As the FBI investigates possible corruption in Kentucky road contracts, it’s returning to ground that federal prosecutors plowed for five years — and then abandoned after the Sept. 11, 2001, terrorist attacks.
Beginning in 1997, the U.S. Justice Department Antitrust Division assigned at least eight attorneys, plus U.S. attorneys in Lexington, FBI agents in Louisville and grand juries in Lexington and Covington, to a massive investigation of Kentucky road contractors, according to federal records obtained by the Herald-Leader.
The case focused on politically connected road contractor Leonard Lawson — who is at the center of the current FBI investigation — and other industry leaders. It lasted from Dec. 3, 1997, to sometime after Sept. 6, 2001, records indicate.
In letters to grand jury witnesses, some of whom were promised immunity for their testimony, prosecutors said they were looking for violations of the Sherman Antitrust Act by ”the asphalt paving industry“ in Kentucky since 1990. They cited the part of the law prohibiting ”agreements, conspiracies or trusts in restraint of trade.“
In 1983, some of the same Antitrust Division prosecutors won felony convictions against two Kentucky road-building companies, including Lawson’s Mountain Enterprises, for that same offense. They had conspired to allocate state road contracts among themselves, rather than compete and submit lower bids. Lawson’s firm paid a $150,000 fine.
The more recent case ended sometime after Sept. 6, 2001. As of that date, prosecutors in the Antitrust Division’s regional field office in Cleveland were asking the U.S. attorney’s office in Lexington for assistance in gathering still more witnesses.
No reasons or date were given for the case’s termination. Despite years of work, no actions apparently were taken, no conclusions were drawn and no report was issued, according to records.
In March 2002, prosecutors simply informed lawyers for more than a dozen road contractors that the investigation was over, so they were welcome to retrieve the many boxes of records subpoenaed for the grand jury.
The records obtained by the Herald-Leader under the Freedom of Information Act were heavily redacted to conceal the identities of the potential targets.
However, newspaper stories about Lawson — and only Lawson — were placed in the Justice Department file, including stories that explored his political friendships in Washington and Frankfort and his success at winning lucrative single-bid asphalt contracts.
In a 2005 interview with the Herald-Leader, Lawson confirmed that he was one of the contractors investigated by the Justice Department in the case.
Prosecutors in 1999 subpoenaed 77,000 pages of his companies’ records going back a decade, he said. The next he heard, in early 2002, the case was closed and he had not been indicted, which was a satisfactory, if mysterious, conclusion, he said.
”We didn’t ask,“ Lawson said.
The Justice Department apparently dropped the subject until recently. A grand jury in Lexington once again has been convened to look into possible corruption involving state road contracts.
The FBI is gathering records related to Lawson and projects awarded to his company, as well as former state Transportation Secretary Bill Nighbert. An attorney for Nighbert has said his client has done nothing wrong. Lawson’s lawyer has questioned why information about the investigation has been released to the public, and stressed that Lawson should be presumed innocent.
Attorneys in the Antitrust Division’s Cleveland field office, who led the previous investigation, did not return calls Friday seeking comment. The Justice Department in Washington said it would not comment on why the previous case suddenly closed.
Assistant U.S. Attorney Jim Arehart in Lexington, who occasionally helped with that case locally, said ”I honestly don’t remember (why the case was dropped). I’d tell you if I did, but it’s been years.“
One possible explanation: After the Sept. 11, 2001, terrorist attacks in New York and Washington, the Justice Department quickly moved its focus to counterterrorism and immigration enforcement and away from nearly everything else, studies show, including antitrust violations and other white-collar crime.
”We shifted a lot of priorities right after that,“ Arehart said.
Nationally, the number of FBI agents assigned to counterterrorism boomed after the attacks, going from 15 percent of agents to 56 percent, according to the Transactional Records Access Clearinghouse, a data-research organization at Syracuse University.
”They’ve gotten out of the business of white-collar crime altogether,“ said TRAC co-director David Burnham, author of an investigative book on the Justice Department.
However, Burnham said, it seems odd that 9/11 — traumatic though it was — would prompt the Justice Department to drop the road contractors case, especially if it already had gathered so much evidence over five years.
If nothing else, it’s hard to imagine what role Lexington prosecutors and antitrust specialists in Cleveland were subsequently assigned to play in the global war on terror, he said.
”I guess it’s possible, but often, decisions like that are made for political reasons, like a higher-up pulled the chain on it for reasons known only to them,“ Burnham said.