Overcharging alleged on Utah's I-15

| 10/31/2002

A lead subcontractor on the four-year reconstruction of I-15 through the Salt Lake Valley overcharged the state and federal government about $5 million on dirt and fill material and pocketed the difference, a recently unsealed federal lawsuit alleges. The lawsuit also claims the Utah Department of Transportation knew of the false claims but failed to take action.

Ralph Smith Co. allegedly failed to properly weigh trucks carrying the material, instead relying on verbal reports from truckdrivers to dispatchers. Because the company was to be paid on a "per ton" basis, the discrepancy reportedly resulted in $4.8 million in overpayments.

Doug Smith, vice president of Ralph Smith Co, denied the accusations and said many of the alleged facts included in the suit are simply wrong. "A job this huge is going to have some calculations differences," Smith told the Salt Lake Tribune, specifically citing the requirement to use metric, rather than U.S., measurements.

The lawsuit was first filed in January 1999 but was sealed until recently when U.S. District Judge Paul Cassell ordered it be made public. The suit seeks $46.4 million in damages and fines.

The whistle-blowers suit is brought by Steven K. Maxfield, chief executive officer of Mighty Max Truck Parts Inc., and independent contractor John Peterson. Mighty Max reportedly was one of many subcontractors hired by Ralph Smith to transport dirt and fill materials to and from the site, and Maxfield hired Peterson to assist with that job.

Ralph Smith billed Wasatch Constructors based on the verbal reports from truckers. In turn, the company paid its subcontractors, including Maxfield and Peterson, with the payments. At least 320,000 loads were falsely invoiced between August 1997 and November 1998.