IN THE UNITED STATES DISTRICT COURT FOR THE …stmedia.startribune.com/documents/Targetlawsuit.pdfrigging scheme appeared to be the low bidder. The Defendant paving companies collaborated

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA

TARGET CORPORATION,

Plaintiff,

vs.

LCH PAVEMENT CONSULTANTS, LLC; UNITED PAVING COMPANY, a division of SUPERIOR PAVING CO, INC.; AMERICAN PAVEMENT SOLUTIONS INC.; ASPHALT MAINTENANCE INC.; ROSE PAVING COMPANY; LESLIE J. BAILEY; KEITH HEUTZENROEDER; SABAS TRUJILLO; TIMOTHY HELSTAD; and JAMES STINSON;

Defendants.

Civil Action No. __________

COMPLAINT

JURY TRIAL DEMANDED

Plaintiff Target Corporation (“Target”), through its undersigned counsel, hereby alleges

as follows for its Complaint against the above-named Defendants:

PARTIES

1. Plaintiff Target is a Minnesota corporation with its principal place of business in

Minneapolis, Minnesota.

2. Defendant LCH Pavement Consultants, LLC (“LCH”) is a Texas limited liability

company with its principal place of business in Pearland, Texas. Defendant Leslie J. Bailey

(“Bailey”) is, on information and belief, one of the owners of LCH. Defendant Keith

Heutzenroeder (“Heutzenroeder”) was the General Manager of LCH at times relevant to this

Complaint. Bailey is a resident of the State of Texas and, upon information and belief,

Heutzenroeder is a resident of the State of Colorado.

CASE 0:12-cv-01912-JRT-FLN Document 1 Filed 08/03/12 Page 1 of 40

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3. Defendant United Paving Company (“United Paving”) is a division of Superior

Paving Co., Inc., a California corporation with its principal place of business in La Mirada,

California. Defendant Sabas Trujillo (“Trujillo”) is the President of United Paving Company and,

upon information and belief, resides in the State of California.

4. Defendant American Pavement Solutions Inc. (“American Pavement”) is a

Wisconsin corporation with its principal place of business in Green Bay, Wisconsin. Defendant

Timothy Helstad (“Helstad”) is the President of American Pavement and, upon information and

belief, resides in the State of Wisconsin.

5. Defendant Asphalt Maintenance Inc. (“Asphalt Maintenance”) is a Texas

Corporation with its principal place of business in Pearland, Texas. Defendant James Stinson

(“Stinson”) is the President of Asphalt Maintenance and, upon information and belief, resides in

the State of Texas.

6. Defendant Rose Paving Company (“Rose Paving”) is an Illinois corporation with

its principal place of business in Bridgeview, Illinois.

JURISDICTION AND VENUE

7. This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. §

1332 because this is a matter in controversy between citizens of different states and exceeding

the sum or value of $75,000, exclusive of interest and costs. This Court also has subject matter

jurisdiction over this action pursuant to 28 U.S.C. § 1331 because Plaintiff asserts claims that

arise under the laws of the United States, and over Plaintiff’s state law claims pursuant to 28

U.S.C. § 1367.


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8. This Court has personal jurisdiction over all Defendants, and venue is proper in

this District pursuant to 28 U.S.C. § 1391 because a substantial part of the events or omissions

giving rise to the claims occurred in this judicial district. Defendants United Paving, American

Pavement and Asphalt Maintenance have stipulated contractually to personal jurisdiction and

venue in this District. Personal jurisdiction and venue in this District are also proper pursuant to

18 U.S.C. § 1965(b).

FACTUAL ALLEGATIONS

9. Target is a retailer that operates more than 1,700 stores, located throughout the

United States. Target stores have parking lots that require periodic maintenance and repair. For

some years, Target has used consultants to manage its parking lot repair and maintenance needs.

These consultants inspect Target store parking lots and advise the company as to which parking

lots are most in need of repair. They recommend needed repairs and maintenance and identify

the quantities and types of repairs to be performed. Along with other responsibilities, the

consultants function as construction managers. They schedule the performance of the work,

coordinate with personnel employed at the Target stores, oversee the performance of the work by

the contractors, and certify that the work has been completed and satisfactorily performed. Until

2011, they solicited bids from paving contractors. The consultants are paid a fixed fee to inspect

each parking lot, and a percentage of the cost of each project.

10. Beginning in 2009, LCH was retained by Target as a consultant and was assigned

responsibility for assessing and managing asphalt pavement work for Target throughout the

majority of the United States, excepting only the Upper Midwest. Since that time, LCH has been

responsible for managing contracts worth approximately $100 million for parking lot

maintenance and repair for Target.


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11. At some point after it began working for Target as a consultant, LCH, through

Bailey, Heutzenroeder, and perhaps others employed by that company, in conjunction with other

Defendants named herein, devised a scheme to defraud Target. That scheme involved the

knowing participation of a number of paving companies, and various principals and employees

of those companies, including United Paving, American Pavement, Asphalt Maintenance, Rose

Paving, Trujillo, Helstad, and Stinson, and perhaps others not yet known to Target. These

paving companies and their respective principals and employees collaborated with each other

and with LCH to defraud Target, as described more fully below.

12. The fraudulent scheme which is the subject of this action involved at least the

following elements:

a. When LCH identified for Target the types and quantities of work that

needed to be carried out at each store (e.g., 10,000 square feet of 2-inch asphalt overlay; 20,000

square feet of 6-inch asphalt removal and replacement; etc.), LCH would, at times, overstate the

quantities and types of work to be performed.

b. Prior to 2011, rather than supervising a competitive bidding process as it

represented to Target, LCH in fact organized, with the knowing participation of the Defendant

paving contractors, their principals and employees, and perhaps others, a bid-rigging scheme.

LCH and the Defendant paving contractors allocated projects on a territorial basis. The

Defendants would ensure that the contractor that had been allocated a given territory would be

the successful bidder by: (1) not inviting other local companies that were likely to be low-cost

competitors to bid; (2) having contractors who were part of the bid-rigging scheme but who were

not allocated the project in question submit uncompetitively high bids; and/or (3) when a

contractor who was not part of the scheme submitted a competitive, low-cost bid, falsely


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reporting an inflated bid amount to Target so that the company that participated in the bid-

rigging scheme appeared to be the low bidder. The Defendant paving companies collaborated

with each other and with LCH by refraining from submitting competitive bids reflecting actual

market pricing on any project that had been allocated to another member of the bid rigging

scheme, e.g., Rose Paving submitted non-competitive bids for projects allocated to United

Paving; Asphalt Maintenance submitted non-competitive bids for projects allocated to American

Pavement, etc. As a result of Defendants’ bid-rigging scheme, Target paid prices for paving

work that were substantially higher than competitive rates in the relevant geographic areas.

c. With the knowledge and cooperation of the other Defendants, LCH

abdicated its contractual responsibility to oversee the work of the paving contractors. In

numerous instances, LCH appointed an employee of the contractor itself (or a subcontractor) to

oversee and certify the completion of its own work.

d. Rather than ensuring that the work on which the Defendants had bid was

fully performed, LCH agreed with the Defendant contractors that they would perform only a

portion of the work, but would invoice Target as though all of the work which they contracted to

do had been performed. In many cases, the most costly work in the contracts—the removal and

replacement of asphalt all the way down to the subgrade—was either not performed at all or was

performed in amounts far less than those called for in the contract. This fraud was concealed by

applying a surface overlay of asphalt, which provided the outward appearance of completely new

pavement.

e. LCH and the Defendant contractors would falsely certify to Target that all

of the work had been completed; the Defendant contractor would submit a fraudulent invoice

seeking payment from Target for all of the work called for in the contract; and LCH would


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submit a fraudulent invoice to Target based upon a percentage of the entire project cost,

including that portion of the work which was not in fact performed by the Defendant contractors.

