ST. LOUIS – The owner of a Hazelwood steel company appeared in federal court on Tuesday and admitted contract fraud for a repair project in Lincoln County for a Mississippi River lock and dam.
Prosecutors with the U.S. Attorney’s Office for the Eastern District of Missouri said Theodore “Ted” J. Stegeman, 60, defrauded the U.S. Army Corps of Engineers and a contractor by claiming bridge parts manufactured by his company passed mandated safety tests.
Stegeman is the owner and CEO of Industrial Steel Fabrication LLC (ISF), which was hired as a subcontractor for a project to repair Lock and Dam No. 25 along the Mississippi River near Winfield.
ISF was hired to manufacture and then weld cover plates (flanges) for all 17 bridge spans. The flanges, which are load-bearing components, are required to undergo ultrasonic testing to check for any defects.
If a defective flange cracks or fails, it could cause the entire bridge and dam to fail, which could carry the risk of injuries or fatalities.
In October 2019, a flange for bridge span #10 failed its ultrasonic test. However, Stegeman’s company delivered the flange anyway after Stegeman reassigned the ISF employees who knew about the failure and altered the test results.
A flange for bridge span #12 was delivered that had not been tested, prosecutors said.
Both flanges were installed in November and December 2019, respectively.
Stegeman, who pleaded guilty to one count of wire fraud, admitted the flanges were not fit for installation. It cost approximately $238,000 to remove the wrong flanges, then test and re-install the proper ones.
Stegeman will be sentenced on September 12. He faces up to 20 years in federal prison and a $250,000 fine.
