Big Dig company pleads guilty

The Cambridge company, Modern Continental Corp., hailed as vindication the decision by the US attorney's office to drop the five charges resulting from the accident that killed a car passenger, Milena Del Valle. The company's lawyers said the collapse occurred because a New York company supplied the wrong epoxy for ceiling panels, not because of poor workmanship by Modern Continental.

"The epoxy didn't work, and Modern Continental had nothing to do with selecting the epoxy," said Michael J. Connolly, a Boston lawyer who represented the company at the change-of-plea hearing in US District Court in Boston. "We believe that the US attorney's office brought charges that it could not possibly prove."

Acting US Attorney Michael K. Loucks issued a statement that suggested Modern Continental is hardly blameless and pointed out that it has already paid millions as a result of the ceiling collapse.

The company previously agreed to pay $21 million in damages to the state in a settlement stemming from the disaster and has contributed to a $28.1 million settlement of a wrongful death lawsuit filed by Del Valle's family in state court. But with the company now broke, there was no point in further charges in the collapse.

"By today's pleas of guilty to 39 felonies, Modern has admitted its felony culpability in the mismanagement of the Big Dig construction project," the statement said. "Given its bankrupt status, the dismissal of particular charges, the government believes, will have no impact on the punishment that the court may impose."

No one is going to jail in the case, he added, because corporations cannot go to prison and are generally punished only with fines.

Modern Continental faces criminal fines of up to $500,000 on each of the 39 counts to which it pleaded guilty, totaling $19.5 million, when it is sentenced Aug. 11.

Company lawyers said it sought the shelter of US Bankruptcy Court last June, three days after federal prosecutors filed criminal charges, and will not be able to pay the fines. "We believe the government will recover nothing in regard to this conviction," Connolly said.

Powers Fasteners Inc. - the epoxy vendor from Brewster, N.Y., referred to by Connolly - is the only other company that has faced criminal charges stemming from the tunnel ceiling collapse. It agreed to pay Massachusetts and Boston $16 million in December to resolve criminal charges filed against it in state court by Attorney General Martha Coakley. In exchange, prosecutors dropped a manslaughter charge against Powers. At the time, Powers accepted its share of responsibility in Del Valle's death, and one of the company's attorneys said Powers intended to "move on and concentrate on its business in tough economic times."

Powers declined to comment yesterday.

In yesterday's hearing before District Court Judge Douglas P. Woodlock, Modern Continental - represented by its president, John Pastore - pleaded guilty to one count of making false statements in documents about flaws in a concrete panel in the slurry wall of the Thomas P. O'Neill Jr. Tunnel.

Defects in the panel caused the wall to burst in September 2004, allowing 300 gallons of water a minute to gush into the roadway. Prosecutors say field workers reporting to Modern Continental knew of the defects and yet the company certified that the work met specifications.

The company also pleaded guilty to 38 charges of making false statements and submitting phony time and materials slips on the project. Modern Continental admitted it overbilled the project by about $167,000 over 15 years by claiming pay for workers classified as experienced journeymen, when they were, in fact, apprentices.

Federal prosecutors have pursued similar overbilling charges against several other contractors who worked on the project. On Tuesday, they charged Adams Management Group Inc., a subcontractor of McCourt Construction Co., in an alleged overbilling scheme.

Prosecutors had previously dropped five wire fraud charges against Modern Continental.

Yesterday's plea marked the latest development in a seemingly endless series of criminal and civil legal disputes over the Big Dig.

Modern Continental, which started some 30 years ago with a wheelbarrow and a single sidewalk contract in Peabody, became one of the biggest symbols of the problems that plagued the $15 billion project.

The company earned $3.2 billion for work on the Big Dig, but in recent years was considered a virtual shell corporation, teetering on the edge of bankruptcy. After Del Valle's death, federal and state prosecutors, as well as plaintiffs' lawyers, scrutinized what role it played in the collapse. Del Valle, a 38-year-old Jamaica Plain mother, was crushed when tons of concrete tumbled down on the car driven by her husband on July 10, 2006.

The charges filed by federal prosecutors last June alleged that Modern Continental knew that the anchor bolts-and-epoxy system used to hold up the ceiling was faulty but did not correct it. But Connolly said yesterday that the allegation was false and that the company told prosecutors that "under no circumstances would Modern Continental plead guilty to the ceiling collapse counts."

Last November, Modern Continental agreed to pay $21 million for damages stemming from the fatal collapse, as part of an effort by state and federal authorities to recover cost overruns and settle civil suits resulting from Del Valle's death. In March, Coakley announced that she and federal prosecutors had recovered more than $610 million.

Because of Modern Continental's dire financial straits, the $21 million was expected to be deducted from what the state had withheld from Modern Continental on Big Dig contracts.

Last September, Del Valle's family reached settlements with the last of the defendants in the family's wrongful death lawsuit in Suffolk Superior Court. The family will collect more than $28 million from Modern Continental, Bechtel/Parsons Brinckerhoff (the consortium that oversaw Big Dig design and construction), six smaller companies, and the Turnpike Authority, according to the family's lawyers.

Jeffrey A. Denner, one of the Del Valle family's lawyers, said yesterday that federal and state prosecutors have done an excellent job of holding companies accountable in Del Valle's death.

"If the US government is satisfied that the case against Modern Continental in relation to Milena Del Valle's death couldn't be proved, we're satisfied," he said.

Saltzman can be reached at jsaltzman@globe.com.