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Crime and Courts

Federal criminal investigation alleged as lawsuit claiming bribery, bid rigging for Denver airport concessions contract is revived

The “most valuable concessions contract” in airport history — including Smashburger, Tom's Urban Kitchen and Brewery — at the center of legal battle.

Passengers make their way through security at Denver International Airport earlier this summer. (Jesse Paul, The Colorado Sun)
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A federal criminal investigation is underway into allegations of bribery and bid rigging involving a former top official at Denver International Airport and a concessions contract worth millions of dollars, according to a lawsuit recently filed by a company that lost out on the bid.

The filing revives a case dismissed by a judge earlier this year for lacking in specificity. The new version contains two things the previous filing didn’t: the allegation of the criminal probe and a sworn affidavit by a former FBI agent who said he interviewed witnesses and turned over information to federal investigators.

“This is a case about a criminal scheme — currently the subject of an active criminal investigation by the Federal Bureau of Investigation — in which several members of a concessionaire joint venture conspired with a former Denver International Airport official to rig the bidding process to ensure they would be awarded the most lucrative concessions contract in DIA history,” the lawsuit claims on its first page.

The U.S. Attorney’s Office in Colorado declined to comment.

“We cannot confirm or deny the existence of any investigation,” said Jeff Dorschner, a spokesman for the office.

The lawsuit does not go into detail about the federal criminal investigation or identify anyone as being targeted.

DOCUMENTS: READ THE LAWSUIT AND AFFIDAVIT.

What the lawsuit alleges

The lawsuit was filed by DIA Brewing Co., which includes the popular Breckenridge-Wynkoop LLC group that owns and operates the Cherry Cricket and Wynkoop Brewing restaurants in Denver. It is being brought against the organizations that won the bid and several people behind those companies.

The defendants include Rick Schaden, the former CEO of Quiznos and a founder of Smashburger; a Michigan company called Midfield Concessions Enterprises; and Pangea Concessions Group, which is based in Florida.

The group submitted a bid for the concessions contract as MCE-DIA, LLC.

Lawyers for the defendants did not respond to requests for comment from The Colorado Sun.

The lawsuit, filed on Aug. 15 in Denver District Court, alleges that DIA’s former chief revenue officer, Bhavesh Patel, accepted bribes in exchange for rigging the bid process in 2015 in favor of MCE-DIA. In exchange, two people connected to Patel are alleged to have been made part owners of MCE-DIA, according to the lawsuit.

When MCE-DIA won the 10-year concessions contract, it began the process of opening two Smashburger restaurants, a Tom’s Urban Kitchen and Brewery, and a Roasting Plant Coffee shop.

But DIA Brewing Co., which hoped to develop a Cherry Cricket, Park Burger, Wynkoop Brewing and Peet’s Coffee and Tea outlet at the airport, alleges that MCE-DIA’s proposal was the weakest of the bids.

DIA Brewing alleges that its team had more operating experience than MCE-DIA’s and that its restaurant and brewery lineup was more in keeping with what the airport said it was seeking.

For instance, DIA’s contract request sought an upscale burger joint, while all of Smashburger’s locations to that point had been fast-casual, according to the lawsuit. Members of Denver’s City Council previously voiced similar concerns.


Roasting Plant coffee shop at Denver International Airport in August 2018. (Dana Coffield, The Colorado Sun)

Claims of rigging bidding process

Patel was hired by DIA in late 2014 and began work there in January 2015. Three days after he started his job, according to the lawsuit, MCE-DIA — the last three letters in the acronym refer to the airport — was formed, even though the companies involved were based out of state and none had bid on DIA business before.


The request for proposals for the concessions contract, dubbed the Four-Pack contract, wasn’t issued until eight months later. None of the other partnerships that bid formed until after the RFP was posted, according to the lawsuit.

The lawsuit claims that one of the companies that formed MCE-DIA approached Patel before he even started work at DIA and bribed him, though it does not provide a source for that information or exact details of the alleged bribe.


“The precise details about that additional consideration to support the bribe are exclusively in Defendants’ possession,” the lawsuit states.

The lawsuit says Patel helped steer the defendants through the bidding process and rigged it in their favor, specifically by manipulating a matrix used to tabulate judges’ scores and determine which proposal was best. After the scoring was completed, the lawsuit claims, the scoring matrix was destroyed at Patel’s direction.

Patel allegedly used text messages to direct people on the panel interviewing bidders that attempted to steer positive opinions away from Wynkoop, according to the lawsuit. He also allegedly boasted later to an industry member that “he steered the contract away from ‘the Wynkoop people,'” the lawsuit says.

Suit claims FBI investigating “activities at DIA”

In a sworn affidavit included in the lawsuit, former FBI agent John Osa, who had investigated tips about bid-rigging at DIA while he worked for the federal agency, said he got a new tip about the Four-Pack bid in February 2016, around the time the contract was awarded.

Osa, who is now a consultant, said he conducted a preliminary investigation before handing over his information to an FBI agent investigating “activities at DIA” in April 2016.


Two years later, after being hired by DIA Brewing, Osa said he interviewed Gerard Stafford, who had been DIA’s lead administrator for the Four-Pack RFP. Stafford allegedly told Osa he saw numerous red flags during the process, including comments by Patel that he believed were intended to sway judges in favor of MCE-DIA.

“Mr. Stafford stated that he does not believe MCE-DIA could have or would have won the Four-Pack RFP but for the manipulated scoring matrix and improper involvement of Bhavesh Patel in the process,” Osa said in his affidavit. The new lawsuit does not name Patel as a defendant, though he was named as one in the earlier lawsuit.

Patel, who was also an executive vice president at DIA, parted ways with the airport shortly after the concessions contract was awarded to the defendants, according to the filing. His LinkedIn page says he worked at the airport from January 2015 until June 2016.

The Colorado Sun tried to reach Patel at Unison Consulting, an aviation industry consultancy firm at which he was said to be part of a concessions team, where he was last listed as being employed. A woman who answered the phone at the company on Tuesday said a reporter needed to reach out to Patel by cellphone.

“I don’t think he wants to talk to you,” she said when asked for Patel’s phone number. She then hung up.

Patel told the website Airport Experience News that the first lawsuit contained “groundless accusations that were not and could not be substantiated.” Further attempts to reach Patel were not successful.

The first lawsuit’s dismissal and what has changed

Denver District Court Judge Brian Whitney dismissed the first iteration of the lawsuit in June on the grounds that it lacked specificity and failed to show where damage had been caused. But Whitney left the door open for an amended complaint to be filed, which is how the lawsuit has been revived.


Stephen Long, the attorney representing DIA Brewing Co., says his new filing is far more detailed than the earlier version.

“We studied the court’s previous dismissal order and identified the court’s concerns stated there,” he told The Colorado Sun on Tuesday. “This amended complaint is far more detailed and addresses the court’s concerns, in our view.”

DIA Brewing says in losing out on the contract, it is out the roughly $250,000 it spent to create its bid and potentially millions of dollars in revenue from the restaurants, brewery and coffee shop.

In addition to damages, the lawsuit seeks to order the defendants to divest themselves of any interest in the winning enterprise and prohibit them from bidding on any future DIA contracts.

The airport is not named as a party in the lawsuit, but in a statement spokeswoman Emily Williams said “it’s not uncommon for unsuccessful proposers to file lawsuits or grievances or similar actions.”

“The case was dismissed previously and we expect it to be again,” she added. “Other than that, we don’t comment on legal proceedings.”

This story first appeared in The Colorado Sun’s newsletter, The Sunriser. You can subscribe here: cosun.co/thesunriser