Jesus Reyes
COACHELLA VALLEY, Calif. (KESQ) – Tim Leiweke has stepped down as the CEO of the Oak View Group after being criminally indicted by a federal grand jury for allegedly orchestrating a conspiracy to rig the bidding process for an arena in Texas, the Department of Justice announced.
OVG said Leiweke, 68, will remain a shareholder and transition to vice chairman of the board of directors, according to CNBC.
OVG is the owner of Acrisure Arena and the Coachella Valley Firebirds. Leiweke is the co-founder of the company. The company also recently reached an agreement to manage the historic Plaza Theatre in Palm Springs and is negotiating with the city to take over tourism and management services of the Palm Springs Convention Center.
The DOJ says that Leiweke, 68, is charged with a violation of Section 1 of the Sherman Act. The maximum penalty for individuals is 10 years in prison and a $1 million criminal fine, although he fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime if either amount is greater than the statutory maximum fine.
If convicted, a federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Statement from a spokesperson for Tim Leiweke:
“Mr. Leiweke has done nothing wrong and will vigorously defend himself and his well-deserved reputation for fairness and integrity. The Antitrust Division’s allegations are wrong on the law and the facts, and the case should never have been brought. The law is clear: vertical, complementary business partnerships, like the one contemplated between OVG and Legends, are legal. 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.”
According to the DOJ, the indictment alleges that from approximately February 2018 through at least June 2024, Leiweke conspired with the Chief Executive Officer of a competitor to rig the bidding for the development, management, and use of a multi-purpose arena that was to be located on the campus of a public university in Austin, Texas (the “Arena Project”).
According to CNBC, the second company was Legends Hospitality, a New York-based venue services company whose minority owners include the New York Yankees and the Dallas Cowboys.
OVG and 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 DOJ announced.
Statement from OVG:
“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. We are proud of the partnerships we’ve built, and remain committed to continuing to offer exceptional hospitality and holistic venue management solutions and venue development expertise which deliver value to our venue partners, fellow service providers, and the communities and customers we serve.”
“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,” said Assistant Director in Charge Christopher G. Raia of the FBI New York Field Office. “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.”
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 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 ultimately 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. In exchange for the competitor’s agreement to stand down, Leiweke represented that the competitor would receive Arena Project’s subcontracts.
Consistent with the bid-rigging agreement, the competitor did not submit a competing bid for the Arena Project. OVG ultimately submitted the sole qualified bid and won the Arena Project. The arena opened to the public in April 2022, and OVG continues to receive significant revenues from the project to date.
Statement from City of Palm Springs
The City of Palm Springs is aware of the recent federal indictment of Oak View Group CEO Tim Leiweke and understands that this news may raise concerns within our community. While the allegations are serious, they pertain solely to activities entirely unrelated to the City of Palm Springs, the Palm Springs Convention Center, or the Plaza Theatre.
The City’s selection of OVG as the preferred operator for the Palm Springs Convention Center followed a rigorous, transparent, and competitive procurement process. A panel composed of City staff and community representatives evaluated all qualified proposals, and OVG received the highest overall recommendation based on merit. The City remains confident in the integrity of this process, which adhered to the highest ethical and professional standards.
Contract negotiations with OVG are ongoing and remain on schedule. A final agreement is expected to be presented to the City Council for consideration later this month. The City continues to closely monitor developments and remains committed to transparency and public trust throughout this process.
We look forward to partnering with OVG to revitalize the Convention Center into a world-class venue that drives economic growth, creates quality jobs, and provides outstanding cultural and event programming for residents and visitors alike. The City of Palm Springs holds itself and its partners to the highest standards of accountability, and we will continue to keep our community fully informed as this process moves forward.
Click here to follow the original article.
