Joe Ciaglia, a big player in the small world of skate park construction, has agreed to pay $65,000 to resolve allegations that he attempted to rig the bidding on an L.A. skate park project in October 2010.
Ciaglia is CEO of California Skateparks, and is best known for his close relationship with Rob Dyrdek, the professional skateboarder and MTV reality star. (The two own a racehorse together.) Recently, Ciaglia has faced accusations of trying to collude with another skate park company to manipulate the bidding on a project at Hansen Dam.
Here, allegedly, is how the whole thing went down:
On the date that bidding opened for the project, Ciaglia allegedly texted two out-of-state companies to make sure they were not going to bid. His representative then sent the following email to Spohn Ranch, another skate park firm :
Joe's final number for our bid is $750,000 total ($660,000 design + construction, plus the required $90k for landscape, drainage, etc.) He's suggesting $770,000 ($680,000 + $90k) for you guys.
The e-mail suggests that Ciaglia was interested in "bid rotation," in which two firms decide how much each will bid, and then take turns winning contracts. Such an arrangement could inflate the cost of projects or shut out honest competitors.
In this case, Spohn Ranch had already submitted its bid when the e-mail arrived. Spohn Ranch had the low bid and won the contract. When Ciaglia discovered that, he (again, allegedly) showed up at Spohn Ranch's offices and berated the employees for failing to follow his instructions.
When Ciaglia discovered that Spohn Ranch was not interested in colluding, he demanded that the e-mail be deleted, according to a complaint later filed by Spohn Ranch. He later told Spohn's employees that they didn't know "how the game was played" and said they had "left a lot of money on the table." He also demanded that Spohn rescind the winning bid. Aaron Spohn, the president of the company, refused.
Spohn complained to the city, and the complaint was ultimately forwarded to the D.A.'s office.
"The public should be outraged when this kind of business conduct occurs," said Kathleen Tuttle, the prosecutor who handled the case. "It's not the way the system should operate. It's subversion of competition."
The D.A.'s office also found a pattern of Ciaglia's company submitting artificially low bids, with the apparent goal of recouping the cost down the road, Tuttle said.
Tuttle said the D.A.'s office has decided not to pursue criminal charges. Under the civil settlement agreement, Ciaglia admitted no wrongdoing. In a written response to Spohn's complaint last year, Ciaglia's attorney's called Spohn's version of events "fictionalized" and threatened to sue him for defamation.
Neither Ciaglia nor his attorney returned calls seeking comment.
California Skateparks, Ciaglia's company, has done millions of dollars worth of work installing skate parks for the city. The agreement does not bar California Skateparks from doing further business with the city, but Ciaglia will have to disclose the settlement on bid materials.
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"It's just unfortunate that people tend not to play by the rules, and tend to look for shortcuts and cheat," said Aaron Spohn, Ciaglia's competitor. "It's not good business practice, and it hurts us all and gives our industry a bad name."
Spohn Ranch built the skate park at Hansen Dam, and it opened last year.