Christopher Young, a salesman with a strong jaw and an easy smile, began suspecting his boss of federal crimes soon after starting work at the cramped Pooler office of one of the world’s largest concrete companies.
The first tipoff came when his boss, the local sales manager for Argos USA LLC, ordered him to ensure that a local competitor that employed his brother would win 75% of Savannah’s residential concrete construction business, according to a whistleblower complaint Young filed in 2011.
Young documented for years how his manager, Gregory Melton, his younger brother David and the president of a third area concrete company allegedly colluded on concrete contracts for residential, governmental and commercial construction projects across the Low Country. The men predetermined prices for bids and thus which company would win projects, including Georgia Southern University’s biology building and dining halls in Statesboro, buildings at Fort Stewart in Hinesville, Hunter Army Airfield in Savannah and Savannah-Chatham County schools, according to Young.
Those allegations sparked a federal probe into price-fixing that simmered for years before burning out in 2016. This fall, however, it flickered back into life when a grand jury in Savannah indicted four businessmen originally named by Young. Earlier this month, the case gained momentum when prosecutors secured a confession from Young’s former firm.
On Jan. 4, Argos admitted that a small number of former employees in Pooler “conspired with other persons and entities engaged in the sale of ready-mix concrete to suppress and eliminate competition by agreeing to fix prices, rig bids, and allocate markets for sales of ready-mix concrete in the greater Savannah, Georgia, area including Statesboro, Georgia, and Hilton Head Island, South Carolina.” The criminal conspiracy took place from between 2011 and 2016 and cheated customers and competitors in the Savannah region out of millions of dollars.
The company, which has its U.S. headquarters in Alpharetta, agreed to give evidence against two former employees and two other men facing federal charges in exchange for a deferred prosecution agreement with prosecutors. The defendants, who all pleaded not guilty, are:
— Greg Melton, 56, Young’s former boss who was division manager for concrete sales for Argos. He lives on a 200-acre farm in Emanuel County, according to property records.
— David Melton, his 51-year-old brother who was a general manager for Elite Concrete in Walthourville and now lives in Lynn Haven, Florida. Former colleagues say David is the more amiable of the brothers, who grew up in Decatur.
— Timothy Tommy “Bo” Strickland, 42, who is president and co-owner of Evans Concrete in Claxton, a third generation family business. “He’s the backbone of the company,” his lawyer, Tom Peterson IV of Vidalia, said of the Hinesville-based businessman. “It’s all he’s ever done.” The indictment charges him with perjury and making false statements to authorities. Both Strickland and his company face conspiracy charges.
— James Pedrick, a 64-year-old former cement salesman for Argos who lives in Savannah. He is accused of acting as a go-between by passing pricing information among conspiring concrete suppliers so they could coordinate contract bids. In addition to the conspiracy count, he is charged with giving false statements to federal agents.
The Current sought comment from all four men and their attorneys via telephone, email and LinkedIn. Those who replied declined to comment. Some cited federal court rules in Savannah that frown upon pre-trial press interviews.
General counsel for Argos USA, Mark Prybylski, told The Current he couldn’t discuss the case beyond a statement the company released at the time of its admission that admitted responsibility for the wrongdoing it said was limited to a few people in the Pooler office.
Young, now president of Southeast Ready Mix in Bluffton, declined comment on the case, citing ongoing lawsuits. His current employer is suing Argos over the antitrust allegations. At the same time Argos is suing Young for allegedly stealing privileged corporate documents and giving them to its competitor, Southeast.
Details given here about the Low Country concrete business come from filings in Young’s original whistleblower case, the federal indictment, the admission by Argos, and civil suits against Argos and other alleged conspirators. In one case, Georgia and South Carolina construction businesses are suing to recover the millions of dollars they say the cartel’s price-fixing cost them. In two others, concrete suppliers say the conspiracy cost them work and revenue and drove companies out of business.
The concrete companies have sought dismissal of these cases, saying in court filings that the plaintiffs’ claims fall short of legal standards and the business practices were standard, competitive behavior.
