Construction Kickbacks

David Goldsmith

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During a court hearing this winter, alleged loan shark Mark “Chippy” Kocaj urged a federal judge to allow him to work for a Bronx-based construction company.

Kocaj was out on bail, awaiting trial for his alleged role in a mafia-connected construction bribery scheme. In the meantime, he wanted to return to the industry where he’d spent most of his career — but prosecutors weren’t keen on the idea.

“We do have concerns about that company and its connections with organized crime and other misconduct they may have committed,” Assistant District Attorney Keith Daniel Edelman said of the contractor offering the job, according to a transcript of the hearing. “He may be exposed to further violations. He may be exposed to other associates.”

Ultimately, the judge rejected his request.

Kocaj is the cousin of John “Smiley” Simonlacaj — a former managing director at Ziel Feldman’s development firm HFZ Capital Group — and their relationship helped enable a wide-ranging scheme that ensnared at least two New York developers and three construction management firms, prosecutors allege. Kocaj’s attorney, Christopher Booth, and Simonlacaj’s attorney, Glen Colton, both declined to comment.

One of the projects at the heart of the case is HFZ’s $2 billion condo tower at 76 11th Avenue, known as the XI.

Simonlacaj, who has since been fired from HFZ, is accused of letting the Gambino crime family skim hundreds of thousands of dollars from the condo development and other projects in New York through CWC Contracting — a carpentry subcontractor that allegedly doled out bribes to employees of multiple companies in exchange for work and larger payouts.

“HFZ has not been the target of the government’s investigation, and there has never been any suggestion that HFZ did anything inappropriate,” a spokesperson for the developer said in a statement. “Rather, it appears that HFZ, like the other developers described in the indictment, may have been a victim of the alleged acts.”

In addition to HFZ’s Simonlacaj, an employee at RXR Realty was also allegedly offered kickbacks by CWC, court documents show.

The subcontractor is accused of inflating bills for work that, in some cases, the company didn’t even perform. Instead, the money was allegedly used, in part, to pay for work performed at construction executives’ personal homes. The alleged scheme played out in just one year, from June 2018 to July 2019. But according to prosecutors, in that time period, the little-known subcontractor was able to quietly manipulate some of the biggest names in Manhattan real estate and exploit multibillion-dollar projects.

In addition to HFZ and RXR, CWC’s developer and general contractor clients over the past decade include Gary Barnett’s Extell Development and Tishman Construction, according to an archived version of the CWC’s website and permits filed with the city Department of Buildings. It worked for these firms despite the fact that CWC owner Andrew Campos had previously been accused of mob-related activities. None of the larger development firms or general contractors have been accused of wrongdoing.

The indictment, filed last December against Kocaj, Simonlacaj and nine others, is a case study on how organized crime can still infiltrate New York development projects even at a time when mob activity is much lower than it was in the 1980s and 1990s.

Dozens of subcontractors can work on any given job at one time, creating myriad opportunities to inflate bills and strong-arm workers who may already be indebted to the mafia, several former prosecutors told The Real Deal. And unless a developer is closely monitoring who is working on their site, such behavior can go undetected.

Still, the influence of organized crime in construction isn’t as “systematic or unbridled” as it was decades ago, said Bruce Maffeo, an attorney with Cozen O’Connor and a former prosecutor with the U.S. Attorney’s Office for the Eastern District of New York who served on an organized crime task force in the 1980s.

“You couldn’t pour a yard of concrete in Manhattan without kicking money to the Genovese or Gambino crime family,” he said. “My sense is that it’s not as dramatic as it was 30-plus years ago.”

Federal prosecutors declared last December, however, that the Gambino family is “thriving.” And while the mafia may no longer have as strong a hold on individual trades, real estate in New York will always pose enticing, albeit illicit, opportunities, according to Maffeo.
 

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“This is one of those problems that is never going to go away,” he said. “There’s just too much money involved.”

Tangled ties

HFZ’s luxury condo project along the High Line was already facing headwinds in early 2019, and the ongoing coronavirus pandemic will only make it harder to move units going forward.

No sales had been recorded at the project as of late March, according to property records. However, a spokesperson for Douglas Elliman, which is handling sales at the property, said that eight contracts at the project were signed prior to the coronavirus’ rampant spread.

The twisting luxury condo towers have long been viewed as an ambitious and risky undertaking for HFZ, due in part to predevelopment costs of about $1 billion and a $1.25 billion construction loan. And that was all before the indictment dropped last December.

Executives at HFZ, which oversees more than $10 billion in development, were well aware that Simonlacaj had a previous brush with the law, court records from a separate case show.

