Last week, the DOJ announced criminal charges against Mark Snedden (the owner of Mark 1 Restoration) for, among other things, conspiracy to commit federal program bribery.
According to the DOJ, the company (the “Contractor”) was awarded a $58 million contract by Amtrack to be the main contractor on a facade repair and restoration project at Amtrak’s 30th Street Station in Philadelphia. Pursuant to the contract, the Contractor was prohibited from “offer[ing] to any Amtrak employee, agent, or representative any cash, gift, entertainment, commission, or kickback for the purpose of securing favorable treatment with regard to award or performance of any contract or agreement.”
The DOJ alleges that various individuals associated with the Contractor, with Snedden’s knowledge and agreement, provided Amtrak Employee #1 [employed by Amtrak as the Project Manager on the repair and restoration project] with gifts and other things of value totaling approximately $323,686, including, among other things, paid vacations, jewelry, cash, dinners, entertainment, and transportation, to ensure that Amtrak Employee #1 used his power and influence to benefit the Contractor during the performance of the 30th Street Station Repair and Restoration Project.”
Per the DOJ:
“In return for these gifts and other things of value, Amtrak Employee #1 used his position at Amtrak to access internal agency information available only to Amtrak employees about the 30th Street Station Project, and Amtrak Employee #1 shared this internal information with [various individuals associated with the Contractor] who then passed on the information they received from Amtrak Employee #1 to Snedden.
In return for these gifts and other things of value, Amtrak Employee #1 used his position at Amtrak to approve additional, more expensive changes to the 30th Street Station Repair and Restoration Project, thereby increasing the amount and value of the work to be performed by the Contractor. These additional expenses were reflected in a series of change orders or contract modifications. In total, Amtrak Employee #1 approved over $52 million of additional payments from Amtrak to the Contractor. Amtrak Employee #1 and officials with the Contractor falsely inflated the true costs of some of the work to be performed by the Contractor under these change orders, causing Amtrak to be substantially overbilled by over $2 million for the completion of the 30th Street Station Repair and Restoration Project.”
As noted in the DOJ’s release Donald Seefeldt, Lee Maniatis, and Khaled Dallo (Vice Presidents of the Contractor) were each previously charged in connection with the underlying conduct.
The criminal information sets forth the following background information on Amtrack (which is interesting to read through the lens of how the DOJ alleges that a business organization is an “instrumentality” of a foreign government in certain FCPA enforcement actions).
“Congress created the National Railroad Passenger Corporation, doing business as Amtrak, as a private, for-profit corporation, pursuant to the passage of the Rail Passenger Service Act of 1970 to operate a nationwide system of passenger rail transportation. Amtrak received significant federal funding through United States Department of Transportation (“DOT”) grants to cover its activities associated with the Northeast Corridor and the National Network as authorized by the Fixing America’s Surface Transportation Act.
In addition to providing a substantial portion of Amtrak’s funding, the federal government also provided oversight of how the funds were spent. The Federal Railroad Administration (“FRA”), as part of the DOT, administered the grants to Amtrak and provided federal oversight of Amtrak’s grants. Amtrak’s ownership and corporate structure were heavily controlled by the federal government. The United States government, through the Secretary of the DOT, owned all issued and outstanding preferred Amtrak stock.
Pursuant to 49 U.S.C. § 24302, Amtrak’s ten-member Board of Directors was comprised of the Secretary of the DOT; eight members nominated by the President of the United States and confirmed by the U.S. Senate; and the President of Amtrak, who was appointed by the members of the Board. In selecting individuals for nomination to the Board, the President was required to consult with the Speaker of the House of Representatives, the minority leader of the House of Representatives, the majority leader of the Senate, and the minority leader of the Senate to try to provide adequate and balanced representation of the major geographic regions of the United States served by Amtrak. These branches of the federal government exercised substantial supervision over Amtrak’s operations. Amtrak was required to submit
annual reports to Congress and the President of the United States detailing such information as route-specific ridership and on-time performance. Congress conducted oversight hearings to delve into details of Amtrak’s budget, routes, and prices. In addition, the Freedom of Information Act (5 U.S.C. § 552) applied to Amtrak.Amtrak was substantially supported by federal funds. In 2016 and 2017, Amtrak received over $1,000,000,000 in federal appropriations each year. In 2018 and 2019, Congress approved Amtrak to receive approximately $1,950,000,000 each year in federal funding through DOT grants for the Northeast Corridor and the National Network.”
