A steel company owner was hit with a one-year prison sentence after pleading guilty to felony charge of wire fraud in connection with a U.S. Army Corps of Engineers contract, federal officials reported. Theodore J. "Ted" Stegeman, the 60-year-old operator of Industrial Steel Fabrication LLC, was accused of falsifying safety test results for parts used in a major repair project on the Mississippi River, according to the U.S. Attorney’s Office.
Following up on a case that put a spotlight on the integrity of infrastructure safety, U.S. District Judge Stephen R. Clark handed down the sentence yesterday. The owner's company, which served as a subcontractor on the project for Lock and Dam No. 25, was supposed to ensure that flanges underwent proper ultrasonic tests – an assurance betrayed when Stegeman decided to manipulate failed test reports to conceal defects. He has since shelled out more than $238,000 in restitution, which covers the costs for the removal, re-testing and re-installation of the flanges, as reported by the U.S. Attorney’s Office.
The investigation was carried out by the Defense Criminal Investigative Service and the Department of the Army Criminal Investigation Division, with Assistant U.S. Attorney Kyle Bateman leading the prosecution. The sentence reflects Judge Clark's assessment of the situation, labeling Stegeman’s conduct not solely unlawful, but perilously negligent. As mentioned by the U.S. Attorney’s Office, "evidence suggested that he had knowledge of the risks that his conduct created," Judge Clark stated.
Stegeman's plea in April acknowledged that, in October 2019, a flange that failed an ultrasonic test was delivered. To mask this failure, an employee reassignment was executed and reporting documents were altered to falsely indicate compliance. Further, another flange that was never tested was passed off as certified safe under Stegeman's instruction to fabricate a test result, contributing to a ripple of potential risk throughout the maintenance of the infrastructure, as stated by the U.S. Attorney’s Office.
Stegeman, whose company was involved in an essential public works project, will now face the consequences of undermining the trust placed in the hands of those commissioned to uphold safety and engineering standards.
