in the amount of $277,335, on or about October 4, 2010.
LCH’s transmission to Target of its invoice for payment of its fee for the Hurst project in
the amount of $24,102, on or about September 14, 2010.
LCH’s submission to Target of a “Pavement Assessment” for the Augusta project.
Asphalt Maintenance’s and Stinson’s transmission to Target of Bid Proposals for the
Augusta project, on or about July 2, 2010.
Asphalt Maintenance’s and Stinson’s transmission to Target of invoices for the Augusta
project, on or about October 4, 2010 and October 15, 2010.
LCH’s transmission to Target of invoices for the Augusta project, on or about September
6, 2010 and September 14, 2010.
LCH’s submission to Target of a “Pavement Assessment” for the Irving project.
LCH’s and Bailey’s interstate wire communication to Target to the effect that Asphalt
Maintenance was the low bidder on the Irving project.
LCH’s and Bailey’s transmission of a spreadsheet to Target that falsely reported
competing bids, and made Asphalt Maintenance appear to be the low bidder on the Irving
project.
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Asphalt Maintenance’s and Stinson’s submission to Target of a Bid Proposal for the
Irving project in the amount of $332,896, on or about July 2, 2010.
Asphalt Maintenance’s and Stinson’s transmission to Target, on or about August 22,
2010, of a waiver of lien form that falsely represented that Asphalt Maintenance had fully
performed its scope of work on the Irving project and was entitled to payment of its full
contract price of $332,897.
Asphalt Maintenance’s and Stinson’s transmission to Target, on or about September 16,
2010, of an invoice for the Irving project in the amount of $332,897.
LCH’s transmission of its invoices for the Irving project in the amount of $28,829, on or
about September 16, 2010.
LCH’s submission to Target of a “Pavement Assessment” for the Cicero project.
LCH’s and Bailey’s false representation to Target that Rose Paving was the low bidder
on the Cicero project.
LCH’s and Bailey’s transmission of a spreadsheet to Target that falsely showed that Rose
Paving was the low bidder on the Cicero project.
Rose Paving’s transmission to Target of its Bid Proposal for the Cicero project of
$367,145, on or about June 23, 2010.
LCH’s transmission of its estimate for its work on the Cicero project, in the amount of
$29,372, on or about July 21, 2010.
Rose Paving’s transmission to Target, on or about October 15, 2010, of an invoice that
falsely represented that Rose Paving had completed all of the work it contracted to do on
the Cicero project and requested payment of the full amount of Rose’s contract,
$367,145.
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LCH’s transmission to Target, on or about September 14, 2010, of its invoice for the
Cicero project in the amount of $29,372.
LCH’s submission to Target of a “Pavement Assessment” for the Henrietta project.
Rose Paving’s transmission to Target of a Bid Proposal for Phase 1 of the Henrietta
project in the amount of $824,000, on or about June 23, 2010.
Rose Paving’s subsequent transmission to Target of a second Bid Proposal for Phase 2 of
the Henrietta project in the amount of $504,610.
LCH’s transmission to Target of its estimate of its fee for Phase 1 of the Henrietta project
in the amount of $65,920, on or about July 21, 2010.
Rose Paving’s transmission to Target of invoices requesting payment in full of Rose
Paving’s contract price for the Henrietta project, $1,328,610, on or about October 15,
2010 and November 18, 2010.
LCH’s transmission to Target of its invoice for the Henrietta project in the amount of
$109,518, on or about October 19, 2010.
LCH’s submission to Target of a “Pavement Assessment” for the Lake Zurich project.
LCH’s and Bailey’s false representation to Target that Rose Paving was the low bidder
on the Lake Zurich project.
LCH’s and Bailey’s transmission of a spreadsheet to Target that falsely showed that Rose
Paving was the low bidder on the Lake Zurich project.
Rose Paving’s transmission to Target of its Bid Proposal for the Lake Zurich project in
the amount of $658,144, on or about July 13, 2010.
LCH’s transmission to Target of its estimate of its fee for the Lake Zurich project in the
amount of $52,652, on or about July 21, 2010.
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Rose Paving’s transmission to Target of a lien waiver form that represented falsely that
Rose Paving had completed its contractual scope of work on the Lake Zurich project and
was entitled to full payment of its contract price, on or about October 29, 2010.
Rose Paving’s transmission to Target of its invoice for the Lake Zurich project, on or
about November 17, 2010, in the amount of $658,134.
LCH’s false certification to Target that Rose Paving had properly performed all of the
work which it had contracted to perform on the Lake Zurich project, together with its
invoice in the amount of $52,652, for the Lake Zurich project.
120. Defendants’ racketeering activity constituted a pattern of racketeering activity
within the meaning of 18 U.S.C. §1961(5). Defendants’ racketeering activity was both related
and continuous. As to relatedness, the predicate acts of racketeering activity are related to the
same or similar purposes, results and participants, and have the same goal, namely the
enrichment of Defendants and other possible members of the enterprise at the expense of Target,
and have the same methods of commission and are otherwise inter-related by distinguishing
characteristics, and are not isolated incidents. The pattern of racketeering activity was
sufficiently continuous under either the closed-end or open-end continuity standards. The
racketeering activity began in or about 2009 and continued until it was discovered by Target in
2012. The racketeering activity was a regular way for Defendants and the Paving Fraud
Enterprise to conduct business. Moreover, the racketeering activity would have continued
unabated if it had not been discovered and terminated, satisfying the open-end standard.
121. Target has been directly and proximately caused injury and financial loss by
reason of Defendants’ violation of 18 U.S.C. §1962. Accordingly, Target is entitled to recover
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threefold the damages it has sustained, as well as its costs of this suit, including reasonable
attorneys’ fees, all pursuant to 18 U.S.C. § 1964(c).
