`Case 1:22-cr-00113-SPW Document1 Filed 09/19/22
`Case 1:22-cr-00113-SPW Document 1 Filed 09/19/22 Page 1 of 6
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`FILED
`
`SEP 1 5 2022
`
`Clerk, U S District Court
`District Of Montana
`Billings
`
`BRYAN T. DAKE
`Assistant U.S. Attorney
`U.S. Attorney’s Office
`James F. Battin Courthouse
`2601 Second Avenue North, Suite 3200
`Billings, MT 59101
`Phone:
`406-657-6101
`Fax:
`406-657-6058
`Email:
`Bryan.Dake@usdoj.gov
`
`JEREMY M. P. GOLDSTEIN
`Trial Attorney
`United States Department of Justice
`Antitrust Division
`450 Golden Gate Avenue, Room10-0101
`San Francisco, CA 94102
`Phone:
`415-229-2934
`Fax:
`415-934-5399
`Email:
`Jeremy.Goldstein@usdoj.gov
`
`ATTORNEYS FOR PLAINTIFF
`UNITED STATES OF AMERICA
`
`IN THE UNITED STATES DISTRICT COURT
`
`FOR THE DISTRICT OF MONTANA
`
`BILLINGS DIVISION
`
`
`
`UNITED STATES OF AMERICA,_|CR 22-j j J-BLG- SPW
`
`Plaintiff,
`
`INFORMATION
`
`vs.
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`NATHAN NEPHIZITO,
`
`Defendant.
`
`ATTEMPTED MONOPOLIZATION
`Title 15 U.S.C. § 2
`(Penalty: Ten years of imprisonment,
`$1,000,000 fine, and three years of
`supervised release)
`
`
`
`Case 1:22-cr-00113-SPW Document1 Filed 09/19/22 Page 2 of 6
`Case 1:22-cr-00113-SPW Document 1 Filed 09/19/22 Page 2 of 6
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`The United States of America, acting through its attorneys, charges:
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`BACKGROUND
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`Atall times relevant to this Information:
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`1.
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`The United States Departmentof Transportation (“U.S. DOT”), a
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`federal agency under the executive branch of the Governmentof the United States,
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`administers and distributes federal funds to state and local government agencies
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`responsible for, among other things, the construction, maintenance, and
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`rehabilitation of highways, bridges, and tunnels. Federal Highway Administration
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`(“Federal Highway”) is an agency within U.S. DOTandit supportsstate and local
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`governments in the design, construction, and maintenanceofthe federal highways.
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`2.
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`The Montana Department of Transportation (“MDOT”) is an agency
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`underthe executive branch of the State of Montana, andit oversees construction,
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`maintenance,and rehabilitation of transportation infrastructure in Montana.
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`Similarly, the Wyoming Department of Transportation (“WYDOT”), an agency
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`underthe executive branch of the State of Wyoming, oversees construction,
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`maintenance, and rehabilitation of transportation infrastructure in Wyoming.
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`3.
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`Crack sealing is the processoffilling cracks in asphalt or pavementto
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`prevent water, sand, and dirt from damaging the substrate. MDOT and WYDOT
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`invite contractors to compete for crack sealing projects on Montana and Wyoming
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`highways and other public roadwaysandtypically award projects to the lowest
`
`2
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`
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`Case 1:22-cr-00113-SPW Document1 Filed 09/19/22 Page 3 of 6
`Case 1:22-cr-00113-SPW Document 1 Filed 09/19/22 Page 3 of 6
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`bidders. These crack sealing projects are often funded in wholeorin part by U.S.
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`DOT.
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`
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`4, COMPANYAis a paving and asphalt contractor incorporated in the
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`State of Montana and headquartered in Billings, Montana. The defendant,
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`NATHANNEPHI ZITO,is the owner and president of COMPANY A.
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`Approximately 95% of COMPANY A’s business comes from providing crack
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`sealing services on publicly-funded highway projects.
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`
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`5. COMPANYBis a paving and asphalt contractor. INDIVIDUAL| is
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`the owner and president of COMPANYB.
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`6.
`COMPANY A and COMPANYB routinely compete for the same
`publicly-funded highway crack sealing projectsand, in many instances, are the
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`only two companiesthat submit bids for crack sealing projects administered by
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`WYDOTandstate departments of transportation in neighboringstates.
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`7.
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`Wheneverin this Information reference is made to any act, deed, or
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`transaction of a business organization, the allegation meansthat the business
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`organization engagedin the act, deed, or transaction by or through its officers,
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`directors, employees, agents, or other representatives while they were actively
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`engaged in the management,direction, control, or transaction of its business or
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`affairs.