Building the business
In 2010, when Young moved from the Atlanta area to work in Pooler, the Savannah-area construction industry was just beginning to recover from the economic recession.
He, his boss Greg Melton, and a third salesman, solicited business in offices converted from dental examination rooms in a modern, one-story building off Pooler Parkway.
A receptionist sat near the front door, a dispatcher with his own office helped organize the transport of concrete sold by the men from plants around Coastal Georgia. One of them, on Louisville Road in Garden City, contained a small office where Pedrick worked.
In such close quarters, co-workers could easily overhear telephone conversations, even those discussing questionable business practices.
Melton and his brother who worked at Elite “spoke at least several times per week and compared customers, prices and job bids,” Young alleged in his whistleblower suit. They’d talk on the phone. They’d meet at diners around Chatham County — a couple of Cracker Barrels, Hooters or the Sunshine restaurant. They’d exchange pricing information before submitting bids for construction work, effectively dividing Savannah’s concrete jobs between Argos and Elite.
The older Melton replicated the same cartel behavior in Statesboro, where Argos and Evans Concrete, a company run by Strickland, controlled nearly the entire market. Instead of competing honestly for contracts, the two men secretly traded information about pricing and bids, according to the federal indictment. That allowed them to rig their bids and guarantee jobs for both companies, according to the people and companies suing over the conspiracy. The companies claim their actions were “independent and competitive behavior,” according to a joint court filing for Argos, Evans, Elite.
Deals drove pricing on university contracts
Young’s whistleblower complaint provided granular details about the way collusion affected tax-payer funded building projects at Georgia Southern University.
The two men, according to the complaint, agreed to a deal in which Evans would bid lower price for certain construction projects at the campus, while Argos would offer a lower bid for other projects in Statesboro.
The largest of those projects was the Biological Sciences Building, which would require nearly 21,000 tons of concrete or 840 truckloads. When Georgia Southern’s contractors offered the job up for bids, Evans Concrete came in low at $89 per cubic yard, or $979,000. Argos, the only other bidder, priced it at $92 a yard, according to Young’s account. As the two businessmen had pre-arranged, the smaller Liberty County firm won that contract, he said.
The price-fixing set the Statesboro contracts at $10 higher per yard than the cost of the same concrete in Savannah, according to Young. That would have added $110,000 to the price.
Evans also won contracts for a Georgia Southern recreational facility and an off-campus apartment complex, while Argos bid lower on two university dining halls and won those jobs, according to Young.
As for concrete needed for the university’s sports stadium, the two companies split the work, according to Young’s lawsuit.
Georgia Southern, which is not party to the price-fixing case, said that its construction projects are overseen by a general contractor, and the university has “little to no involvement in any subcontractors hired to supply materials or provide labor.”
“As a state entity, we are dismayed with any report that the public’s money may have been misused and are working to learn more about these connections,” said university spokeswoman Melanie Simon.
Elsewhere around Statesboro, Evans won concrete contracts for a Steak ‘n Shake, a Nissan dealership and two apartment complexes by pre-arranging pricing and bids with Melton, according to Young. Argos, meanwhile, bid below Evans to win concrete work for a Hampton Inn, a CVS and three apartment projects.
Strickland denied he’d colluded with Melton on the Statesboro jobs when questioned in 2015 by federal authorities. The federal indictment from September now says those denials were false.
Cement: Foundation of power
The unheralded, quotidian commodity key to most modern construction projects is cement. When mixed together with sand, gravel and water, and sometimes other additives, it becomes concrete, the basic ingredient for the multibillion-dollar global construction industry.
In the Savannah region, Argos USA was the largest company that sold both commodities, giving the salesmen in the company’s office off the Pooler Parkway significant influence over the construction market in Coastal Georgia and South Carolina.
That market dominance also gave Argos leverage over smaller concrete companies that balked at joining the cartel, according to ongoing civil suits against the Alpharetta-based company. One plaintiff estimates Argos’s share of the cement market in Coastal Georgia and South Carolina at 70 percent. The combined market share of Argos and three other cement suppliers that allegedly conspired with Argos came to 90 percent, according to a suit a Guyton couple and their concrete company filed against several concrete and cement companies.