COUNT TWO
BREACH OF CONTRACT (LCH)
122. The allegations of paragraphs 1 through 121 are incorporated herein by reference
and re-alleged.
123. Prior to February 2011, Target and LCH had an express contract, or in the
alternative an implied contract, that arose from the parties’ multiple oral and written expressions
of intent and from their course of dealing. That contract required, inter alia, that LCH discharge
certain duties in connection with Target paving contracts, including but not limited to assessing
the condition of a store’s parking lot and the need for repair or maintenance; identifying the
quantities of work required to perform such repair and maintenance; conducting a competitive
bidding process to select a contractor for the project; scheduling the work; interfacing with
Target personnel at the store as well as in Target’s home office; overseeing the work of the
contractor and ensuring that it completed the work that was included in the project scope and that
its work was of good quality; certifying to Target that the work had been properly completed;
and exercising due care in the discharge of these and other contractual duties.
124. Beginning in February 2011, LCH entered into a contract with Target titled a
“Supplier Qualification Agreement.” Its duties under the Supplier Qualification Agreement
remained substantially the same, except to the extent that assignment of projects by territory
eliminated the need for competitive bidding.
125. The acts and omissions alleged herein, including but not limited to failing to
accurately estimate the quantities required for performance of projects; failing to solicit
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competitive bids for projects; selecting contractors for projects who were not in fact low bidders;
misrepresenting to Target the amounts of bids submitted by competing bidders; failing to
properly oversee work done by paving contractors; certifying that paving contractors had
completed their contractual scope of work when in fact they had not; and conspiring with paving
contractors to defraud Target, all constituted material breaches of LCH’s express or implied
contract with Target.
126. Target has fulfilled all material terms of its contracts with LCH.
127. Target has been damaged by LCH’s breaches of contract because it has paid non-
competitive prices for paving work and has paid for paving work that has not been completed by
contractors. The amount of Target’s damages will be proven at trial.
COUNT THREE
BREACH OF CONTRACT (UNITED PAVING, AMERICAN PAVEMENT, ASPHALT MAINTENANCE AND ROSE PAVING)
128. The allegations of paragraphs 1 through 127 are incorporated herein by reference
and re-alleged.
129. Prior to May 1, 2011, United Paving, American Pavement, Asphalt Maintenance
and Rose Paving all entered into contracts with Target on a project by project basis. The
contracts consisted of the contractors’ bid proposals to perform a specified scope of work and
Target’s acceptance of those bid proposals.
130. On or about May 1, 2011, United Paving, American Pavement and Asphalt
Maintenance all entered into Supplier Qualification Agreements with Target, pursuant to which,
along with Program Agreements and other documents that were incorporated into the contract,
they continued to perform services based on specified scopes of work for each store and
archetype pricing which the contractors quoted to Target.
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131. The acts and omissions of United Paving, American Pavement, Asphalt
Maintenance and Rose Paving as alleged herein, including but not limited to participation in a
bid-rigging scheme and billing Target for work which had not been performed, constituted
material breaches of Defendants’ contracts with Target.
132. Target has fulfilled all material terms of its contracts with United Paving,
American Pavement, Asphalt Maintenance and Rose Paving.
133. Target has been damaged by United Paving’s, American Pavement’s, Asphalt
Maintenance’s and Rose Paving’s breaches of contract because it has paid non-competitive
prices for paving work and has paid for paving work that has not been completed by these
Defendants. The amount of Target’s damages will be proven at trial.
COUNT FOUR
FRAUD (ALL DEFENDANTS)
134. The allegations of paragraphs 1 through 133 are incorporated herein by reference
and re-alleged.
135. The actions of Defendants as alleged herein constitute fraud, including but not
limited to fraudulent misrepresentation.
136. Target reasonably relied on false material representations by Defendants in
making the payments to them described herein with respect to the projects specifically identified.
Such misrepresentations included, but were not limited to, representations as to the quantities of
work that were required to repair parking lots; representations that the bids solicited by LCH and
prepared by the Defendant contractors were procured competitively, without collusion, and, in
fact, represented the lowest bids for the work solicited; representations that LCH would monitor
and oversee the work of the Defendant contractors; and representations that the Defendant
contractors did, in fact, perform all of the work that they contracted to perform. If Target had
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known that Defendants’ representations were false, it would not have made those payments.
137. To the extent that Defendants made similar false material representations in
connection with other projects, Target likewise reasonably relied on those false representations
in making payments to Defendants on those projects.
138. If Target had known that Defendants’ representations were false as alleged herein,
it would not have continued its business relationships with Defendants.
139. Target has been damaged by the fraudulent misrepresentations and other
fraudulent conduct of Defendants and has lost large sums of money, the amount of which will be
proven at trial.
WHEREFORE, Target prays for the following relief:
1) Judgment against all Defendants, jointly and severally, for the full amount of
damages proven at trial;
2) Restitution of all amounts proven to have been obtained by Defendants through
fraudulent means;
3) Judgment against all Defendants, jointly and severally, for treble damages for
violation of 18 U.S.C. §1962;
4) Interest; and
5) Costs and attorneys’ fees.
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Dated: August 3, 2012 FAEGRE BAKER DANIELS LLP s/James J. Hartnett
James J. Hartnett, # 238624 John H. Hinderaker, #45305 2200 Wells Fargo Center 90 South Seventh Street Minneapolis, MN 55402-3901 Phone: 612.766.7000 Fax: 612.766.1600 [email protected] [email protected] ATTORNEYS FOR PLAINTIFF TARGET CORPORATION
fb.us.8556392.02
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