In 2016, he was charged with and pleaded guilty to instructing someone who did business with a company he owned to file a false tax form five years earlier. Managing principal Nir Meir — who helped found HFZ in 2005 — penned a letter to the court on Simonlacaj’s behalf at the time, calling him a “key member” of the firm who “has a reputation for being fair and honest within the industry.”

In the latest case involving CWC, Simonlacaj pleaded not guilty to charges of tax fraud and wire fraud and was released on $250,000 bail on Dec. 6, 2019.

Court documents indicate that HFZ’s Belnord, a landmarked pre-war building on the Upper West Side, was also a target of the CWC scheme.

During a recorded conversation last March, alleged Gambino “crime family soldier” Vincent Fiore discussed hiding payments for work done on an HFZ employee’s Bronx home, according to a detention memo written by U.S. Attorney Richard Donoghue and filed with the court in December 2019.

Fiore wanted the expenses to be attributed to work done on the Belnord, according to the detention memo.

Fiore said CWC had sent employees to work on a home owned by an HFZ employee on Delanoy Avenue in the Bronx, according to the letter. In the recorded conversation, Fiore instructs an unnamed co-conspirator to account for CWC’s payments for work on the Delanoy Avenue home by putting them “against the Belnord.”
 

David Goldsmith

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A similar scheme is at the center of the charges against Simonlacaj, according to the detention memo.

“I owe [the Worker] some money. I forgot to pay him,” Fiore said, according to court documents. “One is John Si’s house; we owe him some money there.” Fiore then said he also owed the worker some money for working on the HFZ employee’s Delanoy Avenue home, according to the memo.

An employee of HFZ has owned a home on Delanoy Avenue in the Bronx since 1999 and is listed on DOB documents as a representative for the Belnord, according to city records. The employee previously worked for Extell when the company owned the Belnord and was hired by HFZ when Feldman’s firm bought the property in 2015 for $575 million.

There is no indication in court documents of the employee being involved with a quid pro quo. The employee was not charged in the indictment.

HFZ said it fired CWC and its affiliates from all of its projects after learning about the federal investigation, months ahead of the December indictment. Omnibuild, the general contractor on the XI, declined to comment. Omnibuild has not been accused of wrongdoing in the case.

Overall, CWC’s kickback scheme involved employees at two development companies, HFZ and RXR, and three general contractors, one of which appears to be Hudson Meridian, court records show.

Court papers identify a firm as “Construction Company #5,” and the indictment says it worked as the general contractor on an unnamed Yonkers project. Donoghue’s December 2019 memo identified the Yonkers project as Larkin Plaza, RXR and Rising Development’s residential and retail development, where Hudson Meridian was the general contractor.

Hudson Meridian said it fired CWC after the subcontractor abandoned Larkin Plaza following the release of the indictment. CWC is accused of overbilling “Construction Company #5,” and Hudson Meridian has not been charged with any crimes in the case.

“Hudson Meridian has fully cooperated with the U.S. Attorney’s office, and we will continue to do so,” said Daniel Katz, an attorney for the company, who would not comment on whether or not the general contractor is one of the unnamed construction firms in court documents. “Hudson Meridian has not engaged in any wrongdoing and, as far as we know, is not the subject of any investigation.” The same goes for the company’s employees, Katz said.

According to Donoghue’s detention memo, a project manager for Larkin Plaza was offered bribes in the form of free construction materials for a jiu-jitsu gym in White Plains that the manager is “associated with.” In exchange, the project manager was expected to approve change orders at Larkin Plaza, according to the detention memo. The employee is not named, but Matthew Kachmar is listed on LinkedIn as a senior property manager at RXR and is listed on the website of East Coast United Brazilian Jiu-Jitsu in White Plains as its CEO.

The detention memo details another recorded conversation where Fiore expresses frustration with the project manager (Kachmar), saying, “The kid is not even making an attempt,” despite labor and materials for the jiu-jitsu gym costing north of $40,000. RXR confirmed that the change orders mentioned in the letter were never actually performed, and Kachmar did not have the authority to sign off on them in the first place.

Kachmar left RXR sometime in February. He declined to comment for this story. Neither he nor RXR have been accused by prosecutors of wrongdoing.
 

David Goldsmith

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A similar scheme is at the center of the charges against Simonlacaj, according to the detention memo.

“I owe [the Worker] some money. I forgot to pay him,” Fiore said, according to court documents. “One is John Si’s house; we owe him some money there.” Fiore then said he also owed the worker some money for working on the HFZ employee’s Delanoy Avenue home, according to the memo.

