A federal grand jury on Wednesday indicted Kentucky's leading road contractor and a former head of the state Transportation Cabinet for allegedly scheming to rig bids on $130 million in state road work.
Contractor Leonard Lawson, 69, and former Transportation Secretary Bill Nighbert, 57, both of Lexington, conspired to give Lawson's companies confidential Transportation Cabinet bid estimates in 2006 and 2007, according to the indictment.
The insider information allegedly allowed Lawson to avoid the competitive bidding process by submitting bids at the high end of what the cabinet considered an acceptable price range.
Lawson faces six counts, including bribery and obstruction of justice charges. Nighbert has been charged with conspiracy, accepting illegal payments and obstruction of justice.
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Also charged was Brian Billings, 37, of Stanton, who is a former transportation employee and current Lawson employee. Billings faces obstruction of justice charges.
Assistant U.S. Attorney Ken Taylor said the investigation is continuing. It is unclear whether there will be more indictments.
Attorneys for Nighbert, Billings and Lawson denied the allegations and said each of their clients will enter not-guilty pleas.
"The indictment is evidence of nothing," Larry A. Mackey, Lawson's attorney, said in a statement. "In time, evidence will show that Leonard Lawson committed no crime and should have never been charged."
Allegations on bidding
According to the 22-page indictment, on eight occasions in 2006 and 2007, Nighbert and Lawson told cabinet official James Rummage to get the bid estimates — prepared by cabinet engineers — on projects that Lawson wanted.
Rummage delivered the estimates to Lawson's home or office in Lexington five times. The other times, he gave them to Nighbert, who passed them along to Lawson, the indictment said.
Nighbert tried to conceal his favors for Lawson by asking Rummage to also retrieve estimates on unrelated projects as "camouflage," according to the indictment.
Lawson gave Rummage four cash payments of $5,000 each, totaling $20,000, according to the indictment.
Lawson also funneled money to Nighbert through a Pikeville utility management company, the indictment alleges. Lawson paid Nighbert $36,000 disguised as an employment contract through the utility company, which allegedly hired him after he left state government in December 2007 at the end of Gov. Ernie Fletcher's administration.
Fletcher could not be reached for comment.
Prosecutors contend Lawson gave Nighbert an additional $31,251 in payments through the utility company from January through March of this year while Nighbert was an adviser on transportation issues to Senate President David Williams, R-Burkesville.
According to an affidavit filed last month by FBI Special Agent Clay Mason, the utility company that Nighbert allegedly worked for is Utility Management Group. A lawyer for Greg May, who is listed as an officer in UMG in documents filed with the secretary of state's office, declined to comment on the indictment.
Phone calls taped
The conspiracy charges stem from taped conversations that Rummage had with Nighbert, Lawson and Billings.
The indictment quotes heavily from phone conversations between Lawson and Rummage in which Lawson repeatedly urges Rummage to use a lawyer that Lawson suggests.
"What I don't wanna get into here is obstruction of justice, that's the reason it's so hard to ... talk to ya," Lawson says at one point during a call with Rummage on March 26, 2008, according to the indictment. "I'm a givin' ya good sound advice. It's the best you'll ever get. You need to go see that — that attorney (selected by Lawson) ..."
Rummage has been represented by Marc Murphy, a Louisville lawyer. But Lawson kept referring him to another lawyer, whom the indictment doesn't name, and steering him away from Murphy.
The indictments also say Rummage met with Billings at a Lexington restaurant on March 19 and March 21. During those meetings, Billings asked in writing about Rummage's legal representation while carrying on an unrelated conversation.
On March 25, the two men met again in a hotel parking lot in Lexington where, according to the indictments, Billings used hand gestures and text messaging on his cell phone as he "again encouraged James Rummage to drop his current attorney and take the one selected by Leonard Lawson," the indictment says.
Planning a defense
Attorneys for the three men are already on the attack.
Mackey, Lawson's attorney, said his firm has conducted its own investigation into the allegations of bid-rigging.
"There is simply no credible evidence that Leonard Lawson violated any laws," Mackey's statement said. "Mr. Lawson built businesses which served the public and employed hundreds of his fellow Kentuckians. He won every contract fair and square and because he builds safe and sound roads."
Mackey also criticized federal prosecutors for "earlier leaks of grand jury information" — a reference to the sworn statement from Mason that was filed last month in U.S. District Court and left unsealed before any indictments were returned.
"The earlier leaks have only destroyed Mr. Lawson's right to a fair trial," Mackey wrote.
Nighbert's attorney, Howard Mann, issued a statement saying Nighbert will "enter a not-guilty plea and will vigorously defend any and all charges."
He called into question the integrity of Rummage, whose cooperation with the FBI provided a foundation for the indictment.