According to Keith and Joy Woods of Guyton, the former owners of Premier Concrete, claim that Pedrick, the indicted Argos cement salesman, was the member of the cartel that strong-armed their small, Rincon-based firm out of business.
Pedrick “would follow the Premier trucks to job sites and then try to undercut Premier on price,” the Woodses allege in a civil suit filed last January in Atlanta.
That happened, the Woodses say, when Premier had a purchase order to pour concrete on Ebenezer Road in Effingham County. The day before the scheduled work, the general contractor told Premier that the job had been shifted to Argos because the larger company had offered lower prices. The same thing happened for a job at a Lexus car dealership in Hardeeville, which opened in June 2013.
By 2014, Argos and other local cement sellers stopped supplying Premier, the Woodses claim. That forced Premier’s trucks to travel more than 200 miles to buy cement in Branford, Florida, thus raising its costs. By 2019, the Woodses sold the business.
Lawyers for Argos and Pedrick have denied any wrongdoing in the ongoing civil case, saying that the Woodses “failed to allege facts that plausibly show either the existence of an agreement among the Defendants or that they actually excluded [Premier] from the market.”
Salesman turns whistleblower
Around the same time as Premier was coming under pressure from the cartel, Young’s suspicions about his boss’s business practices had mounted.
The salesman gave federal authorities corporate documents from the Pooler office and secretly recorded business conversations. Then, in April 2013 Young filed a whistleblower lawsuit in Savannah alleging that price-fixing among concrete and cement suppliers cheated local, state and federal governments out of millions of dollars.
As is routine in whistleblower cases, he requested federal and state authorities to join the case and use their investigative powers.
Edgar Bueno, civil division chief for the district’s U.S. Attorney’s Office, who looked into the whistleblower claims, told The Current that he considered Young’s allegations “very credible.” Yet, federal investigators from the Departments of Justice, Defense, and Transportation had a tough time finding enough evidence to support the whistleblower claim, and the case dragged on for three years.
Despite laws in place to keep secret the identity of whistleblowers, Young was convinced that Melton and his Argos boss learned that he was behind the probe. Soon, according to Young, he was subject to a retaliation campaign at work.
On July 7, 2016, the company fired him from his $137,000 a year job.
A day later, Bueno filed notice in court that the U.S. government would not intervene in his case. “We didn’t have enough,” says Bueno, now a partner in Morris, Manning & Martin in Atlanta and Savannah. “We tried very, very hard. But you need evidence. You need witnesses.”
Out of work and abandoned by the government, Young closed his whistleblower case.
But, Argos’s legal troubles in the Savannah area were just beginning.
Homeowners, developers take on companies
Concrete and cement companies around the world have a track record of engaging in dubious business practices and getting caught breaking the law.
Over the past decade, regulators in South Africa, Spain, Mexico, Colombia, India and Korea all have slapped fines on cement makers for price-fixing and blocking competition. India imposed a $994 million fine in 2016 against 11 cement companies.
In 2017, Colombia fined the country’s three largest cement makers $66 million for price fixing. One of those companies, Cementos Argos, is the parent of Argos USA.
U.S. authorities have successfully punished concrete executives who colluded to fix prices. In 2011, a sales manager for an Iowa concrete maker got hit with an $830,000 fine and a four-year prison term when he pleaded guilty to three separate price-fixing conspiracies. One of his co-conspirators agreed to an $83,000 fine and a one-year prison sentence for a minor role in the illegal activity.
When federal investigators declined to move forward with Young’s whistleblower case, alleged victims of the Savannah-area cartel took steps to get compensation by claiming some of the same unethical or illegal behavior that the former Argos salesman had raised flags about.
