Timothy Leiweke, the Co-Founder and Chief Executive Officer of venue developer Oak View Group (OVG), is being indicted by the Department of Justice for allegedly rigging the bidding process for an arena at the University of Texas.
The DOJ said on Wednesday (July 9) that OVG and rival Legends Hospitality have agreed to pay $15 million and $1.5 million in penalties, respectively, in connection with the conduct alleged in the indictment against Leiweke.
The indictment, filed in the U.S. District Court for the Western District of Texas, alleges that, from approximately February 2018 through at least June 2024, Leiweke conspired with the Chief Executive Officer of its competitor to rig the bidding for the development, management, and use of a multi-purpose arena.
CNBC reports that the venue was the $338 million Moody Center arena at the University of Texas in Austin.
According to the indictment, in September 2017, Leiweke informed colleagues that he had learned another venue-services company was “bidding against us” for the Arena Project and wanted to “find a way to get [the competitor] some of the business” and “get them to back down.”
In November 2017, Leiweke allegedly informed others that he was “[m]ore than happy talking to [the competitor] about not bidding and [receiving certain subcontracts]” but had “no interest in working with them if they intend on putting in a bid.”
In February of 2018, Leiweke allegedly reached an agreement with the competitor’s CEO, “pursuant to which the competitor agreed that it would stand down and neither submit nor join an independent competing bid for the Arena Project”.
“Mr. Leiweke has done nothing wrong and will vigorously defend himself and his well-deserved reputation for fairness and integrity.”
Spokesperson for Timothy Leiweke
In exchange for the competitor’s agreement to stand down, Leiweke allegedly agreed that the rival firm would receive subcontracts for the arena project.
According to the DOJ, “consistent with the bid-rigging agreement, the competitor did not submit a competing bid for the Arena Project,” with OVG ultimately submitting “the sole qualified bid and won the Arena Project”.
The arena opened to the public in April 2022, and, according to the DOJ, “OVG continues to receive significant revenues from the project to date”.
CNBC cites a spokesperson for Leiweke as saying that the exec “has done nothing wrong and will vigorously defend himself and his well-deserved reputation for fairness and integrity”.
The spokesperson added: “These allegations blatantly ignore established legal precedent and seek to criminalize common teaming efforts that are proven to enhance competition and benefit the public. The Moody Center is a perfect example, as it has resulted in substantial and sustained benefits to the University of Texas and the City of Austin.”
CNBC also cited a statement from Oak View Group, which reads: “Oak View Group cooperated fully with the Antitrust Division’s inquiry and is pleased to have resolved this matter with no charges filed against OVG and no admission of fault or wrongdoing.
“We support all efforts to ensure a fair and competitive environment in our industry and are committed to upholding industry-leading compliance and disclosure practices.
Leiweke said in a statement issued to CNBC that he has “decided that now is the right time to implement the succession plan that was already underway and transition out of the CEO role”.
“The Antitrust Division and its law enforcement partners will continue to hold executives who cheat to avoid competition accountable.”
Abigail Slater, Assistant Attorney General
Assistant Attorney General Abigail Slater of the Justice Department’s Antitrust Division, said: “As outlined in the indictment, the Defendant rigged a bidding process to benefit his own company and deprived a public university and taxpayers of the benefits of competitive bidding.
“The Antitrust Division and its law enforcement partners will continue to hold executives who cheat to avoid competition accountable.”
U.S. Attorney Justin R. Simmons for the Western District of Texas, added: “Unfair business practices, like those employed here, make it very difficult for the American people to pursue prosperity like our founders intended.
U.S. Attorney Justin R. Simmons for the Western District of Texas, added: “Unfair business practices, like those employed here, make it very difficult for the American people to pursue prosperity like our founders intended.
“In the Western District of Texas, we’re proud to work with our colleagues in the Antitrust Division on these types of cases, and we will do all we can to ensure those who engage in the type of conduct described in this case are held to account.”
Assistant Director in Charge Christopher G. Raia of the FBI New York Field Office said: “Timothy Leiweke allegedly led a scheme designed to steer the contract for entertainment services at a public university’s arena to his company. Public contracts are subject to laws requiring an open and competitive bid process to ensure a level playing field.
“The FBI is determined to ensure that those who disregard fair competition principles do not benefit from a rigged bidding process targeting our communities and public institutions.”
Special Agent in Charge Jonathan R. Mellone of the U.S. Department of Labor, Office of the Inspector General, Northeast region, said: “An important part of the mission of the Office of Inspector General is to investigate allegations of corruption and illegal influence in the American workplace. We will continue to work closely with our law enforcement partners to investigate these types of allegations.”Music Business Worldwide
