We Have Some New Beef Plant Filings for Y'all to Chew On

Nowdy tells me there are several housekeeping type items that were filed on PACER we won’t bother with as they appeared unremarkable to her. However the prosecution today filed motions in opposition to defense motions to sever and exclude evidence from other contracts from trial.

In these motions we find out there is an upcoming Daubert Hearing and a good bit more about the government allegations on billing backoffice labor. In essence Greenlee makes a common sense argument that by using a labor factor to account for labor charges, TFG essentially billed costs such as annual and performance bonuses in advance. As a construction CPA the reasoning the government uses seems solid from an accounting standpoint and industry practice.

I read the motion that Greenlee intends to show how other projects constructed by TFG tied into the Beef Plant in that these back office labor provisions were negotiated and included in the project agreements elsewhere but not in the Beef Plant contract and how charging a labor multiplier resulted in an overbill. Figuring this very well could have been where Sean Carothers spent some of those countless hours helping the prosecution while in prison. Here is a snippet from the motion:

In the instant matter, the defendants claim to have used a multiplier, that is multiplying salaries by two to recoup indirect costs associated with their labor billings. As will be more fully explained at the upcoming Daubert hearings, items included in their use of the multiplier, such as employee inefficiency or yet to be paid bonuses, are not costs, direct or indirect, and have resulted in overbillings in this case. The contract in the instant matter does not contain a provision to use such a multiplier. While the use of multipliers in construction contracts may be an acceptable practice, it is not where it has not been negotiated and is not in the contract. The Facility Group has entered into contracts with other individuals and entities that contain negotiated provisions for the use of a multiplier. Thus, the evidence is direct proof of a regular business practice that when a multiplier has been negotiated and agreed to, it is in the contract.

Citizen & Concerned what do you guys make of this?

sop

11 thoughts on “We Have Some New Beef Plant Filings for Y'all to Chew On”

  1. I think TFG should be considering any deals the prosecution is offering. If none are being offered then I think they should run for cover.

  2. I haven’t had a chance to read the motion but the last two sentences above

    “The Facility Group has entered into contracts with other individuals and entities that contain negotiated provisions for the use of a multiplier. Thus, the evidence is direct proof of a regular business practice that when a multiplier has been negotiated and agreed to, it is in the contract.”

    Don’t pass the logic 101 test. For the second sentence to be true then the first must say all contracts not some. Does this mean if TFG can produce a past project billed on a multiplier where the multipliers were not in the contract then they are innocent of all charges?

  3. Not exactly Pediddle, if TFG billed for labor in a way that was not set out in the contract with other owners means they got away with something.

    Construction projects, especially the size of the beef plant, aren’t done on a handshake and a I trust you basis. The written contract is the total agreement.

    I think the Government has laid out it’s plans to show TFG billed costs that were not allowed by the contract at the Beef Plant and that the provision was bargained for elsewhere. If anything it blows a huge hole in Moultrie’s contention his method of billing back office labor was some sort of secret industry pratice no one else ever heard about.

    sop

  4. Page 5 of the project management agreement Nowdy, emphasis mine.

    Services Compensation shall include compensation for aIl labor, salaries, indirect labor costs and social burdens, materials, equipment, temporary facilities, insurance, and general conditions costs directly incurred in or attributable to performance of the Services (but not including general overhead or profit).

    The contract language is clear in this regard Nowdy.

    Finally annual bonuses are overhead, performance bonuses are trickier depending on the consistency of their application.

    sop

  5. I would disagree with the assertion that this is some secret industry practice. The prosecution states its an acceptable pratice.

    “While the use of multipliers in construction contracts may be an acceptable practice”

    The point I’m trying to make is the prosecution is making the case that, because TFG had some contracts that spell out the multiplier – then all contracts billed using a multiplier must have it spelled out in the contract. Based on my Philosophy 101 course the prosecutors conclusion is derived from flawed logic.

    I believe that your contention that

    “…if TFG billed for labor in a way that was not set out in the contract with other owners means they got away with something”

    Implies there is some fixed industry billing standard written down somewhere that must be followed unless stated otherwise in a contract. I don’t think its that clear cut. You say it best when you say the contract is the total agreement.

  6. I don’t know that we’re that far apart Pediddle. The cost plus service agreements I typically see include the labor buildup calculation by position as an exhibit to the contract, that way there is no question.

    My own experience is there are differences between owners thus what is allowable under one contract is not under another. Special provisions must be bargained for.

    What has generated more interest in terms of downloads today is in the opposition to the motion to sever which details other costs the government says it can prove were billed to MBP.

    The indictment alleges and the proof will establish that Moultrie, Cawood and corporate defendants attempted to acquire this contract, in part, through the promise of campaign contributions. The contributions were paid after the company acquired the contract and were charged off, at the direction of Moultrie and Cawood to the contract both directly and indirectly.

    sop

  7. Interesting, Sop, that brings us back to the first count of the indictment which is the one Moultrie moved to dismiss saying that the contributions weren’t illegal – if my memory serves me well.

  8. nosdoucit and sop,

    your thoughts since you guys are in the law field, will Moultrie and Company be indicted and serve time?

    What is Sean doing? Is the Judge and Attorney Freeland accepting his testimony?

  9. Citizen first off none of your slabbed moderators are lawyers though we have availed oursleves of the PACER system (Public Access for Court Electronic Records).

    Moultrie is already indicted and as a general rule the feds get their man. Have heard anything about Sean Carothers lately but I suspect he is preparing to testify.

    Stay tuned Citizen, we have more coming as we speed to trial now set for late this month.

    sop

Leave a Reply

Your email address will not be published. Required fields are marked *