Mann's statement says Rummage "had admitted lying on multiple occasions and admitted to other illegal activity." Because Rummage wasn't charged Wednesday, "this would indicate that he has made a very good deal to avoid charges," Mann wrote.
Rummage, according to the FBI affidavit, first denied to investigators that he improperly sought the confidential bid information. After hiring a lawyer, Rummage later told the FBI that he did take money from Lawson in exchange for the bid information.
Murphy said Rummage has cooperated fully with the FBI and federal prosecutors but has no plea deal or even a promise from federal prosecutors that they will not charge him.
"My client is telling the truth," Murphy said. "The FBI believes him, the assistant U.S. attorney believes him. I believe him."
Taylor said he could not discuss whether Rummage would be charged.
Kent Wicker, a lawyer who represents Billings, said his client "vigorously denies the charges."
He said he and Billings did have "discussions" with investigators about the direction of the case and they are "very disappointed that the government has chosen to seek an indictment against Brian."
The three men are scheduled to be arraigned Sept. 12 in federal court.
Leonard V. Lawson, six counts:
■ One count of conspiring to get secret engineering cost estimates for prospective road contracts
■ Two counts of making illegal payments to former Transportation Cabinet engineer James Rummage and Nighbert for confidential cost estimates
■ Three counts of conspiring to persuade Rummage not to cooperate with a federal investigator.
If convicted, Lawson faces a maximum of 40 years in prison. However, it is rare for anyone to receive the maximum sentence.
Charles William “Bill” Nighbert, six counts:
■ One count of conspiring to provide confidential cost estimates for prospective road contracts to Lawson
■ One count of misapplication of funds used to pay for road contracts and the engineer’s estimates for those contracts
■ One count of accepting an illegal payment from Lawson
■ Three counts of conspiring to persuade Rummage not to cooperate with a federal investigator
If convicted, Nighbert could receive a maximum of 40 years in prison.
Brian Russell Billings, three counts:
■ Three counts of conspiring to persuade Rummage not to cooperate with a federal investigator
If convicted, Billings could receive a maximum of 25 years in prison.
TIME LINE FOR INVESTIGATION OF TRANSPORTATION CABINET
This time line is based on allegations in an FBI affidavit and an indictment. These documents tell only one side of a story.
June 2006 to August 2007: Deputy chief state highway engineer James Rummage, at the direction of either highway contractor Leonard Lawson or Transportation Secretary Bill Nighbert, obtains confidential road contract estimates about eight times. On four occasions, Lawson gives Rummage $5,000 for a total of $20,000. Lawson uses the estimates to get contracts worth $130 million.
Dec. 10, 2007: Nighbert, who has led the cabinet since March 2005 for Republican Gov. Ernie Fletcher, steps aside for the incoming administration of Democratic Gov. Steve Beshear.
January 2008: The Transportation Cabinet’s watchdog agency, the Office of Inspector General, begins investigating allegations that the confidentiality of road contract estimates could have been compromised.
Jan. 4 to July 11, 2008: Nighbert works as an aide in the office of Senate President David Williams, R-Burkesville.
Jan. 7, 2008: Lawson funnels Nighbert $36,000 disguised as payment on an employment contract with Utility Management Group of Pikeville. Nighbert receives an additional $31,251 from UMG from January through March.
Jan. 25, 2008: Nighbert meets with Rummage at a restaurant parking lot in Lexington to discuss what Rummage should say in an interview with the inspector general. Rummage falsely tells inspector general that he gave engineer estimates only to Nighbert for use in budget considerations.
Late February 2008: Rummage is interviewed by FBI investigators and lies about his actions.
March 7, 2008: Lawson aide Brian Russell Billings meets Rummage at his Lexington office and gives him a phone number to call Lawson. Lawson speaks by phone to Rummage and tells him he should not worry about the investigation.
March 12, 2008: Rummage meets again with the FBI after he told Lawson he was very afraid and retracts his earlier statement. He starts cooperating with investigators.
March 19, 2008: Billings meets with Rummage at a Lexington restaurant and writes questions on pieces of paper about the FBI investigation.
March 21, 2008: Billings meets with Rummage at a Lexington restaurant and agrees to relay to Lawson a request for money to help Rummage with attorney’s fees.
March 31, 2008: Rummage retires from the cabinet.
Aug. 1, 2008: FBI affidavit filed in U.S. District Court in London accuses Lawson of paying $20,000 to Rummage in exchange for confidential bid information on state contracts. It says Nighbert allegedly facilitated release of secret bid estimates to Lawson.
Aug. 10, 2008: Beshear says his administration has been cooperating with federal authorities.
Aug. 11, 2008: Senate President Williams says Nighbert was not in a position to help any road contractors while Nighbert worked as a legislative aide.
Sept. 3, 2008: Federal grand jury in Lexington issues indictments against Nighbert, Lawson and Billings.