Bid Rigging A Government Agency Doesn’t Pay
The Department of Justice’s Antitrust Division is a unique organization that wields its proverbial sword in both civil and criminal realms. Although less than a decade ago the Antitrust Division closed several of its field offices and consolidated personnel, recent investigations and prosecutions demonstrate that the Division is very much alive and well.
The Division has recently been investigating a group of individuals involved in an online bid rigging scheme of the Government Services Administration’s (GSA) online public auction. So far 2 people have pled guilty and agreed to cooperate with the government in the prosecution of others.
According to the Information filed by the United States Attorney’s Office in the District of Minnesota, Marshall Holland, who owned a Texas company that purchased computers to resell and recycle, along with Igor Yurkovetsky and others, conspired to rig and price fix the GSA’s online auction of used computers.
The GSA auctions federal government assets it no longer uses, such as computers, via a platform called GSA Auctions. GSA Auctions assigns a sale-lot number to an item to be auctioned and Bidder numbers to bidders in order to maintain anonymity. The auction period is specified. The bidder with the highest bid, at the close of the bid, wins the bid. The Defendants were located in Texas, Missouri and Pennsylvania. The computers they purchased were located in different states, including Pennsylvania, and were then shipped to Texas and Pennsylvania. The GSA server is located in Minnesota, where the case was filed.
According to the defendants’ Plea Agreement and Sentencing Stipulations, the conspiracy lasted approximately 6 years. They won bids totaling $93,000. The Antitrust Division alleged that the defendants suppressed and eliminated competition of the sale of the computers by agreeing:
- to designate which co-conspirator would submit the winning bid;
- to not compete against each other;
- to disclose each other’s Bidder number in order to monitor the bidding;
- to submit rigged bids on computers in 8 states;
- to split the computers among the conspirators.
Igor Yurkovetsky pled guilty on September 24th to conspiracy to restrain interstate trade and commerce in violation of the Sherman Act. Marshall Holland pled guilty on April 10, 2019 to the same charges. Both defendants agreed to cooperate with the United States government in the prosecution of co-conspirators and both agreed to a United States Sentencing Guideline range of 8-14 months imprisonment, a fine of one to five percent of the volume of commerce with a minimum of $20,000, restitution, and supervised release between one and three years. In addition, the Defendants may face debarment or suspension by states or federal agencies they do business with.
The mission of the Antitrust Division is “to promote economic competition through enforcing and providing guidance on antitrust laws and principles.” Clearly the government is cognizant of the volume of transactions that occur online each and every day. The Division does not focus solely on cases involving millions or billions of dollars. The Holland and Yurkovetsky cases broadcast to businesspeople and counsel alike that bid rigging, no matter what the dollar amount, is on the government’s radar.
(USA v. Marshall Holland, United States District Court of Minnesota, Case No. 2019-cr-00065)
(USA v. Igor Yurkovetsky, United States District Court of Minnesota, Case No. 2019-cr-00182)