As a result, on multiple projects, in multiple states, Target paid LCH and Defendant contractors

hundreds of thousands of dollars for work that was never actually performed.

f. On information and belief, LCH demanded and received kickbacks from

the Defendant contractors as further compensation for its role in the fraudulent scheme.

13. In June 2011, Target conducted a “sourcing event” relating to its parking lot

maintenance program in Minneapolis, Minnesota. Leslie Bailey of LCH, along with

representatives of the Defendant contractors, including Sabas Trujillo and David Brown of

United Paving, Tim Helstad and Roger Myers of American Pavement, and Dave Rivers and C.B.

Kuzlik of Rose Paving, traveled to Minnesota and participated in the event on behalf of their

respective companies. Upon information and belief, the Defendant contractors conspired both in

advance of the sourcing event and during the event itself to fix prices among themselves for

Target’s paving work. At the sourcing event, each contractor was asked to prepare proposed

“archetype prices” (i.e., unit-prices—$X per square foot for task A; $Y per square foot for task

B, etc.) for the various types of work that are involved in parking lot repair and maintenance.

Subsequent to the sourcing event, Target changed its asphalt procurement practices so that

contracts were awarded on the basis of each contractor’s archetype pricing. Contractors were

assigned primary responsibility for stores on a geographic basis. As a result, the bid rigging

scheme that Defendants had engaged in could no longer be carried out in the same manner. The

remainder of the scheme, with respect to non-performance of the work, continued to operate.

The Defendant paving contractors participated in the scheme with knowledge of the participation

of the other Defendant paving contractors, pursuant to a single, common enterprise, the purpose


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of which was to defraud Target in connection with Target’s parking lot repair and maintenance

projects.

14. The archetype pricing approach resulted in significantly lower unit prices for

asphalt work, thus confirming that Defendants’ bid rigging scheme had caused inflated and non-

competitive prices to be paid by Target in the years prior to 2011.

United Paving: Cypress, CA (T-0229), Billings, MT (T-0171), and Peoria, AZ (T-0825).

15. Defendants implemented their fraudulent scheme on at least the following

projects that were performed by United Paving: Cypress, California (T-0229), Billings, Montana

(T-0171), and Peoria, Arizona (T-0825).

Cypress, California (T-0229)

16. On the Cypress project, Defendant Heutzenroeder submitted a “Pavement

Assessment” to Target in Minnesota, via interstate mail or wire, on or about May 18, 2010. This

Pavement Assessment defined the scope of work to be done on the Cypress parking lot and

defined the quantities of work to be performed in square feet, inches and so on. This Pavement

Assessment fraudulently overstated the size of parking lot area “Zone B” by over 90,000 square

feet. The Pavement Assessment, with its grossly overstated work quantities, was used as the

basis for bids submitted by contractors, including United Paving.

17. LCH represented to Target that United Paving was the low bidder on the project,

based on United Paving’s unit prices as applied to the work quantities identified by LCH. United

Paving’s bid proposal for Phase 1 of the project, in the amount of $590,345, and for Phase 2 of

the project, in the amount of $409,304, were transmitted to Target in Minnesota by interstate

mail or wire, on or about August 17, 2010, pursuant to Defendants’ fraudulent scheme. United

Paving’s proposal for both phases was subsequently accepted by Target.


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18. On or about July 27, 2010, LCH submitted an estimate for its work on Phase 1 of

the project via interstate mail or wire to Target in Minnesota, in the amount of $47,228. On or

about August 23, 2010, LCH submitted an estimate for its work on Phase 2 of the project via

interstate mail or wire to Target in Minnesota, in the amount of $32,744.

19. United Paving carried out the work on the Cypress project in August and

September 2010, ostensibly under the oversight of LCH. However, the quantity of work that

United Paving actually performed was far less than that which it had agreed to do and for which

it sought and received payment from Target. In addition to not performing over 90,000 square

feet of asphalt overlay work, United Paving also performed only a small fraction of the nearly

40,000 square feet of 6” asphalt removal and replacement work that it had contracted to perform.

20. On or about October 15, 2010 and November 3, 2010, at the direction or with the

consent of Defendant Trujillo, United Paving submitted to Target in Minnesota, via interstate

mail or wire, invoices for Phase 1 and Phase 2 of the Cypress project in the amounts of $590,345

and $409,304, respectively. These invoices misrepresented the scope of work that United Paving

had carried out on the Cypress project and the quantities of asphalt and other materials that it had

installed. This was done pursuant to the Defendants’ fraudulent scheme. LCH knew that all of

the work on the Cypress project had not been completed by United Paving, but nevertheless

certified falsely to Target that the work was complete.

21. On or about September 13, 2010, LCH submitted to Target in Minnesota, via

interstate mail or wire, invoices for Phase 1 and Phase 2 of the Cypress project in the amounts of

$47,228 and $32,744, respectively. These invoices sought payment from Target for work that

LCH did not perform, including the oversight and certification of completion of work that United

did not actually perform. Upon information and belief, LCH submitted its fraudulent invoices


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for the Cypress project with the knowledge and at the direction of Bailey, pursuant to

Defendants’ scheme to defraud Target.

22. Target has paid United Paving $999,649 and LCH $79,972, representing payment

in full for the Cypress project. Target would not have made these payments if it had known of

Defendants’ fraudulent scheme and Defendants’ misrepresentations regarding the status of

completion of the work.

Billings, Montana (T-0171)

23. On the Billings project, Defendant Heutzenroeder submitted a “Pavement

Assessment” to Target in Minnesota, via interstate mail or wire, on or about April 13, 2011. This

Pavement Assessment defined the scope of work to be done on the Billings parking lot and

defined the quantities of work to be performed in square feet, inches and so on.

24. By the date of the Billings project, Target had converted to the archetype pricing

system, so United Paving was automatically selected as the contractor for the Billings project

based on geography.

25. United Paving carried out its work on the Billings project, using the services of a

subcontractor, during August and September 2011. This work was ostensibly done under the

oversight of LCH. However, the quantity of work that United Paving actually performed was far

less than that which it had agreed to do and for which it sought and received payment from

Target. In fact, United directed its subcontractor to install less than one-half of the asphalt and

other materials required for the project as defined by LCH and included in United Paving’s

contract with Target.


interstate mail or wire, as-built drawings for the Billings project that represented falsely that all


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of the work on the project was complete. Upon information and belief, this was done with the

knowledge and at the direction of Bailey.

