Six months after a federal jury in Savannah, Ga., convicted two ready-mixed concrete supply company managers of a years-long illegal bid-rigging and price-fixing scheme, the examination of the scheme and those responsible now shifts to another federal courtroom, in Charleston, S.C. That’s where contractors who bought the concrete are pressing onward with their now-eight-year-old class-action lawsuit to recover millions of dollars in alleged overcharges.

The contractors asked a federal judge last month to allow them to take depositions from the two ready mix supply company managers, brothers who are now in prison. A recording device that looked like an electronic fob that opens car doors provided important evidence against them.

The civil lawsuit, first filed in 2017, was held up until the four-day trial of criminal anti-trust and market manipulation charges against the, brothers Gregory and David Melton was completed last summer. Gregory Melton was the division manager of ready-mix sales for ARGOS Ready Mix and based in Pooler, Ga. His brother was general manager for Elite Concrete in Walthourville, Ga. In 2021 ARGOS agreed to a deferred prosecution agreement—not a guilty plea, but under which it would pay the Dept. of Justice a $20 million criminal fine.

The Meltons pleaded not guilty to the charges against them personally and went to trial. A federal judge sentenced them to prison in October. Three other individuals charged had entered guilty pleas as part of agreements with prosecutors.

What isn’t clear yet is how crucial evidence and testimony in the criminal case—which included over 1,000 secret recordings from a six-year period made by a sales manager who worked for Gregory Melton—will be used in the civil lawsuit.

The companies involved served territories that included Savannah, Jonesboro and Statesboro in Georgia, and in the Hilton Head, S.C., area.

The sales manager, Christopher Young, is now running his own ready mix supply company. But he had worked for many years as a sales manager for LaFarge, the materials giant, until his unit was sold to Argos and he continued in the same role reporting to Gregory Melton. Young, who had majored in criminal justice as a college student, became the main witness against the Meltons during last summer’s trial in Savannah.

The Meltons’ attorneys portrayed Young as a disgruntled employee who hoped to make a lot of money by becoming a whistleblower, which federal law entitles to 10% to 30% of any illegally gained funds that are recovered, depending on the case. 

“Because you stood to make a lot of money,” an attorney for the Meltons insisted was Young’s motivation.

Young said that he became worried about the routine conversations in the company’s offices. Prosecutors say the illegal activity encompassed fuel and environmental surcharges and price-increase letters sent out by several competitors with the same prices at the same time. One of the conspirators served as a go-between to communicate to other companies and conceal cooperation, Young and prosecutors alleged. 

As that went on, Young testified, he felt he needed to protect himself and his family in case he was to be implicated in the illegal market manipulations.

“I had two children, one with special needs,” he said.

The prosecutors provided Young with a recording device that resembled an automobile’s electric key fob that could easily be handled and wouldn’t draw suspicion as a recording device. Often, Young testified, he accidentally turned the device on and unknowingly recorded pieces of his ordinary family life.

But in several instances shown to the Savanah jury, discussions did involve pricing for different projects.

In one conversation in February 2012, Young switched on his recording device while talking to James Pedrick, a cement and additives salesman for ARGOS, who prosecutors accused of serving as a go-between for sharing sensitive information. Young asked Pedrick about the price of cubic yard of concrete on a project.

Phone Call Sets Ready Mix Range

Young asked whether “David is going up?” with his price. After Pedrick replied that he is, Young continued: “Cause right now he is freaking killing us.” Pedrick then says on the recording that David Melton called him while he was at a sales meeting and wanted to know what his brother was charging for the project being discussed. David Melton “called Greg and Greg said somewhere between 85 and 88…is where to go. Or where we’re gonna go.”

Federal prosecutors opted not to support a whistleblower lawsuit with Young as the whistleblower, and in 2016 Argos after learning of the investigation, fired Young. The criminal case seemed at a standstill for several years.

But in 2020 a federal grand jury first brought criminal charges of illegal price-fixing. The prosecutors accused the Meltons and Pedrick and a ready-mix supply company, Evans Concrete, with violating federal anti-trust law from 2010 to 2016. In September, Pedrick and Evans Concrete each pled guilty to a single count of illegal price manipulation as part of agreements with prosecutors.

Neither Melton brother took the witness stand and testified in their own defense at the criminal trial. In addition to attacking Young’s motives, the Meltons’ attorneys implied that recordings were taken out of context, that the pricing information was not secret and that numerous factors affect prices and pricing decisions.

David Melton received a sentence of 26 months in prison, three years of supervised release and a $10,000 fine. Gregory Melton was sentenced to 41 months in prison, three years of supervised release and a $50,000 fine. Both of the brothers started serving their sentences December 31 at federal prisons, David in Montgomery, Ala., and Gregory in Lexington, Kentucky.

The lead plaintiffs in the class action civil lawsuit consist of Pro Slab Inc., Bremer Construction Management and Forrest Concrete. In asking to now depose the Meltons, the plaintiffs’ attorneys argued in January’s motion that “There is no basis…for limiting the requested discovery.”