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`
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`Case 1:22-cr-00113-SPW Document1 Filed 09/19/22 Page 4 of 6
`Case 1:22-cr-00113-SPW Document 1 Filed 09/19/22 Page 4 of 6
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`DESCRIPTION OF THE OFFENSE
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`8.
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`In January 2020, ZITO telephoned INDIVIDUAL1 to propose a
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`“strategic partnership.” INDIVIDUAL1 reported ZITO’s phonecall to Federal
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`Highway, which notified the U.S. DOT Office of Inspector General (“U.S. DOT
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`OIG”). With INDIVIDUAL1’s cooperation, U.S. DOT OIG recorded additional
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`phonecalls between ZITO and INDIVIDUAL 1 between March and October 2020.
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`9.
`Over the course of those calls, ZITO proposed that COMPANY A and
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`COMPANYBstop competing against each other by dividingterritories in |
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`Montana, Wyoming, and neighboring states. Under the termsof this proposed
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`market-allocation agreement, which ZITOlaid out in a June 16, 2020call,
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`INDIVIDUAL1’s COMPANYB wouldstop bidding for publicly-funded highway
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`crack sealing projects in Montana and Wyoming and ZITO’s COMPANYA would
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`do the same in South Dakota and Nebraska. ZITO proposed that COMPANY A
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`pay COMPANY B $100,000 as additional compensation for COMPANY B’s lost
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`business in Montana and Wyoming.
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`10.
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`From the outset, ZITO stated his intention to eliminate COMPANY B
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`as a competitor in Montana and Wyoming. He told INDIVIDUAL1 thatif they
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`agreed not to compete, their companies’ revenue streams would be more stable and
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`their margins would be higher.
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`
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`11. ZITO proposed that COMPANY A and COMPANYBenterinto a
`
`4
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`
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`Case 1:22-cr-00113-SPW Document 1 Filed 09/19/22 Page 5 of 6
`Case 1:22-cr-00113-SPW Document1 Filed 09/19/22 Page 5of6
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`written contract that memorialized the market-allocation agreement, but obscured
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`its effects. The written contract included an option to purchase COMPANY B,
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`even though INDIVDIUAL | told ZITO that he had nointention ofselling his
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`company,andthesale of a piece of equipment valued significantly above its worth.
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`12. Ultimately, INDIVIDUALI refused to enter into the sham agreement
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`and rejected ZITO’s invitation to divide territories and end competition between
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`COMPANYA and COMPANYBin Montana, Wyoming, South Dakota, and
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`Nebraska.
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`COUNT1
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`Beginningat least as early as January 2020, and continuing until at least
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`October 2020, in Billings, within Yellowstone County, in the State and District of
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`Montana, and elsewhere, the defendant, NATHAN NEPHI ZITO, knowingly
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`engaged in anticompetitive conduct with the intent to gain monopoly powerin the
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`markets for highway crack sealing services in Montana and Wyoming. There
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`existed a dangerous probability that, had the defendant’s proposed market
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`allocation been effectuated, COMPANY A would have gained monopoly powerin
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`those markets. The defendant’s conduct occurred in and affected interstate
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`commerce. All in violation of 15 U.S.C. § 2.
`
`Ml
`
`Mf
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`
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`Case 1:22-cr-00113-SPW Document1 Filed 09/19/22 Page 6 of6
`Case 1:22-cr-00113-SPW Document 1 Filed 09/19/22 Page 6 of 6
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`DATED this
`
`day of September, 2022.
`
`U.S. ATTORNEY'S OFFICE
`
`rTRICT OF MONTANA, by CYNDEE L. PETERSON
`
`Criy inal Chief Assistant U.S. Attorney
`
`U.S. DEPARTMENT OF JUSTICE
`
`ANTITRUST DIVISION,py
`
`DOHA G. MEKKI
`Principal Deputy Assistant Attorney
`General
`
`GhAE.
`
`
`
`RICHARD A. POWERS
`Deputy Assistant Attorney General
`
`AANAAfyhur CtC-iL-
`
` ANISH KUMAR
`Chief, San Francisco Office
`JACKLIN CHOU LEM
`
`Assistant-Chief, San Francisco Office
`
`
`
`MM. P-@OLDSTEIN
`EMY
`al Attorney, San Francisco Office
`
`
`
`a 2 ae
`
`— fa
`
`_
`—,
`7
`. DAKE
`BRY
`Assistant U.S. Attorney
`
`“,
`
`‘
`
`