27. On or about September 13, 2011, at the direction or with the consent of Defendant

Trujillo, United Paving submitted to Target in Minnesota, via interstate mail or wire, its invoice

for the Billings project in the amount of $395,889. This invoice misrepresented the scope of

work that United Paving had carried out on the Billings project and the quantities of asphalt and

other materials that it installed. This was done pursuant to the Defendants’ fraudulent scheme.

LCH knew that all of the work on the Billings project had not been completed by United Paving,

but nevertheless certified falsely to Target that the work was complete.


interstate mail or wire, an invoice for the Billings project in the amount of $26,143. This invoice

sought payment from Target for work that LCH did not perform, including the oversight and

certification of completion of work that United did not actually perform. Upon information and

belief, LCH submitted its fraudulent invoices for the Billings project with the knowledge and at

the direction of Bailey, pursuant to Defendants’ scheme to defraud Target.

29. Target has paid United Paving $395,889 and LCH $26,143, representing payment

in full for the Billings project. Target would not have made these payments if it had known of



Peoria, Arizona (T-0825)

30. On the Peoria project, LCH submitted a “Pavement Assessment” to Target in

Minnesota, via interstate mail or wire, on or about February 21, 2011. This Pavement


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Assessment defined the scope of work to be done on the Peoria parking lot and defined the

quantities of work to be performed in square feet, inches and so on.

31. On or about September 13, 2011, United Paving transmitted by interstate mail or

wire to Target in Minnesota its bid proposal to perform the Peoria work as defined by LCH’s

Pavement Assessment, and agreed to carry out that work.

32. United Paving carried out its work on the Peoria project, using the services of a

subcontractor, American Asphalt, during September 2011. This work was ostensibly done under

the oversight of LCH. However, the quantity of work that United Paving (via its subcontractor)

actually performed was far less than that which it had agreed to do and for which it sought and

received payment from Target. In fact, United directed its subcontractor to install less than one-

half of the asphalt and other materials required for the project as defined by LCH and included in

United Paving’s contract with Target.


Trujillo, United Paving submitted to Target in Minnesota, via interstate mail or wire, its invoice

for the Peoria project in the amount of $1,074,810, together with a representation that it had

completed all of the work within its contractual scope at the Peoria store. This invoice

misrepresented the scope of work that United Paving had carried out on the Peoria project and

the quantities of asphalt and other materials that it installed. This was done pursuant to the

Defendants’ fraudulent scheme. Trujillo, LCH, Bailey and Heutzenroeder knew that all of the

work on the Peoria project had not been completed by United Paving, but nevertheless certified

falsely to Target that the work was complete.

34. On or about October 3, 2011, LCH submitted to Target in Minnesota, via

interstate mail or wire, an invoice for the Peoria project in the amount of $69,624. This invoice


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certification of completion of work that United did not actually perform. Upon information and

belief, LCH submitted its fraudulent invoice for the Peoria project with the knowledge and at the

direction of Bailey, pursuant to Defendants’ scheme to defraud Target.

35. Target has paid United Paving $1,074,810 and LCH $69,624, representing

payment in full for the Peoria project. Target would not have made these payments if it had

known of Defendants’ fraudulent scheme and Defendants’ misrepresentations regarding the

status of completion of the work.

American Pavement: Skyline, VA (T-1893), Neshaminy, PA (T-1183), and Monroeville, PA (T-1219) 36. Defendants implemented their fraudulent scheme on at least the following

projects that were performed by American Pavement: Skyline, Virginia (T-1893), Neshaminy,

Pennsylvania (T-1183), and Monroeville, Pennsylvania (T-1219).

Skyline, Virginia (T-1893)

37. On the Skyline project, LCH submitted a “Pavement Assessment” to Target in

Minnesota, via interstate mail or wire. This Pavement Assessment defined the scope of work to

be done on the Skyline parking lot and defined the quantities of work to be performed in square

feet, inches and so on.

38. American Pavement prepared bids for the two phases of the Skyline project,

totaling $488,203, and transmitted them to Target in Minnesota via interstate mail or wire on or

about July 6, 2010 and August 24, 2010. American Pavement’s proposals for both phases were

subsequently accepted by Target.

39. American Pavement carried out the work on the Skyline project in September

2010, ostensibly under the oversight of LCH. However, the quantity of work that American


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Pavement actually performed was far less than that which it had agreed to do and for which it

sought and received payment from Target. In fact, American Pavement installed less than one-

half of the asphalt and other materials required for the project as defined by LCH and included in

American Pavement’s contract with Target.


Helstad, American Pavement submitted to Target in Minnesota, via interstate mail or wire, its

invoice for the Skyline project in the amount of $488,203. This invoice misrepresented the

scope of work that American Pavement had carried out on the Skyline project. This was done

pursuant to the Defendants’ fraudulent scheme. Upon information and belief, LCH, American

Pavement, Bailey, Heutzenroeder, and/or Helstad knew that all of the work on the Skyline

project had not been completed by American Pavement, but nevertheless certified falsely to

Target that the work was complete.


interstate mail or wire, invoices for Phase 1 and Phase 2 of the Skyline project in the amounts of

$31,884 and $7,972, respectively. These invoices sought payment from Target for work that

LCH did not perform, including the oversight and certification of completion of work that

American Pavement did not actually perform. Upon information and belief, LCH submitted its

fraudulent invoices for the Skyline project with the knowledge and at the direction of Bailey,

pursuant to Defendants’ scheme to defraud Target.

42. Target has paid American Pavement $488,203 and LCH $39,856, representing

payment in full for the Skyline project. Target would not have made these payments if it had




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Neshaminy, Pennsylvania (T-1183)

43. On the Neshaminy project, LCH submitted a “Pavement Assessment” to Target in


be done on the Neshaminy parking lot and defined the quantities of work to be performed in

square feet, inches and so on.

44. Helstad, on behalf of American Pavement prepared bids for the two phases of the

Neshaminy project, totaling $476,085, and transmitted them to Target in Minnesota via interstate

mail or wire on or about July 9, 2010 and August 24, 2010, respectively. American Pavement’s

proposals for both phases were subsequently accepted by Target.

45. American Pavement carried out the work on the Neshaminy project in August and

September 2010, ostensibly under the oversight of LCH. However, the quantity of work that

American Pavement actually performed was far less than that which it had agreed to do and for

which it sought and received payment from Target. In fact, American Pavement installed only

one-half of the asphalt and other materials required for the project as defined by LCH and

included in American Pavement’s contract with Target.

46. On or about September 16, 2010 and October 4, 2010, at the direction or with the

consent of Defendant Helstad, American Pavement submitted to Target in Minnesota, via

interstate mail or wire, invoices for the Neshaminy project in the total amount of $476,085.