At the same time, Argos was facing nearly 200 homeowners between Savannah and Hilton Head in a class action suit that accused the company of using defective concrete in their driveways, walkways and underneath their houses. The affected subdivisions included Palmetto Bluff and Hampton Lake in Bluffton; Forest Lakes in Pooler; Westbrook Cove and the Fairways at Savannah Quarters in Pooler; Shadowbrook in Springfield; Emerald Plantation and Laurel Mills in Guyton; Straffordshire Estates in Rincon; Dunham Marsh in Richmond Hill.
Argos agreed last summer to pay the homeowners and their lawyers $10 million to settle.
Meanwhile, Young got a job across the Savannah River in Bluffton and his new employer, Southeast Ready Mix, joined with Mayson Concrete in 2017 to sue Argos, Evans and Elite, claiming the cartel illegally cut into their revenue and squeezed Mayson out of the market. The allegations filed in federal court in Atlanta echoed many which were in Young’s original whistleblower suit.
Elite’s lawyer did not return telephone and email messages from The Current seeking comment.
Four months later, construction firms filed another suit in Charleston against some of the same companies alleging the Savannah-area concrete cartel forced them to pay millions of dollars in unlawful overcharges for concrete. The companies have asked for a dismissal, saying the plaintiffs have not passed the legal threshold of evidence to support a suit.
Going on the offense, Argos sued Young, claiming he stole trade secrets that were the basis of some of the civil suits. Young sued in Beaufort, S.C., claiming Argos fired him illegally, but a judge dismissed his case.
Accusations pile up again
As the civil cases mounted, the U.S. Department of Justice rekindled interest in the allegations about the Argos Pooler office that the U.S. Attorney’s Office in Savannah had declined to pursue.
Four years after government lawyers seemed to wash their hands of Young’s whistleblower claims, Washington-based prosecutors convened a grand jury that led to indictments of the Meltons, Strickland and Pedrick. They were also quietly coaxing the admission of wrongdoing from Argos.
That Justice Department attorneys would find enough evidence to support criminal charges after others couldn’t back up the original whistleblower case is hard to understand, say whistleblower lawyers not connected to the case.
The DOJ press office in Washington did not respond to requests for comment. The spokesman for the Southern District’s prosecutors said the department never discusses strategy.
Argos, in its admission to prosecutors, can escape prosecution if, within three years, it meets certain demands, including beefing up antitrust compliance.
As for the $20 million fine it’s agreed to pay, the amount is a quarter of the $83 million in business it did in the Savannah and Hilton Head during a 4 ½-year period from October 2011, when Argos entered the Savannah market through the acquisition of rival French-based company LaFarge’s assets and taking on its employees, including Melton, Pedrick and Young.
Settlement may not end complaints
The Argos fine will likely end up in the U.S. Treasury, not with the cartel’s victims.
Still, if Argos and its alleged conspirators lose the ongoing civil suits, they could be forced to pay up to three times the amount of damages in each case.
A lawyer representing the Rincon-based business owners says he is hopeful that Argos’ admission to the federal conspiracy charge will strengthen the Woods’ civil suit.
“I think it’s going to support what we have alleged in our case,” says Lance Gould, a principal in the Montgomery-based firm Beasley Allen, which has an Atlanta office.
Scott Gilchrist, a lawyer representing local construction firms in the Charleston lawsuit against concrete and cement companies, called the Argos admission “a significant step toward getting some relief to our class members.”
“We’re pleased to see that Argos is admitting its role in the conspiracy,” said Gilchrist. A partner in Cohen & Malad in Indianapolis, Gilchrist has helped win multi-million-dollar settlements in two major antitrust class actions involving concrete in the Midwest — the same cases that sent conspirators to jail.
As for Young, the only thing his whistleblowing has delivered him so far is a pile of legal bills. Both of his own lawsuits against Argos have been dismissed in civil federal courts.
“He’s been fired. He’s been sued, and all as a result of his efforts to do the right thing,” Warren Johnson, a Hardeeville lawyer representing Young said in an interview last November.
But with Argos’ admission, Young has ended up with what he wanted in the first place: an end to the illegal behavior and possible punishment for those involved, Johnson said.