An employee of HFZ has owned a home on Delanoy Avenue in the Bronx since 1999 and is listed on DOB documents as a representative for the Belnord, according to city records. The employee previously worked for Extell when the company owned the Belnord and was hired by HFZ when Feldman’s firm bought the property in 2015 for $575 million.

There is no indication in court documents of the employee being involved with a quid pro quo. The employee was not charged in the indictment.

HFZ said it fired CWC and its affiliates from all of its projects after learning about the federal investigation, months ahead of the December indictment. Omnibuild, the general contractor on the XI, declined to comment. Omnibuild has not been accused of wrongdoing in the case.

Overall, CWC’s kickback scheme involved employees at two development companies, HFZ and RXR, and three general contractors, one of which appears to be Hudson Meridian, court records show.

Court papers identify a firm as “Construction Company #5,” and the indictment says it worked as the general contractor on an unnamed Yonkers project. Donoghue’s December 2019 memo identified the Yonkers project as Larkin Plaza, RXR and Rising Development’s residential and retail development, where Hudson Meridian was the general contractor.

Hudson Meridian said it fired CWC after the subcontractor abandoned Larkin Plaza following the release of the indictment. CWC is accused of overbilling “Construction Company #5,” and Hudson Meridian has not been charged with any crimes in the case.

“Hudson Meridian has fully cooperated with the U.S. Attorney’s office, and we will continue to do so,” said Daniel Katz, an attorney for the company, who would not comment on whether or not the general contractor is one of the unnamed construction firms in court documents. “Hudson Meridian has not engaged in any wrongdoing and, as far as we know, is not the subject of any investigation.” The same goes for the company’s employees, Katz said.

According to Donoghue’s detention memo, a project manager for Larkin Plaza was offered bribes in the form of free construction materials for a jiu-jitsu gym in White Plains that the manager is “associated with.” In exchange, the project manager was expected to approve change orders at Larkin Plaza, according to the detention memo. The employee is not named, but Matthew Kachmar is listed on LinkedIn as a senior property manager at RXR and is listed on the website of East Coast United Brazilian Jiu-Jitsu in White Plains as its CEO.

The detention memo details another recorded conversation where Fiore expresses frustration with the project manager (Kachmar), saying, “The kid is not even making an attempt,” despite labor and materials for the jiu-jitsu gym costing north of $40,000. RXR confirmed that the change orders mentioned in the letter were never actually performed, and Kachmar did not have the authority to sign off on them in the first place.

Kachmar left RXR sometime in February. He declined to comment for this story. Neither he nor RXR have been accused by prosecutors of wrongdoing.
 

David Goldsmith

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Passing the buck
Developers aren’t often involved with vetting subcontractors who work on their sites — meaning that responsibility largely falls to construction management firms. However, some owners do ask outside firms to investigate companies before they are hired.
Paul E. Ryan, who conducts reputational reviews of construction and real estate companies and formerly served on a labor racketeering task force for the Manhattan District Attorney’s Office, said organized crime is “still a major factor” that his firm K2 Intelligence checks for when conducting reviews of a subcontractor’s reputation.
“It’s not something that has diminished over time,” he said.
A key part of such reviews, Ryan added, is an investigation into the subcontractor’s principals. Some companies may risk hiring a firm whose leader has a record of indiscretions, but they often build clauses into their contracts to enable the removal of the firm should the project go south. But to have such foresight, he said, an owner or construction manager must have a clear picture of the subcontractor’s history.
“You can’t get there without knowing what you are dealing with,” he said.
CWC’s general contractor license is registered to Campos, according to the DOB, and his criminal history is readily available online. The 2003 indictment involving the Gambino family was covered by multiple media outlets, and federal prison records online show he spent nearly two years behind bars. At the time, the New York Sun even wrote a profile detailing Campos’ legal woes, as well as his friendship with hip-hop mogul Sean “Diddy” Combs.
It’s unknown if the construction managers that hired CWC were aware of his record — and if they weren’t, how this information slipped past background checks.
If owners take more of an active role in the vetting process, such risks could become less of an issue, according to Ryan.
“When owners and developers are involved in the process for selection and the oversight of subcontractor selection, it mitigates these types of concerns,” he said. “The more people who are looking, the less this would become an issue.”
Katz, the attorney for Hudson Meridian, said Campos’ previous indictment did not come up in the background check on CWC, and the firm is now reviewing their process for vetting subcontractors. Hudson Meridian is no longer using the vendor who conducted the background check, but it did not make this decision because of the CWC case, according to Katz.
RXR indicated that as a result of this case, the company “no longer relies on construction managers or general contractors to perform background checks.” Every trade contractor working on an RXR job now must “be prequalified and fully vetted.”
HFZ said it has commissioned “a top-to-bottom review of those policies to ensure the integrity of our operations going forward.” The company has also hired outside attorneys, auditors and investigators to assess if the firm was financially harmed by the defendants, according to HFZ’s spokesperson.
Multiple developers who CWC has claimed it worked with either downplayed their relationship or denied that one exists at all.
Campos’ firm worked on Extell’s 11-unit condo project at 1010 Park Avenue, for instance, where it was a carpentry and drywall subcontractor for Gilbane, the project’s construction manager. But a spokesperson for Gary Barnett’s development firm said, “Extell has no contractual or other relationship with CWC, who completed their work for Gilbane and was paid in accordance with their contract.”
CWC was one of 68 subcontractors who worked on the Park Avenue condo tower, according to Gilbane. A spokesperson for the company would not comment on the specifics of the company’s vetting process for subcontractors.
“Gilbane has maintained the highest standards of business conduct and ethics throughout its 150-year history,” a company spokesperson said in a statement. “Gilbane has cooperated fully as a witness in the government’s investigation and will continue to do so.”
But the December indictment hasn’t deterred other construction companies from seeking out some of the defendants.
Although the court denied Kocaj’s request to work for the Bronx-based construction company that prosecutors claimed had ties to organized crime, for instance, a federal judge is now reviewing his request to work for an elevator company instead.
Gerald McMahon, a defense attorney who has represented multiple clients with alleged mafia connections, said that, while certain industries are barred from hiring people who have any suspected affiliations with organized crime, construction is not one of them.
“It’s pretty much ad hoc. Whatever companies want to do, they can do, and so I think that’s why you would have disparate treatment in the construction industry, as opposed to some other industries,” he said. “There is no hard and fast rule. This is America. If you’re charged with a crime, you’re presumed to be innocent.”
 