These invoices misrepresented the scope of work that American Pavement had carried out on the

Neshaminy project. This was done pursuant to the Defendants’ fraudulent scheme.

47. On or about August 30, 2010 and September 20, 2010, LCH submitted to Target

in Minnesota, via interstate mail or wire, its invoices for the Neshaminy project in the total

amount of $38,087. These invoices sought payment from Target for work that LCH did not


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perform, including the oversight and certification of completion of work that American

Pavement did not actually perform. Upon information and belief, LCH submitted its fraudulent

invoices for the Neshaminy project with the knowledge and at the direction of Bailey, pursuant

to Defendants’ scheme to defraud Target.


payment in full for the Neshaminy project. Target would not have made these payments if it had



Monroeville, PA (T-1219)

49. On the Monroeville project, LCH submitted a “Pavement Assessment” to Target

in Minnesota, via interstate mail or wire. This Pavement Assessment defined the scope of work

to be done on the Monroeville parking lot and defined the quantities of work to be performed in


50. Helstad, on behalf of American Pavement, prepared a bid for the Monroeville

project, totaling $307,444, and transmitted it to Target in Minnesota via interstate mail or wire.

American Pavement’s bid proposal for the Monroeville project was subsequently accepted by

Target.

51. American Pavement carried out the work on the Monroeville project in August

2010, ostensibly under the oversight of LCH. However, the quantity of work that American

Pavement actually performed was far less than that which it had agreed to do and for which it

sought and received payment from Target. In fact, American Pavement installed only

approximately one-half of the asphalt and other materials required for the project as defined by

LCH and included in American Pavement’s contract with Target.


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52. On or about August 30, 2010, American Pavement submitted to Target, via

interstate mail or wire, a Waiver of Lien form that represented that work on the Monroeville

project had been completed and requested payment of $314,671. On or about September 16,

2010, at the direction or with the consent of Defendant Helstad, American Pavement submitted

to Target in Minnesota, via interstate mail or wire, an invoice for the Monroeville project in the

total amount of $314,671. This invoice misrepresented the scope of work that American

Pavement had carried out on the Monroeville project. This was done pursuant to the Defendants’

fraudulent scheme.

53. On or about August 31, 2010, LCH certified to Target in Minnesota, via interstate

mail or wire, that American Pavement had satisfactorily completed its work on the Monroeville

project. This certification was false.

54. On or about August 31, 2010, LCH submitted to Target in Minnesota, via

interstate mail or wire, its invoice for the Monroeville project in the amount of $25,174. This

invoice sought payment from Target for work that LCH did not perform, including the oversight

and certification of completion of work that American Pavement did not actually perform. Upon

information and belief, LCH submitted its fraudulent invoice for the Monroeville project with the

knowledge and at the direction of Bailey, pursuant to Defendants’ scheme to defraud Target.


payment in full for the Monroeville project. Target would not have made these payments if it had




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Asphalt Maintenance: Hurst, TX (T-1766), Augusta, GA (T-1090), and Irving, TX (T-0255) 56. Defendants implemented their fraudulent scheme on at least the following

projects that were performed by Asphalt Maintenance: Hurst, Texas (T-1766), Augusta, Georgia

(T-1090), and Irving, Texas (T-0255).

Hurst, Texas (T-1766)

57. On the Hurst project, LCH submitted a “Pavement Assessment” to Target in


be done on the Hurst parking lot and defined the quantities of work to be performed in square


58. Asphalt Maintenance transmitted its proposal for the Hurst project via interstate

wire to Target in Minnesota. Target approved Asphalt Maintenance’s proposal, also via interstate

wire.

59. Asphalt Maintenance carried out the work on the Hurst project in August 2010,

ostensibly under the oversight of LCH. However, the quantity of work that Asphalt Maintenance


received payment from Target. In fact, Asphalt Maintenance installed less than one-half of the

asphalt and other materials required for the project as defined by LCH and included in Asphalt

Maintenance’s contract with Target.


Stinson, Asphalt Maintenance submitted to Target in Minnesota, via interstate mail or wire, an

invoice for the Hurst project in the amount of $277,335. This invoice misrepresented the scope

of work that Asphalt Maintenance had carried out on the Hurst project. This was done pursuant

to the Defendants’ fraudulent scheme.


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61. On or about September 14, 2010, LCH certified to Target in Minnesota, via

interstate mail or wire, that Asphalt Maintenance had satisfactorily completed its work on the

Hurst project. This representation was false and, upon information and belief, was known to be

false by Bailey and Heutzenroeder. These misrepresentations by Asphalt Maintenance and LCH

were made pursuant to Defendants’ scheme to defraud Target.


interstate mail or wire, its invoice for the Hurst project in the amount of $24,102. This invoice


certification of completion of work that Asphalt Maintenance did not actually perform. Upon

information and belief, LCH submitted its fraudulent invoice for the Hurst project with the


63. On or about October 14, 2010 and September 24, 2010, respectively, Target paid

Asphalt Maintenance $277,335 and LCH $24,102, representing payment in full for the Hurst

project. Target would not have made these payments if it had known of Defendants’ fraudulent

scheme and Defendants’ misrepresentations regarding the status of completion of the work.

Augusta, Georgia (T-1090)

64. On the Augusta project, LCH submitted a “Pavement Assessment” to Target in


be done on the Augusta parking lot and defined the quantities of work to be performed in square


65. On or about July 2, 2010, Stinson, on behalf of Asphalt Maintenance, sent to

Target in Minnesota via interstate mail or wire a Revised Bid Proposal for the Augusta project of

$375,064. Stinson subsequently sent Target via interstate mail or wire a Bid Proposal for Phase 2


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of the Augusta project in the amount of $134,136.50. Asphalt Maintenance’s bid proposals for

the Augusta project were subsequently accepted by Target.

66. On or about July 21, 2010, LCH transmitted an estimate of its fee for Phase 1 of

the Augusta project, in the amount of $30,005, to Target in Minnesota via interstate mail or wire.

67. Asphalt Maintenance carried out the work on the Augusta project in September

2010, ostensibly under the oversight of LCH. However, the quantity of work that Asphalt

Maintenance actually performed was far less than that which it had agreed to do and for which it

sought and received payment from Target. In fact, Asphalt Maintenance installed only

approximately one-half of the asphalt and other materials required for the project as defined by

LCH and included in Asphalt Maintenance’s contract with Target.

68. On or about September 14, 2010, LCH certified to Target in Minnesota, via

interstate mail or wire, that Asphalt Maintenance had satisfactorily completed its work on the

Augusta project. This certification was false.

