O’Neal Steel, Leeco Steel prevail in RICO/fraud lawsuit
In January 2011, O’Neal Steel Inc. and Leeco Steel LLC instituted a lawsuit to recover damages sustained as a result of having been sold steel on the basis of fraudulent representations of its quality. The defendants were David Chatkin, Lance Chatkin, Bruce Adelstein, Ryan Chatkin, Von Argyle, General Purpose Steel Inc., and World Wide Steel Unlimited Inc. Claims were made for violations of the Racketeering Influenced and Corrupt Organizations Act (RICO), conspiracy to violate RICO, and under Alabama law for fraud, wantonness, and conspiracy to commit wantonness.
After a two-and-a-half-week trial in Birmingham, Ala., on June 25, 2014, a jury rendered verdicts in favor of O’Neal and Leeco for $17 million in RICO damages and $100 million in punitive damages.
According to Bill Jones, vice chairman of O’Neal Industries, the parent company of O’Neal and Leeco, the jury verdict sends a clear message on behalf of the steel industry: “Manufacturers and distributors trust that the steel supplied to them is as represented, especially in critical structural applications, and consumers have to believe that the products they use will meet the required safety standards. This verdict shows that fraud has no place in the steel service center industry.
“General Purpose and Worldwide are out of business, and several of the individual defendants have filed for bankruptcy. While we are not likely to recover all of the damages the jury has awarded to us, this case wasn’t about money. It was about doing the right thing and holding accountable those who put property and lives at risk.”