David Goldsmith

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Cracks in the foundation: Construction’s kickback problem​

Construction is inherently vulnerable to corruption, but contractors have a way of surviving it

A small Queens glass company sent out a letter in 2017, alerting clients that it had fired three of its employees. It did not say why, but that became clear soon enough.
Authorities had discovered an alleged bribery scheme centered not on little-known Jonathan Metal & Glass but on Turner Construction and Bloomberg. Executives from the two giant firms were charged with accepting millions of dollars’ worth of payoffs in exchange for inflating interior construction contracts.
Federal authorities raided Turner’s offices in October 2017, roughly a week before the glass shop revealed the firings. One of the terminated employees was later accused in the scheme, along with nearly two dozen other subcontractors and vendors.

The federal and state criminal cases against former Turner and Bloomberg employees, as well as the subcontractors, are only now nearing a conclusion. Four former executives of the big firms have pleaded guilty to tax evasion, theft and other charges.
By marking up construction costs at Bloomberg offices, executives stole at least $15 million from the media and financial information company, authorities said. They now face prison.

As for Turner, although its client was ripped off, the firm was not charged, suffered no apparent blow to its reputation and has continued to win large contracts. Which surprised absolutely no one.
Large construction companies often emerge from corruption cases relatively unscathed, even when found to be directly involved in wrongdoing. They pay a fine, issue an apologetic statement and continue to bid on work.

But the Turner case also underscores how vulnerable construction is to malfeasance and the persistent appetite of industry players to cheat at every level of the process.
“You can never be content with the controls that you set up because people who are looking to pad their invoices are vigilant as well, in a negative sense,” said Dennis Walsh, a former prosecutor with the New York attorney general’s Organized Crime Task Force and a consultant with Guidepost Solutions. “Companies need to think in a forward way and be mindful of the tireless efforts of some contractors to exploit opportunities.”

The scheme
In September 2017, a project superintendent for Turner, Vito Nigro, sent a cryptic text message to an air conditioning subcontractor.
“When u bringing lunch so we’re done. The other guy is getting married,” he wrote, according to state prosecutors.

He was referring not to food but to a series of illicit cash payments that were used in part, to help pay for then-Bloomberg construction manager Michael Campana’s wedding photographer, prosecutors allege. Nigro repeatedly referred to bribes in lunch terms, most often as “sandwiches,” according to the 2018 indictment.
The two, along with more than a dozen others, were charged with conspiring with various subcontractors and vendors to award work to certain companies, artificially driving up the costs of construction work at Bloomberg’s offices at 120 Park Avenue and 919 Third Avenue.

In return, the subcontractors allegedly provided cash bribes and other kickbacks, including vacations and home renovations, to executives at Bloomberg and Turner. This went on for six and a half years.
Finally, a month after Nigro’s message about “lunch,” New York State Police officers and investigators crashed the party.
Prosecutors said at the time that the graft turned the New Jersey home of Anthony Guzzone, Bloomberg’s head of global construction, into a “palace.”