69. On or about On October 4, 2010, and October 15, 2010, respectively, Stinson, on

behalf of Asphalt Maintenance, submitted to Target in Minnesota, via interstate mail or wire,

invoices for the Augusta project in the total amount of $509,201. These invoices misrepresented

the scope of work that Asphalt Maintenance had carried out on the Augusta project. This was

done pursuant to the Defendants’ fraudulent scheme.


interstate mail or wire, its invoice for the Augusta project in the amount of $40,736. This invoice




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information and belief, LCH submitted its fraudulent invoice for the Augusta project with the


71. Target has paid Asphalt Maintenance $509,201 and LCH $40,736, representing

payment in full for the Augusta project. Target would not have made these payments if it had



Irving, Texas (T-0255)

72. On the Irving project, LCH submitted a “Pavement Assessment” to Target in


be done on the Irving parking lot and defined the quantities of work to be performed in square


73. Subsequently, LCH purported to conduct a competitive bidding process for the

Irving project and received bids from two contractors. LCH and Bailey represented to Target in a

communication sent via interstate mail or wire that Asphalt Maintenance was the low bidder on

the Irving project. In fact, another contractor was the low bidder. Subsequently, LCH and Bailey

transmitted to Target via interstate mail or wire a spreadsheet that purported to show the bids that

LCH had obtained from contractors on various projects, including Irving. In that spreadsheet,

LCH altered the bid that was actually submitted by another contractor so that it would appear

that Asphalt Maintenance was the low bidder.

74. On or about July 2, 2010, Stinson, on behalf of Asphalt Maintenance, sent to

Target in Minnesota via interstate mail or wire a bid proposal for the Irving project of $332,896.

Asphalt Maintenance’s bid proposal for the Irving project was subsequently accepted by Target.


21

75. On or about August 20, 2010, LCH transmitted an estimate of its fee for the

Irving project, in the amount of $26,632, to Target in Minnesota via interstate mail or wire.

76. Asphalt Maintenance carried out the work on the Irving project in August 2010,

ostensibly under the oversight of LCH. However, the quantity of work that Asphalt Maintenance


received payment from Target. In fact, Asphalt Maintenance installed less than one-half of the

asphalt and other materials required for the project as defined by LCH and included in Asphalt

Maintenance’s contract with Target.

77. On or about August 22, 2010, Stinson transmitted to Target in Minnesota, via

interstate mail or wire, a waiver of lien form that represented, falsely, that Asphalt Maintenance

had completed its scope of work on the Irving project and was entitled to payment of its contract

price of $332,897.


Stinson, Asphalt Maintenance, submitted to Target in Minnesota, via interstate mail or wire, an

invoice for the Irving project in the amount of $332,897. This invoice misrepresented the scope

of work that Asphalt Maintenance had carried out on the Irving project. This was done pursuant

to the Defendants’ fraudulent scheme.


interstate mail or wire, its invoice for the Irving project in the amount of $26,632. This invoice



information and belief, LCH submitted its fraudulent invoice for the Irving project with the



22

80. Target has paid Asphalt Maintenance $332,897 and LCH $26,632, representing

payment in full for the Irving project. Target would not have made these payments if it had



Rose Paving: Cicero, IL (T-0732), Henrietta, NY (T-1157), and Lake Zurich, IL (T-1036)

81. Defendants implemented their fraudulent scheme on at least the following

projects that were performed by Rose Paving: Cicero, Illinois (T-0732), Henrietta, New York (T-

1157), and Lake Zurich, Illinois (T-1036).

Cicero, Illinois (T-0732)

82. On the Cicero project, LCH submitted a “Pavement Assessment” to Target in


be done on the Cicero parking lot and defined the quantities of work to be performed in square



Cicero project and received bids from two contractors. LCH and Bailey represented to Target in

a communication sent via interstate mail or wire that Rose Paving was the low bidder on the

Cicero project. In fact, another contractor was the low bidder. Subsequently, LCH and Bailey

transmitted to Target via interstate mail or wire a spread sheet that purported to show the bids

that LCH had obtained from contractors on various projects, including Cicero. In that spread

sheet, LCH altered the bid that was actually submitted by another contractor so that it would

appear that Rose Paving was the low bidder.


23

84. On or about June 23, 2010, Rose Paving sent to Target in Minnesota via interstate

mail or wire its bid proposal for the Cicero project of $367,145. Rose Paving’s bid proposal for

the Cicero project was subsequently accepted by Target.

85. On or about July 21, 2010, LCH transmitted an estimate of its fee for the Cicero

project, in the amount of $29,372, to Target in Minnesota via interstate mail or wire.

86. Rose Paving carried out the work on the Cicero project in September 2010,

ostensibly under the oversight of LCH. However, the quantity of work that Rose Paving actually

performed was far less than that which it had agreed to do and for which it sought and received

payment from Target. In fact, Rose Paving only installed approximately two-thirds of the

asphalt and other materials required for the project as defined by LCH and included in Rose

Paving’s contract with Target.

87. On or about October 15, 2010, Rose Paving submitted to Target in Minnesota, via

interstate mail or wire, an invoice for the Cicero project in the amount of $367,145. This invoice

misrepresented the scope of work that Rose Paving had carried out on the Cicero project. This

was done pursuant to the Defendants’ fraudulent scheme.


interstate mail or wire, its invoice for the Cicero project in the amount of $29,372. This invoice


certification of completion of work that Rose Paving did not actually perform. Upon information

and belief, LCH submitted its fraudulent invoice for the Cicero project with the knowledge and

at the direction of Bailey, pursuant to Defendants’ scheme to defraud Target.

89. Target has paid Rose Paving $367,145 and LCH $29,372, representing payment

in full for the Cicero project. Target would not have made these payments if it had known of


24



Henrietta, New York (T-1157)

90. On the Henrietta project, LCH submitted a “Pavement Assessment” to Target in


be done on the Henrietta parking lot and defined the quantities of work to be performed in square


91. On or about June 23, 2010, Rose Paving sent to Target in Minnesota via interstate

wire a bid proposal for Phase 1 of the Henrietta project in the amount of $824,000. Subsequently,

Rose Paving sent to Target in Minnesota via interstate wire a bid proposal for Phase 2 of the

Henrietta project in the amount of $504,610. Rose Paving’s bid proposals for the Henrietta

project were subsequently accepted by Target.

92. On or about July 21, 2010, LCH transmitted an estimate of its fee for Phase 1 of

the Henrietta project, in the amount of $65,920, to Target in Minnesota via interstate mail or

wire.

93. Rose Paving carried out the work on the Henrietta project in December 2010,



payment from Target. In fact, Rose Paving installed less than one half of the asphalt and other

materials required for the project as defined by LCH and included in Rose Paving’s contract with

Target.


25

94. On or about October 19, 2010, LCH certified to Target in Minnesota, via

interstate mail or wire, that Rose Paving had satisfactorily completed its work on the Henrietta

project. This certification was false.

95. On or about October 15, 2010 and November 18, 2010, respectively, Rose Paving

submitted to Target in Minnesota, via interstate mail or wire, invoices for the Henrietta project in

the total amount of $1,328,610. These invoices misrepresented the scope of work that Rose

Paving had carried out on the Henrietta project. This was done pursuant to the Defendants’

fraudulent scheme.

