Roofing and construction products company RPM International Inc. and subsidiary Tremco are alleged to have knowingly sold defective products to commercial builders.
Tremco is based in Medina, Ohio. RPM, through its subsidiaries, manufactures, markets, and sells various specialty chemical products, including paints, protective coatings, roofing systems, sealants and adhesives. Tremco, a major manufacturer and supplier of roofing materials, is RPM’s presence in the “industrial segment” of the business. Tremco also supplies roofing and weatherproofing services such as roofing restoration and repair services.
The fraud allegations arose by way of a whistleblower lawsuit kicked off by a former Tremco vice president. Charges were levied, specifically, against RPM’s Building Solutions Group, which includes Tremco.
Tremco Settles with the Federal Government for Nearly $61 Million
The company settled the lawsuit with the federal government last week (which is the week of Sept. 9, 2013) for $60.9 million, the amount designated for the recovery of damages and civil penalties that arose from the company’s fraudulent statements, records and claims that were allegedly made to various federal government entities involving roofing contracts.
The whistleblower suit was filed after Tremco vice president Greg Rudolph voluntarily resigned from his position so he could go public with his fraud allegations. The government charged Tremco with failing to provide it with the same discounts that it provided to non-federal government customers. Additionally, the lawsuit claimed that Tremco had sold expensive materials to the government without disclosing the fact that generic versions of the same material were available at much lower prices. These types of products seem to have primarily been adhesives, mastics and primers for roofing applications.
The government also alleged that Tremco falsely claimed that its roofs had high ratings for fire protection. Tremco had its own in-house fire-testing facility in Cleveland, Ohio; however, in 2007 it lost the ability to use this facility. When it was in possession of the testing facility, Tremco’s roofs held higher fire ratings than its competitors.
Specific Allegations in the Lawsuit Against Tremco
Among other charges in the lawsuit:
- Tremco knew since mid-2005 that its Burmastic roofing systems, which were installed over insulation board, had a strong potential to fail, and that many of these installed systems were failing.
- Tremco did not reveal to the government that there were defects in the roofs that were installed, even though the company had known of the existence of these defects since 2005.
- Tremco knew that any of its “cold roofs” that were constructed with certain products were defective, or would likely become so, once exposed to winter’s regular freezing and thawing cycles. The list of these materials includes composite ply, modified composite ply, premium composite ply, modified premium composite ply, supreme composite ply and modified supreme composite ply.
The company also was aware that the Burmastic 200, 400 and 500 roof systems contained defective products. It also knew that its attempts to repair its defective roofing material were inadequate in terms of stopping leaks, yet the company continued to sell the defective roofing systems.
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