Meetings with competitors resulted in a huge scandal (Indiana) In the spring of 2002, Price C. Irving was invited to a meeting with Irving Materials Inc.’s Indianapolis-area concrete competitors, where prices would be discussed.
He was uneasy. Fixing prices with competitors is illegal.So Irving did what many a son would do: He asked his dad, the company president and chief executive, whether he should attend such a meeting. Fred R. “Pete” Irving told his son he should go.That bit of parental advice, revealed in court documents filed last week, offers the first telling glimpse into how Irving Materials, a family-owned business beloved in its hometown of Greenfield, could wind up at the center of a price- fixing conspiracy that federal investigators say tainted nearly every bit of ready-mixed concrete sold in the Indianapolis market from 2000 to 2004.”Irving Materials is a family business, and the management structure more resembles royalty than a typical business,” Ty B. Hite, who has been friends with Price Irving since both were 4, wrote in a letter filed in federal court in Indianapolis. “When some one is the heir to the throne, it is very difficult to oppose the king.”Justice Department officials identified Pete Irving as playing a leading role in the price- fixing conspiracy.Those illegal meetings will now cost Irving Materials, known as IMI, nearly $30 million in penalties — the largest fine in domestic antitrust history — and probably jail time for the two Irvings, another top executive and a retired one. Sentencing is scheduled for Dec. 9. The Department of Justice’s antitrust division has indicated there are more companies to be punished in the scheme, which affected almost all concrete buyers — governments, builders, businesses and homeowners.And the state of Indiana and at least one federal agency are considering a multiyear ban on business with IMI or other price-fixers.The scandal even could prompt a restructuring of the local ready-mix concrete industry.”There’s a lot of changes in ownership that often follow these,” said John Connor, a cartels expert at Purdue University.The fallout from IMI’s price fixing already has been widespread. Twenty-one lawsuits have been filed against IMI in federal court in Indianapolis. One suit, filed by Indianapolis builder Shane Tharp, has named all of the area’s other major ready-mixed concrete firms as conspirators: American Concrete; Builder’s Concrete & Supply; Carmel Concrete Products; Prairie Material Sales, also known as Prairie Group; and Shelby Materials. Other lawsuits have named some of those companies, too.None of those companies has been charged with a crime. When contacted by The Indianapolis Star, the companies have declined to comment. American Concrete denied any wrongdoing.Simple startIt’s been a long, hard fall for IMI.The company began humbly in 1946 when Pete Irving’s father, the late Clesson C. “Skunk” Irving, founded it.Skunk — he got his nickname from his brothers, one story goes, after he kept looking at a caged skunk at a fair — collected zebras, camels, emus, llamas, cows and other creatures and raised them on his 124-acre farm. He endeared himself to Greenfield, a city of 15,000, by inviting busloads of local schoolchildren to visit the exotic animals. He also would invite children to IMI’s headquarters to see his collection of stuffed hunting trophies.”They never charged a penny to anybody,” said Vernon Schakel, 77, a close friend of the Irvings since he met Skunk in 1948. “To this day, they are very generous people.”Skunk led growth for IMI slowly, said Schakel, a former residential and commercial builder. “If his competition was using a one-yard crane, he would get a two-yard crane.”Skunk Irving got a leg up on his competitors when he purchased a patent for a special type of concrete mixing truck that poured from the front instead of the back. That tool shaved time off IMI’s projects and made IMI an innovative mover in the ready-mixed concrete industry, said Pat Kiel, executive director of the Indiana Ready Mixed Concrete Association.When Skunk’s son, Pete Irving, and 12 other managers bought ownership of IMI in 1967, the company changed.Pete Irving soon began a massive expansion that eventually would let IMI tout itself as the largest independent maker of ready-mixed concrete in the nation. IMI acquired one company a year from 1976 to 1979, according to state records. In 1993 alone, the company splurged on seven companies, including one from relatives, Irving Brothers Gravel, for which it paid $76 million.No slowing downThat same year, Skunk Irving died. But Pete Irving, now 65, kept expanding IMI.The company now has operations in Alabama, Illinois, Indiana, Kentucky, Ohio and Tennessee. According to research by Hoover’s Inc., the company has 2,200 employees and estimated annual sales of $293 million.”They eat, sleep and breathe concrete,” Kiel said of the Irvings.Pete Irving is a hard negotiator, said former IMI employee Al Eckler, and stays inside his office most of the time. Many customers praised IMI as a company but said they had little interaction with Pete Irving.”He thinks in bigger terms than Skunk,” Schakel said of Pete Irving. “They’re two different people. Pete’s more of an ambitious (businessman).” Schakel added that Pete expanded the company “probably too fast.”Along the way, Pete Irving divorced his first wife, Darcey, who is Price Irving’s mother. Pete Irving and his second wife had a daughter and gave her the initials I.M.I.He also continued Skunk Irving’s tradition of giving back to the community.IMI has donated millions in cash and concrete to Ball State University, Hancock County Boys & Girls Club, Habitat for Humanity projects and fire stations in Hancock County, Indianapolis and Jasper. It also funds numerous scholarships for secondary and college students.In 1990, IMI and Irving Brothers Gravel gave $2.25 million to Ball State to create two distinguished professorships and to help finance construction of what is now Worthen Arena. BSU renamed University Gym as Irving Gym after the gift.”They haven’t done anything but good,” said Ann Parker, who lives across the street from IMI’s headquarters and has known Pete Irving for more than three decades. She mentioned