96. On or about October 19, 2010, LCH submitted to Target in Minnesota, via

interstate mail or wire, invoices for Phase 1 and Phase 2 of the Henrietta project in the amounts

of $65,920 and $43,598, respectively. This invoice sought payment from Target for work that

LCH did not perform, including the oversight and certification of completion of work that Rose

Paving did not actually perform. Upon information and belief, LCH submitted its fraudulent

invoice for the Henrietta project with the knowledge and at the direction of Bailey, pursuant to

Defendants’ scheme to defraud Target.

97. Target has paid Rose Paving $1,328,610 and LCH $109,518, representing

payment in full for the Henrietta project. Target would not have made these payments if it had



Lake Zurich, Illinois (T-1036)

98. On the Lake Zurich project, LCH submitted a “Pavement Assessment” to Target

in Minnesota, via interstate mail or wire. This Pavement Assessment defined the scope of work


26

to be done on the Lake Zurich parking lot and defined the quantities of work to be performed in



Lake Zurich project and received bids from two contractors. LCH and Bailey represented to

Target in a communication sent via interstate mail or wire that Rose Paving was the low bidder

on the Lake Zurich project. In fact, another contractor was the low bidder. Subsequently, LCH

and Bailey transmitted to Target via interstate mail or wire a spread sheet that purported to show

the bids that LCH had obtained from contractors on various projects, including Lake Zurich. In

that spread sheet, LCH altered the bid that was actually submitted by another contractor so that it

would appear that Rose Paving was the low bidder.

100. On or about July 13, 2010, Rose Paving sent to Target in Minnesota via interstate

wire its bid proposal for the Lake Zurich project in the amount of $658,144. Rose Paving’s bid

proposal for the Lake Zurich project was subsequently accepted by Target.

101. On or about July 21, 2010, LCH transmitted an estimate of its fee for the Lake

Zurich project, in the amount of $52,652, to Target in Minnesota via interstate mail or wire.

102. Rose Paving carried out the work on the Lake Zurich project in October 2010,



payment from Target.

103. On or about November 1, 2010, LCH certified to Target in Minnesota that Rose

Paving had satisfactorily completed its work on the Lake Zurich project. This certification was

false.


27

104. On or about October 29, 2010, Rose Paving transmitted to Target in Minnesota

via interstate mail or wire a lien waiver form that represented that Rose Paving had completed its

work on the Lake Zurich project. On or about November 17, 2010, Rose Paving submitted to

Target in Minnesota, via interstate mail or wire, an invoice for the Lake Zurich project in the

total amount of $658,144. This invoice misrepresented the scope of work that Rose Paving had

carried out on the Lake Zurich project. This was done pursuant to the Defendants’ fraudulent

scheme.

105. On or about November 1, 2010, LCH submitted to Target in Minnesota, via

interstate mail or wire, its invoice for the Lake Zurich project in the amount of $52,652. This

invoice sought payment from Target for work that LCH did not perform, including the oversight

and certification of completion of work that Rose Paving did not actually perform. Upon

information and belief, LCH submitted its fraudulent invoice for the Lake Zurich project with the

knowledge and at the direction of Bailey and Heutzenroeder, pursuant to Defendants’ scheme to

defraud Target.

106. Target has paid Rose Paving $658,144 and LCH $52,652, representing payment

in full for the Lake Zurich project. Target would not have made these payments if it had known

of Defendants’ fraudulent scheme and Defendants’ misrepresentations regarding the status of


107. Upon information and belief, Defendants’ scheme to defraud Target began shortly

after LCH became a consultant for Target in early 2009. It continued until May 2012, when

Target terminated its relationships with Defendants.


28

108. Upon information and belief, the projects specifically identified herein are not the

only ones where Defendants perpetrated their scheme to defraud Target. Discovery will disclose

what other projects may also have been involved.

109. Paving contractors and individuals other than those named as Defendants may

also have participated in Defendants’ fraudulent scheme.

110. While the full extent of Target’s damages are not yet known, Target believes that

Defendants have obtained millions of dollars from Target through the fraudulent scheme alleged

in this Complaint.

COUNT ONE

CIVIL RICO (ALL DEFENDANTS)

111. The allegations of paragraphs 1 through 110 are incorporated herein by reference

and realleged.

112. Target is a “person” within the meaning of 18 U.S.C. §1961(3).

113. Defendants are each “persons” within the meaning of 18 U.S.C. §1961(3).

114. Defendants are a group of corporations and individuals associated in fact so as to

form an “enterprise” for the purpose of defrauding Target and other victims and for other illicit

purposes (hereinafter the Paving Fraud Enterprise) within the meaning of 18 U.S.C. §1961(4).

115. The Paving Fraud Enterprise was engaged in, and its activities affected, interstate

commerce.

116. Defendants and other employees of the corporate Defendants participated directly

or indirectly in the conduct of the affairs of the Paving Fraud Enterprise through a pattern of

racketeering activity within the meaning of 18 U.S.C. §1961(5) as described herein, in violation

of 18 U.S.C. §1962(c) and (d).


29

117. Defendants and other employees of the corporate Defendants conducted and

participated in the affairs of the Paving Fraud Enterprise in order to carry out a pattern of

racketeering with multiple aims:

(a) to fraudulently obtain money by committing various frauds;

(b) to defraud Target in order to enrich themselves; and

(c) to corruptly conceal their racketeering activity by creating false documents

and providing such false documents to Target and others.

118. The racketeering activity of the Paving Fraud Enterprise included, without

limitation, the use of interstate mails and wires for the purpose of executing a scheme to obtain

money or property by means of false pretenses, representations, or promises. The racketeering

activity thus constitutes multiple, related acts that are indictable under the federal mail and wire

fraud statutes, 18 U.S.C. §§1341 and 1343, and is within the scope of 18 U.S.C. §1961(1)(B)

and (5).

119. Each of the following mailings and/or interstate wire communications constitutes

a separate act of racketeering and were all undertaken with the specific intent to be part of and

in furtherance of the frauds perpetrated upon Target and others:

LCH and Heutzenroeder’s submission of a “Pavement Assessment” for the Cypress

project to Target on or about May 18, 2010.

United Paving’s submission of its bid proposals for the Cypress project to Target.

LCH’s submission of its estimates for its fees on the Cypress project to Target in July and

August 2010.

United Paving’s and Trujillo’s submission to Target of invoices for the Cypress project

on or about October 15, 2010, and November 3, 2000, which falsely represented that


30

United Paving had completed its work on that project and was entitled to payment of

$999,649.

LCH’s false certification to Target that United Paving had properly performed all of the

work which it contracted to perform on the Cypress project and submission of its own

invoices for the Cypress project on or about September 13, 2010.

LCH and Heutzenroeder’s submission of a “Pavement Assessment” for the Billings

project to Target on or about April 13, 2011.

LCH’s submission of as-built drawings to Target on or about September 7, 2011, which

falsely represented that all of United Paving’s work on the Billings project was complete.

United Paving’s and Trujillo’s submission to Target, on or about September 13, 2011, of

its invoice for the Billings project in the amount of $395,889, which falsely represented

that United Paving had completed its work on the Billings project and had installed all

quantities of materials required for the Billings project.