A separate federal indictment slapped tax-evasion charges on the executives, who had not reported the illicit benefits to the IRS. Attorneys for Nigro and Campana did not comment for this story.
The scheme was not novel in the annals of construction fraud. In the past three decades, New York’s largest construction managers have paid millions in fines and penalties to settle similar allegations. But the case was notable for a few key reasons.

For one, Bloomberg and Turner are huge, sophisticated companies. Bloomberg, founded by former New York City Mayor Michael Bloomberg and headquartered on Lexington Avenue, is worth as much as $60 billion, according to Burton-Taylor International Consulting. Turner bills itself as the country’s largest construction manager. Its global revenue last year was $14.66 billion, according to ENR.

Turner is a subsidiary of German engineering giant Hochtief, which acquired the New York–based construction manager in 1999 for $263 million. Since then, Turner has expanded across the U.S. — where it now has more than 40 offices — and internationally.
But size can make corruption harder to find. “Rogue actors” can keep misdeeds under the radar for an extended period at a large company, especially when projects are worth tens of millions of dollars, according to Jodie Kane, head of the Manhattan district attorney’s Rackets Bureau.

“It’s easy to skim off what would still be a considerable amount of money for many of us but, in the larger view of the project, is a small fraction,” she said. The alleged involvement of top Bloomberg executives likely made the scheme even harder to stop.
“I think it’s easy to go undetected for a long time, even with very rigorous internal compliance and especially when it’s the gatekeeper, who’s supposed to be identifying the compliance, who ends up being a bad actor,” Kane said. “Really, that’s the worst of all possible worlds.”

Some elements of a construction contract can be readily inflated if they have no fixed value, such as responding to conditions on a site that emerge during the building process.
“If there was a stock that you could buy for a dollar, and someone paid $1.10, you’d know something was up,” said Ronald Goldstock, a private, independent inspector general and construction integrity monitor who was once director of the New York State Organized Crime Task Force. “The construction industry by its very nature is rife with the possibilities of bribery and extortion.”

Diana Florence, who spent 25 years at the Manhattan district attorney’s office and headed its Construction Fraud Task Force, said looking at a company’s culture is key in determining its culpability.
“There also has to be fairness,” she said. “You can’t indict an entire company, and you shouldn’t, based on a rogue employee.”
But some believe Bloomberg should have been prepared for this kind of scheme. Bloomberg’s previous construction manager, Structure Tone, was also accused of overbilling the firm, as well as other clients. Structure Tone pleaded guilty in 2014 to falsifying business records.

Also, Nastasi & Associates, a carpentry subcontractor, had warned Bloomberg and Turner of problems with their bidding processes, according to lawsuits filed after the criminal federal and state cases were revealed.
The company’s owner, Anthony Nastasi, claims in the suits that after he raised questions, his company was abruptly fired from a Bloomberg project and then blocked from bidding on others, which destroyed his company.

“This is how Turner runs its business,” the lawsuit states. “Everyone knows the risk of crossing Turner, and Turner does not hesitate to impose its enormous market power on subcontractors that depend on Turner for work.”
The suit, which a Turner spokesperson said has “no merit” and was dismissed in March in a decision now being appealed, also contends that both companies ignored “red flags” that the schemes “reached the highest levels of these companies, permeating through many departments and levels of employees in different areas of the construction business.”

“Not only should their compliance programs have caught this scheme, based on the breadth and brazenness of the conduct by their highest-level executives,” the lawsuit claims, “but these companies have long been on alert that their employees, including their highest-level executives, were susceptible to it.”
Moving on
Three years after being revealed, the federal and state cases against the Turner and Bloomberg executives are coming to a close.

Guzzone, whom prosecutors referred to as the scheme’s mastermind, faces up to five years in prison on the federal tax evasion charge and three to nine years for grand larceny in the state case. Ronald Olson, former Turner vice president and deputy operation manager, faces the same sentences. Campana was sentenced to 24 months in prison in the federal case and faces one year in the state case, after pleading guilty to tax evasion and money laundering, respectively.

An attorney for Guzzone, Alex Spiro, said in a statement that his client has “accepted responsibility for accepting gratuities and not disclosing certain matters on his taxes and will further explain the circumstances in court.” A lawyer for Olson did not comment.
One employee of Jonathan Metal & Glass, Frank Zustovich, pleaded guilty to stealing $50,000 from Bloomberg and agreed to provide authorities with the names of Bloomberg and Turner executives, according to the New York Times. Zustovich, along with at least one other employee fired from Jonathan Metal, now work for another company, GFC Ornamental Metal & Glass, according to LinkedIn.