the company’s contributions but declined to comment further about the Irvings.Working for the familyPrice Irving, 43, grew up watching his father and grandfather at IMI and worked some summers there. He joined the company full time in 1988 at age 26, crushing rocks and picking mud off conveyor belts at a stone quarry in Pendleton.It was the same year that Pete and Darcey Irving divorced. In a letter filed in court, Darcey Irving said Pete Irving left her in 1985. Price Irving now lives with his family in his parents’ old house, where he grew up.Price Irving advanced through the company gradually.According to a letter Price Irving submitted for a presentencing report, he moved into IMI’s concrete division in the mid-1990s and became vice president of Indiana operations in 1998. He reported to John Huggins, who as executive vice president essentially ran the company. Huggins, now retired, also pleaded guilty to price fixing.In 2001, Huggins gave Price Irving oversight of the Indianapolis plants. The next year, Huggins retired and was replaced by Daniel C. Butler, the fourth IMI executive to admit to price fixing.How the business turned toward conspiracy is not fully known because the Justice Department has kept its evidence against IMI secret while pursuing cases against other companies.Government investigators have inquired into potential price fixing in the Indianapolis market for years, said Dick Albright, a former marketing director of the now- defunct Indiana Concrete Council.”There’s been rumors that people have looked at for years,” he said. “I was just surprised that anybody was doing that.”But last week several people filed letters with the court, seeking leniency for Price Irving, and in them they revealed some details of the conspiracy.According to those letters, Butler asked Price Irving to manage the Indianapolis sales team — his fi
rst sales experience — and then asked him to attend the meetings with several of IMI’s ready-mix competitors in Indianapolis.Pete Irving told Price he should go and that the meeting would mostly entail a bunch of industry griping and moaning, Price Irving wrote in his letter to the court. Butler convinced Price Irving it was OK and told him that if IMI’s competitors called asking for IMI’s prices, to tell them. Price Irving gave out the price information and called some competitors to discuss pricing, he wrote.Price Irving said he attended three or four meetings from summer 2002 to October 2003, some of which federal investigators say were conducted at local hotel rooms and a horse barn. At those meetings, which he said he never arranged, concrete company representatives discussed limiting discounts and continuing communication among the companies on quotes and prices.Need to ‘prove himself’Price Irving’s letter was filed by his attorney, Bob Hammerle, along with 24 others, to encourage Judge Larry J. McKinney to spare him from jail time. Many of the letters — including ones written by his wife, Elaine, and his mother, Darcey — point to Pete Irving as the reason Price joined the meetings. The letters do not directly accuse Pete Irving or expressly excuse Price Irving.”Price always thought he had to prove himself to (his father),” Darcey Irving wrote.Elaine Irving, who met Price while working at IMI and married him in 1992, said the relationship between Pete and Price Irving is complex. “Price always respected his father very much, but they have a difficult relationship, different values and communicate poorly with one another,” she wrote.Attorneys for Pete Irving, Butler and Huggins included no letters in their case files. They could not be reached late last week for comment and have declined several requests to make their clients available for interviews.Also writing letters on Price Irving’s behalf were a policeman, an attorney, IMI employees and customers, and state Rep. Bob Cherry R-Greenfield.Each letter lauds Price Irving’s character and gives examples of his devotion to his wife, sons and to the Greenfield community and his strict adherence to rules. They all said he is remorseful and has learned his lessons.Price Irving once convinced an umpire to overturn a ground-rule double for the opposing team into a home run by having one of his outfielders explain that the opposing player had hit the ball over the fence, not bounced it over, as the umpire first thought. That’s a key memory described by Joe Thomas, whose son is a player on the Bandits baseball team that Price Irving coaches in Greenfield.Price Irving met with the parents of his ballplayers to tell them of his guilty plea before it was announced publicly.For his part in the price fixing, Price Irving said “there is no excuse,” but he placed some blame on his lack of sales experience and his father.”It is hard enough for persons to be whistleblowers in companies they simply work for, let alone when it is the only company for which they have ever worked, and it is owned and operated by your father, a person aware of what was happening,” Price Irving wrote in his statement.That still might be excuse- making. But Price Irving has at least one independent supporter.Eugene Muscat, senior associate dean at the University of San Francisco’s Family Business Center, says business and family often become hopelessly enmeshed, particularly when a company gets into trouble.”It’s hard enough to be a whistleblower in a corporation. A whistleblower in a family business is a heck of a lot harder.’The plea agreements:If the plea agreements of four IMI officials are accepted by a judge at sentencing Dec. 9, theese are the punishments:Fred ‘Pete’ Irving, 65Position: President.Pleaded guilty to price fixing.Plea agreement: Five months in prison, five months on home detention and a $200,000 fine.Daniel C. Butler, 55Position: Vice president.Pleaded guilty to price fixing.Plea agreement: Five months in prison, five months’ home detention, $100,000 fine.John Huggins, 65Position: Retired executive vice president.Pleaded guilty to price fixing.Plea agreement: Five months in prison, five months’ home detention, $100,000 fine.Price Irving, 43Position: Vice president. By J.K. Wall and Catherine Rentz Pernotjk.firstname.lastname@example.orgCall Star reporter J.K. Wall at (317) 444-6287.