LCH’s and Bailey’s submission to Target, on or about September 28, 2011, of LCH’s

invoice in the amount of $26,143 for its services in connection with the Billings project.

LCH’s submission of a “Pavement Assessment” for the Peoria project to Target on or

about February 21, 2011.

United Paving’s and Trujillo’s submission to Target of its bid proposal for the Peoria

project, on or about September 13, 2011.

United Paving’s and Trujillo’s submission to Target, on or about September 22, 2011, of

an invoice for $1,074,810, which falsely represented that United Paving had completed

its work on the Peoria project and had installed all quantities required for the Peoria

project.


31

LCH’s and Bailey’s submission to Target, on or about October 3, 2011, of LCH’s invoice

in the amount of $69,624 for its services in connection with the Peoria project.

LCH’s submission of a “Pavement Assessment” for the Skyline project to Target.

American Pavement’s transmission of its two bid proposals for the Skyline project,

totaling $488,203, to Target, on or about July 6, 2010 and August 24, 2010.

American Pavement’s transmission to Target, on or about October 4, 2010, of its invoices

in the amount of $488,203 for the Skyline project.

LCH’s false certification to Target that American Pavement had properly performed all

of the work which it had contracted to perform on the Skyline project and invoices for its

services on the Skyline project in the amounts of $31,884 and $7,972, on or about

September 21, 2010.

LCH’s submission of a “Pavement Assessment” for the Neshaminy project to Target.

American Pavement’s and Helstad’s submission to Target of bids for the two phases of

the Neshaminy project, totaling $476,085, on or about July 9, 2010 and August 24, 2010.

American Pavement’s transmission to Target of invoices for the Neshaminy project

totaling $476,085, on or about September 16, 2010 and October 4, 2010.

LCH’s transmission to Target of invoices for the Neshaminy project in the amount of

$38,087, on or about August 30, 2010 and September 20, 2010.

LCH’s submission of a “Pavement Assessment” for the Monroeville project to Target.

Helstad’s and American Pavement’s transmission of a proposal for the Monroeville

project to Target in the amount of $307,444.

American Pavement’s transmission to Target of a lien waiver form and invoice for the

Monroeville project in the amount of $314,671.


32

LCH’s false certification to Target that American Pavement had satisfactorily completed

its work on the Monroeville project and its invoice in the amount of $25,174, on or about

August 27, 2010.

LCH’s submission to Target of a “Pavement Assessment” for the Hurst project.

Asphalt Maintenance’s transmission to Target of its proposal for the Hurst project.

Asphalt Maintenance’s and James Stinson’s transmission to Target of an invoice for the

Hurst project in the amount of $277,335, on or about October 4, 2010.

LCH’s transmission to Target of its invoice for payment of its fee for the Hurst project in

the amount of $24,102, on or about September 14, 2010.

LCH’s submission to Target of a “Pavement Assessment” for the Augusta project.

Asphalt Maintenance’s and Stinson’s transmission to Target of Bid Proposals for the

Augusta project, on or about July 2, 2010.

Asphalt Maintenance’s and Stinson’s transmission to Target of invoices for the Augusta

project, on or about October 4, 2010 and October 15, 2010.

LCH’s transmission to Target of invoices for the Augusta project, on or about September

6, 2010 and September 14, 2010.

LCH’s submission to Target of a “Pavement Assessment” for the Irving project.

LCH’s and Bailey’s interstate wire communication to Target to the effect that Asphalt

Maintenance was the low bidder on the Irving project.

LCH’s and Bailey’s transmission of a spreadsheet to Target that falsely reported

competing bids, and made Asphalt Maintenance appear to be the low bidder on the Irving

project.


33

Asphalt Maintenance’s and Stinson’s submission to Target of a Bid Proposal for the

Irving project in the amount of $332,896, on or about July 2, 2010.

Asphalt Maintenance’s and Stinson’s transmission to Target, on or about August 22,

2010, of a waiver of lien form that falsely represented that Asphalt Maintenance had fully

performed its scope of work on the Irving project and was entitled to payment of its full

contract price of $332,897.

Asphalt Maintenance’s and Stinson’s transmission to Target, on or about September 16,

2010, of an invoice for the Irving project in the amount of $332,897.

LCH’s transmission of its invoices for the Irving project in the amount of $28,829, on or

about September 16, 2010.

LCH’s submission to Target of a “Pavement Assessment” for the Cicero project.

LCH’s and Bailey’s false representation to Target that Rose Paving was the low bidder

on the Cicero project.

LCH’s and Bailey’s transmission of a spreadsheet to Target that falsely showed that Rose

Paving was the low bidder on the Cicero project.

Rose Paving’s transmission to Target of its Bid Proposal for the Cicero project of

$367,145, on or about June 23, 2010.

LCH’s transmission of its estimate for its work on the Cicero project, in the amount of

$29,372, on or about July 21, 2010.

Rose Paving’s transmission to Target, on or about October 15, 2010, of an invoice that

falsely represented that Rose Paving had completed all of the work it contracted to do on

the Cicero project and requested payment of the full amount of Rose’s contract,

$367,145.


34

LCH’s transmission to Target, on or about September 14, 2010, of its invoice for the

Cicero project in the amount of $29,372.

LCH’s submission to Target of a “Pavement Assessment” for the Henrietta project.

Rose Paving’s transmission to Target of a Bid Proposal for Phase 1 of the Henrietta

project in the amount of $824,000, on or about June 23, 2010.

Rose Paving’s subsequent transmission to Target of a second Bid Proposal for Phase 2 of

the Henrietta project in the amount of $504,610.

LCH’s transmission to Target of its estimate of its fee for Phase 1 of the Henrietta project

in the amount of $65,920, on or about July 21, 2010.

Rose Paving’s transmission to Target of invoices requesting payment in full of Rose

Paving’s contract price for the Henrietta project, $1,328,610, on or about October 15,

2010 and November 18, 2010.

LCH’s transmission to Target of its invoice for the Henrietta project in the amount of

$109,518, on or about October 19, 2010.

LCH’s submission to Target of a “Pavement Assessment” for the Lake Zurich project.

LCH’s and Bailey’s false representation to Target that Rose Paving was the low bidder

on the Lake Zurich project.

LCH’s and Bailey’s transmission of a spreadsheet to Target that falsely showed that Rose

Paving was the low bidder on the Lake Zurich project.

Rose Paving’s transmission to Target of its Bid Proposal for the Lake Zurich project in

the amount of $658,144, on or about July 13, 2010.

LCH’s transmission to Target of its estimate of its fee for the Lake Zurich project in the

amount of $52,652, on or about July 21, 2010.


35

Rose Paving’s transmission to Target of a lien waiver form that represented falsely that

Rose Paving had completed its contractual scope of work on the Lake Zurich project and

was entitled to full payment of its contract price, on or about October 29, 2010.

