The head of a company that manages the American Bank Center has been indicted on allegations of “orchestrating a conspiracy to rig the bidding process” related to an Austin university project, according to the U.S. Department of Justice.
In a news release issued July 9, DOJ officials announced the federal grand jury’s indictment against Timothy J. Leiweke, co-founder and chief executive officer of Oak View Group.
OVG and Legends Hospitality have agreed to pay penalties of $15 million and $1.5 million “in connection with the conduct alleged in the indictment against Leiweke,” the DOJ’s email states.
The indictment does not include any allegations related to the American Bank Center, and it is unclear if there would be any impact locally.
In a message to the Caller-Times, city of Corpus Christi officials wrote that they would monitor the DOJ case “for potential legal and contractual implications,” but declined further comment.
In an email to the Caller-Times, Leiweke’s spokesperson, Ellen Davis, wrote that he “has done nothing wrong and will vigorously defend himself and his well-deserved reputation for fairness and integrity.”
“These allegations blatantly ignore established legal precedent and seek to criminalize common teaming efforts that are proven to enhance competition and benefit the public,” she wrote. “The Moody Center is a perfect example, as it has resulted in substantial and sustained benefits to the University of Texas and the City of Austin.”
The DOJ’s indictment alleges that Leiweke “conspired with the Chief Executive Officer of a competitor to rig the bidding for the development, management, and use of a multi-purpose arena that was to be located on the campus of a public university in Austin, Texas.”
In the news release, antitrust division Assistant Attorney General Abigail Slater asserts that Leiweke “rigged a bidding process to benefit his own company and deprived a public university and taxpayers of the benefits of competitive bidding.”
“Timothy Leiweke allegedly led a scheme designed to steer the contract for entertainment services at a public university’s arena to his company,” stated Assistant Director in Charge Christopher G. Raia of the FBI’s New York field office in the email. “Public contracts are subject to laws requiring an open and competitive bid process to ensure a level playing field.”
In the news release, DOJ officials allege that Leiweke learned of another bidder for the project and had approached the other company, eventually reaching an agreement.
“In exchange for the competitor’s agreement to stand down, Leiweke represented that the competitor would receive Arena Project’s subcontracts,” the news release states. “Consistent with the bid-rigging agreement, the competitor did not submit a competing bid for the Arena Project. OVG ultimately submitted the sole qualified bid and won the Arena Project.”
In an email from OVG, representatives wrote that the company supports “all efforts to ensure a fair and competitive environment in our industry and are committed to upholding industry-leading compliance and disclosure practices.”
The email from Leiweke’s spokesperson asserts that “the Antitrust Division’s allegations are wrong on the law and the facts, and the case should never have been brought.”
“The law is clear: vertical, complementary business partnerships, like the one contemplated between OVG and Legends, are legal,” states the email.
(This story was updated because an earlier version included an inaccuracy.)
Correction: A previous version of this story misstated the name of a spokesperson for Timothy J. Lieweke.
This article originally appeared on Corpus Christi Caller Times: OVG’s CEO has been indicted on allegations of bid-rigging in Austin. What does that mean?
Reporting by Kirsten Crow, Corpus Christi Caller Times / Corpus Christi Caller Times
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