Turner, meanwhile, seems to have emerged with nary a scratch. In New York, the company is serving as construction manager for the Spiral, Tishman Speyer’s Bjarke Ingels–designed office tower. In May it was selected to build out the interiors of Ernst & Young’s offices spanning 18 floors at One Manhattan West. Vornado Realty Trust recently tapped the company to oversee the redevelopment of 2 Penn Plaza.

“Clients recognize that the actions of two former employees do not reflect Turner’s true character of honesty and integrity,” the Turner spokesperson said about the Bloomberg case. “Turner actively cooperated with law enforcement throughout the investigation and applauds their efforts in prosecuting these individuals.”
Kane said larger companies are typically better equipped to weather bad press and reputational damage that accompanies criminal convictions. Smaller companies will sometimes shut down and reopen under a new name, she said.

But the government rarely tries to put firms out of business, a lesson learned when the conviction of Arthur Andersen in the 2001 Enron scandal triggered the disintegration of the accounting giant, costing thousands of employees their jobs.
In determining whether to go after the company itself, prosecutors consider how many people it employs and if there is a way to remedy criminal activity while keeping it in business, according to Kane.
“Many of these companies, despite criminal wrongdoing, they do good work in the construction industry,” she said. “So if you can find a way to clean up the culture of the company, but to keep the workers employed, that’s one of the things that we try to do.”
Louis Coletti, president of the Building Trades Employers Association, called the cases against Turner — a member of his group — and Bloomberg employees an “aberration.”
“At the end of the day, human beings will try to take advantage of any system,” he said. “We do all we can to prevent it, but if anybody goes asunder, rest assured they will be terminated and have been terminated.”
Indeed, executives were caught. But by the government, not by the companies. And given the weaknesses inherent in construction contracting, it appears certain such crimes will happen again.
In addition to increased corporate vigilance, Florence said, the government needs to make clear it is continuously watching for fraud. Otherwise, companies and their employees will continue to think the risk of getting caught is outweighed by potential rewards.
“It’s like Groundhog Day over and over,” she said.
 

John Walkup

Talking Manhattan on UrbanDigs.com
“At the end of the day, human beings will try to take advantage of any system,” he said. “We do all we can to prevent it, but if anybody goes asunder, rest assured they will be terminated and have been terminated.”
Indeed, executives were caught. But by the government, not by the companies. And given the weaknesses inherent in construction contracting, it appears certain such crimes will happen again.
In addition to increased corporate vigilance, Florence said, the government needs to make clear it is continuously watching for fraud. Otherwise, companies and their employees will continue to think the risk of getting caught is outweighed by potential rewards.
“It’s like Groundhog Day over and over,” she said.

----> NYC's Byzantine building codes, enigmatic zoning regulations, and mysterious local politics make everyday Groundhog Day. Perhaps its time to de-centralize and open up the process?
 

David Goldsmith

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Staff member

Colombo mob boss arrested over alleged construction union shakedown​

Defendants allegedly demanded five-figure payments tied to union​

A construction union in Queens was squeezed by alleged mobsters who demanded monthly payments from a health fund tied to the union, according to an indictment unsealed in a Brooklyn federal court.
Prosecutors allege that defendants, including Andrew Russo, the reputed boss of the Colombo crime family, made threats to take control of the health fund and demanded $10,000-plus monthly payments beginning in 2019. The union wasn’t named in the indictment, according to the Wall Street Journal.
A senior labor official also allegedly faced threats and extortion demands from the defendants, though that person also hasn’t been named.

Through recordings and wiretaps, a federal investigation was able to catch defendants allegedly talking about the kickbacks, as well as personnel decisions involved in the union and health fund. One defendant, reputed Colombo captain Vincent Ricciardo, allegedly threatened to kill the labor official in June.
“I’ll put him in the ground right in front of his wife and kids,” Ricciardo allegedly said.

Additional allegations include selling fake Department of Labor cards for $500 each saying construction workers completed certain courses and falsifying paperwork at occupational safety training schools. Those schools allegedly served as a storage space for illegal drugs and fireworks, according to the indictment.
Fourteen people were arrested on Tuesday on fraud and racketeering charges that allegedly took place over the past two decades. The fourteen have been charged in connection to the alleged crimes and arrests took place in three states: New York, New Jersey and North Carolina.