Rose Paving’s transmission to Target of its invoice for the Lake Zurich project, on or

about November 17, 2010, in the amount of $658,134.

LCH’s false certification to Target that Rose Paving had properly performed all of the

work which it had contracted to perform on the Lake Zurich project, together with its

invoice in the amount of $52,652, for the Lake Zurich project.

120. Defendants’ racketeering activity constituted a pattern of racketeering activity

within the meaning of 18 U.S.C. §1961(5). Defendants’ racketeering activity was both related

and continuous. As to relatedness, the predicate acts of racketeering activity are related to the

same or similar purposes, results and participants, and have the same goal, namely the

enrichment of Defendants and other possible members of the enterprise at the expense of Target,

and have the same methods of commission and are otherwise inter-related by distinguishing

characteristics, and are not isolated incidents. The pattern of racketeering activity was

sufficiently continuous under either the closed-end or open-end continuity standards. The

racketeering activity began in or about 2009 and continued until it was discovered by Target in

2012. The racketeering activity was a regular way for Defendants and the Paving Fraud

Enterprise to conduct business. Moreover, the racketeering activity would have continued

unabated if it had not been discovered and terminated, satisfying the open-end standard.

121. Target has been directly and proximately caused injury and financial loss by

reason of Defendants’ violation of 18 U.S.C. §1962. Accordingly, Target is entitled to recover


36

threefold the damages it has sustained, as well as its costs of this suit, including reasonable

attorneys’ fees, all pursuant to 18 U.S.C. § 1964(c).

COUNT TWO

BREACH OF CONTRACT (LCH)


and re-alleged.

123. Prior to February 2011, Target and LCH had an express contract, or in the

alternative an implied contract, that arose from the parties’ multiple oral and written expressions

of intent and from their course of dealing. That contract required, inter alia, that LCH discharge

certain duties in connection with Target paving contracts, including but not limited to assessing

the condition of a store’s parking lot and the need for repair or maintenance; identifying the

quantities of work required to perform such repair and maintenance; conducting a competitive

bidding process to select a contractor for the project; scheduling the work; interfacing with

Target personnel at the store as well as in Target’s home office; overseeing the work of the

contractor and ensuring that it completed the work that was included in the project scope and that

its work was of good quality; certifying to Target that the work had been properly completed;

and exercising due care in the discharge of these and other contractual duties.

124. Beginning in February 2011, LCH entered into a contract with Target titled a

“Supplier Qualification Agreement.” Its duties under the Supplier Qualification Agreement

remained substantially the same, except to the extent that assignment of projects by territory

eliminated the need for competitive bidding.

125. The acts and omissions alleged herein, including but not limited to failing to

accurately estimate the quantities required for performance of projects; failing to solicit


37

competitive bids for projects; selecting contractors for projects who were not in fact low bidders;

misrepresenting to Target the amounts of bids submitted by competing bidders; failing to

properly oversee work done by paving contractors; certifying that paving contractors had

completed their contractual scope of work when in fact they had not; and conspiring with paving

contractors to defraud Target, all constituted material breaches of LCH’s express or implied

contract with Target.

126. Target has fulfilled all material terms of its contracts with LCH.

127. Target has been damaged by LCH’s breaches of contract because it has paid non-

competitive prices for paving work and has paid for paving work that has not been completed by

contractors. The amount of Target’s damages will be proven at trial.

COUNT THREE

BREACH OF CONTRACT (UNITED PAVING, AMERICAN PAVEMENT, ASPHALT MAINTENANCE AND ROSE PAVING)


and re-alleged.

129. Prior to May 1, 2011, United Paving, American Pavement, Asphalt Maintenance

and Rose Paving all entered into contracts with Target on a project by project basis. The

contracts consisted of the contractors’ bid proposals to perform a specified scope of work and

Target’s acceptance of those bid proposals.

130. On or about May 1, 2011, United Paving, American Pavement and Asphalt

Maintenance all entered into Supplier Qualification Agreements with Target, pursuant to which,

along with Program Agreements and other documents that were incorporated into the contract,

they continued to perform services based on specified scopes of work for each store and

archetype pricing which the contractors quoted to Target.


38

131. The acts and omissions of United Paving, American Pavement, Asphalt

Maintenance and Rose Paving as alleged herein, including but not limited to participation in a

bid-rigging scheme and billing Target for work which had not been performed, constituted

material breaches of Defendants’ contracts with Target.

132. Target has fulfilled all material terms of its contracts with United Paving,

American Pavement, Asphalt Maintenance and Rose Paving.

133. Target has been damaged by United Paving’s, American Pavement’s, Asphalt

Maintenance’s and Rose Paving’s breaches of contract because it has paid non-competitive

prices for paving work and has paid for paving work that has not been completed by these

Defendants. The amount of Target’s damages will be proven at trial.

COUNT FOUR

FRAUD (ALL DEFENDANTS)


and re-alleged.

135. The actions of Defendants as alleged herein constitute fraud, including but not

limited to fraudulent misrepresentation.

136. Target reasonably relied on false material representations by Defendants in

making the payments to them described herein with respect to the projects specifically identified.

Such misrepresentations included, but were not limited to, representations as to the quantities of

work that were required to repair parking lots; representations that the bids solicited by LCH and

prepared by the Defendant contractors were procured competitively, without collusion, and, in

fact, represented the lowest bids for the work solicited; representations that LCH would monitor

and oversee the work of the Defendant contractors; and representations that the Defendant

contractors did, in fact, perform all of the work that they contracted to perform. If Target had


39

known that Defendants’ representations were false, it would not have made those payments.

137. To the extent that Defendants made similar false material representations in

connection with other projects, Target likewise reasonably relied on those false representations

in making payments to Defendants on those projects.

138. If Target had known that Defendants’ representations were false as alleged herein,

it would not have continued its business relationships with Defendants.

139. Target has been damaged by the fraudulent misrepresentations and other

fraudulent conduct of Defendants and has lost large sums of money, the amount of which will be

proven at trial.

WHEREFORE, Target prays for the following relief:

1) Judgment against all Defendants, jointly and severally, for the full amount of

damages proven at trial;

2) Restitution of all amounts proven to have been obtained by Defendants through

fraudulent means;

3) Judgment against all Defendants, jointly and severally, for treble damages for

violation of 18 U.S.C. §1962;

4) Interest; and

5) Costs and attorneys’ fees.


40

Dated: August 3, 2012 FAEGRE BAKER DANIELS LLP s/James J. Hartnett

James J. Hartnett, # 238624 John H. Hinderaker, #45305 2200 Wells Fargo Center 90 South Seventh Street Minneapolis, MN 55402-3901 Phone: 612.766.7000 Fax: 612.766.1600 [email protected] [email protected] ATTORNEYS FOR PLAINTIFF TARGET CORPORATION

fb.us.8556392.02


Documents

IN THE UNITED STATES DISTRICT COURT FOR THE …stmedia.startribune.com/documents/Targetlawsuit.pdfrigging scheme appeared to be the low bidder. The Defendant paving companies collaborated