Service Centers

O'Neal and Leeco Steel Win Compensatory & Punitive Damages
Written by Sandy Williams
June 26, 2014
O’Neal Steel and Leeco Steel have been awarded $117 million in compensatory and punitive damages against vendors who knowingly sold them inferior steel.
Jurors in the US District Court in the Northern District of Alabama, agreed that World Steel Unlimited and General Purpose Steel, and their owners, conspired to violate the Racketeering Influenced and Corrupt Organizations Act (RICO) and, under Alabama law, committed fraud, wantonness and conspiracy to commit wantonness, according to court records.
O’Neal and Leeco Steel said the defendants misrepresented the quality of the steel which was ordered that was intended to be High Strength Low Alloy steel. Some of the steel was sold by the plaintiffs for use in military Humvees and armored vehicles in Afghanistan, Iraq and Israel. The plaintiffs said the defendants knew the steel was intended in applications where physical and chemical standards were critical for safety. The untested and inferior steel was sold knowingly to O’Neal and Leeco Steel with “reckless disregard.”
According to court documents, “Plaintiffs O’Neal Steel, Inc. and Leeco Steel, LLC allege that the individual Defendants, Lance Chatkin, Bruce Adelstein, Ryan Chatkin, Von Argyle, and David Chatkin, formed an enterprise through the guise of two corporate entities, General Purpose Steel, Inc. and Worldwide Steel Unlimited, Inc., and then knowingly engaged in a pattern of selling steel to the Plaintiffs and others at inflated prices based on fraudulent certificates of conformance and mill test reports, transmitted via mail and wire.”
“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,” said Bill Jones, Vice-Chairman of parent company O’Neal Industries, in a prepared release.
“This verdict shows that fraud has no place in the steel service center industry,” Jones stated. “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.”
The award includes $17 million in compensatory damages and $100 million in punitive damages.
O’Neal Steel and Leeco Steel are owned by parent company O’Neal Industries, a family-owned group of metals service centers, based in Birmingham, Alabama. O’Neal Industries has annual sales of $2.3 billion in 2013 and has more than 90 specialized facilities throughout North America, South America, Europe, and Asia.

Sandy Williams
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