Russo pleaded not guilty to the charges during his arraignment on Tuesday, for which he appeared via video conference from a hospital where he was being treated.
Mob involvement in New York construction unions has been a longstanding issue. In November, the city’s largest construction union, the New York City District Council of Carpenters, announced it was taking steps to root out possible organized-crime ties within its membership. This January, a former HFZ Capital Group executive pleaded guilty in connection to a construction bribery scheme that skimmed funds from the developer’s projects.
 

David Goldsmith

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Contractors Indicted for Allegedly Bribing Supers at Brooklyn NYCHA Complexes
Nine contractors have been charged with bribing NYCHA superintendents in exchange for small repair contracts, Brooklyn District Attorney Eric Gonzalez announced Monday, noting that the problem is likely far more widespread.
Over a two-year period, city investigators went undercover as supers in two Brooklyn complexes, Red Hook Houses in Red Hook and Lafayette Gardens in Clinton Hill, aiming to snag deviant contractors attempting to provide kickbacks in exchange for securing an inflated contract to conduct small fixes such as window repairs, chain-link fence installation, and tile work.
The nine defendants proffered 35 bribes totaling about $20,000 cash, two $500 gift cards, and four bottles of Johnnie Walker scotch (three black label and one white label), the DA said.

“They knew what they were doing was wrong,” Gonzalez said at a press conference announcing the indictments. “There’s no question that they thought they were just being nice and providing a gift. They understood that what was happening was inappropriate.”
The DA said he hopes the indictments send a message to other supers and contractors not to engage in similar schemes that defraud the taxpayers and negatively impact NYCHA residents’ quality of life.

“Honest contractors stand no chance of doing the work if you have to corrupt the process in order to be awarded the contract,” Gonzalez said. “The residents of NYCHA often live in conditions that are deplorable, and we definitely need a system that works to their advantage to get things done quickly, but they deserve to have the best contractors working to fix items inside NYCHA without this corrupt process.”

Under current NYCHA regulations, “micro-purchase” contracts worth less than $10,000 can be awarded by supers without going through a competitive bidding process, which is intended to allow for small repairs to be addressed quickly, so residents do not have to wait for the conclusion of a long, arduous bidding war. The flip side, though, is that small contracts are rife for graft similar to those in the indictments.
Margaret Garnett, commissioner of the Department of Investigation, said that while the work was completed in all but one of the cases, allowing bribery to become the cost of doing business sends a message that contractors do not have to perform their work to the best of their ability.
“When it becomes commonplace for bribes to be paid, that really removes any incentive to do good work and be responsive and provide value for the taxpayers’ dollar,” Garnett said.

Some of the defendants were captured on videos secretly recorded by city investigators. One video shows Chatranjit Singh, of Fine Touch Construction in Queens, offering a $500 gift card to the investigator posing as a super, who then offers work on doors at Lafayette Gardens.
Another shows defendant Guriqbal Singh (no relation to Chatranjit) allegedly handing over $600 in cash in an elevator, and getting agitated when he sees a security camera, which the undercover investigator claims is not working. Another shows defendant Davinder Singh (seven of the nine defendants are named Singh, but only some are related to others; Davinder is not related to Chatranjit or Guriqbal) questioning an investigator, which the DA alleges to be scoping out whether he’ll take a bribe, and 15 minutes later handing over what the DA alleges to be $1,000.
Garnett said DOI has issued policy recommendations for NYCHA to implement to address the “vulnerabilities” exposed in the indictments. Those include moving responsibility for doling out small-dollar contracts from supers to NYCHA’s central office and adopting a “fixed-price list” for common micro-purchase repairs to prevent contractors from stiffing the housing authority.
In a statement, NYCHA spokesperson Rochel Leah Goldblatt said that the housing authority had worked in partnership with DOI on the investigation and that it was already implementing procurement reforms as part of the NYCHA Transformation Plan, aka the NYCHA Blueprint, which was mandated as part of a consent decree between the city and the feds.
“NYCHA has zero tolerance for these illegal acts committed by staff and vendors, and worked in partnership with DOI on this investigation,” Goldblatt said. “We have implemented significant changes to the systems to prevent this type of malfeasance, including updates and modifications to purchasing oversight, how contracts are awarded and tracked, and post-award contract management. They are all being implemented as part of the Transformation Plan, which was mandated by the 2019 HUD Agreement, and we will continue to do the necessary work to improve.”
Goldblatt said that NYCHA is currently implementing a new procurement oversight entity called Purchasing, Logistics, and Inventory (PLI), which will be tasked with both approving micro-purchases and approving purchases within larger contracts. PLI onboarded a senior director in August and “development purchasing teams” are expected to be in place by 2022.
The authority is also implementing checks via the city’s PASSPort portal for contracts below $250,000, improvements to its oversight of contracts after they’re awarded, implementing “comprehensive” procurement training for staff, and adopting lifetime fixed prices for small purchases within larger contracts.
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member
Contractors Indicted for Allegedly Bribing Supers at Brooklyn NYCHA Complexes
Nine contractors have been charged with bribing NYCHA superintendents in exchange for small repair contracts, Brooklyn District Attorney Eric Gonzalez announced Monday, noting that the problem is likely far more widespread.
Over a two-year period, city investigators went undercover as supers in two Brooklyn complexes, Red Hook Houses in Red Hook and Lafayette Gardens in Clinton Hill, aiming to snag deviant contractors attempting to provide kickbacks in exchange for securing an inflated contract to conduct small fixes such as window repairs, chain-link fence installation, and tile work.
The nine defendants proffered 35 bribes totaling about $20,000 cash, two $500 gift cards, and four bottles of Johnnie Walker scotch (three black label and one white label), the DA said.

“They knew what they were doing was wrong,” Gonzalez said at a press conference announcing the indictments. “There’s no question that they thought they were just being nice and providing a gift. They understood that what was happening was inappropriate.”
The DA said he hopes the indictments send a message to other supers and contractors not to engage in similar schemes that defraud the taxpayers and negatively impact NYCHA residents’ quality of life.

“Honest contractors stand no chance of doing the work if you have to corrupt the process in order to be awarded the contract,” Gonzalez said. “The residents of NYCHA often live in conditions that are deplorable, and we definitely need a system that works to their advantage to get things done quickly, but they deserve to have the best contractors working to fix items inside NYCHA without this corrupt process.”

Under current NYCHA regulations, “micro-purchase” contracts worth less than $10,000 can be awarded by supers without going through a competitive bidding process, which is intended to allow for small repairs to be addressed quickly, so residents do not have to wait for the conclusion of a long, arduous bidding war. The flip side, though, is that small contracts are rife for graft similar to those in the indictments.
Margaret Garnett, commissioner of the Department of Investigation, said that while the work was completed in all but one of the cases, allowing bribery to become the cost of doing business sends a message that contractors do not have to perform their work to the best of their ability.
“When it becomes commonplace for bribes to be paid, that really removes any incentive to do good work and be responsive and provide value for the taxpayers’ dollar,” Garnett said.

Some of the defendants were captured on videos secretly recorded by city investigators. One video shows Chatranjit Singh, of Fine Touch Construction in Queens, offering a $500 gift card to the investigator posing as a super, who then offers work on doors at Lafayette Gardens.
Another shows defendant Guriqbal Singh (no relation to Chatranjit) allegedly handing over $600 in cash in an elevator, and getting agitated when he sees a security camera, which the undercover investigator claims is not working. Another shows defendant Davinder Singh (seven of the nine defendants are named Singh, but only some are related to others; Davinder is not related to Chatranjit or Guriqbal) questioning an investigator, which the DA alleges to be scoping out whether he’ll take a bribe, and 15 minutes later handing over what the DA alleges to be $1,000.
Garnett said DOI has issued policy recommendations for NYCHA to implement to address the “vulnerabilities” exposed in the indictments. Those include moving responsibility for doling out small-dollar contracts from supers to NYCHA’s central office and adopting a “fixed-price list” for common micro-purchase repairs to prevent contractors from stiffing the housing authority.
In a statement, NYCHA spokesperson Rochel Leah Goldblatt said that the housing authority had worked in partnership with DOI on the investigation and that it was already implementing procurement reforms as part of the NYCHA Transformation Plan, aka the NYCHA Blueprint, which was mandated as part of a consent decree between the city and the feds.
“NYCHA has zero tolerance for these illegal acts committed by staff and vendors, and worked in partnership with DOI on this investigation,” Goldblatt said. “We have implemented significant changes to the systems to prevent this type of malfeasance, including updates and modifications to purchasing oversight, how contracts are awarded and tracked, and post-award contract management. They are all being implemented as part of the Transformation Plan, which was mandated by the 2019 HUD Agreement, and we will continue to do the necessary work to improve.”
Goldblatt said that NYCHA is currently implementing a new procurement oversight entity called Purchasing, Logistics, and Inventory (PLI), which will be tasked with both approving micro-purchases and approving purchases within larger contracts. PLI onboarded a senior director in August and “development purchasing teams” are expected to be in place by 2022.
The authority is also implementing checks via the city’s PASSPort portal for contracts below $250,000, improvements to its oversight of contracts after they’re awarded, implementing “comprehensive” procurement training for staff, and adopting lifetime fixed prices for small purchases within larger contracts.
still going on huh
 
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