Wednesday, August 1, 2012

NYC Construction Giants in Criminal Probe for Billing Fraud

The FBI is investigating the billing practices of four New York City construction giants, just months after Bovis Lend Lease admitted to years of fraudulent billing, paying $56M in fines  Federal prosecutors now have Turner Construction Company, Tishman Construction, Plaza Construction and Skanska USA, under their magnifying glass. 

A grand jury subpoena has reportedly been issued to AECOM, the parent company of Tishman. That news comes after charges filed against Bovis Lend Lease in April ultimately led to an admission of guilt and $56 million in fines.

Turner Construction Company issued a statement confirming that they, among other major construction contractors, had been issued a subpoena by the United States Attorney's Office for the Eastern District of New York last December.

"Turner fully complied with the subpoena and will cooperate with any further inquiries from the authorities," the statement said. "Turner is well-recognized for its commitment to corporate integrity and high standards of business practice."

The four companies currently under investigation are involved in a number of large-scale public projects, including the extension of the #7 Subway line.

"The message should be clear to all who are engaged in similar contract billing fraud: You are in our sights. And the defense that ‘everyone does it’ will not be a shield against law enforcement."
— Loretta Lynch, U.S. Attorney for the Eastern District of New York
James Abadie, a former principal of Lend Lease's New York office, pleaded guilty to overbilling clients for more than 10 years, including projects with federal, state, and municipal funding, in April. He faces up to 20 years in prison. Fraudulent practices typically involved billing clients for labor overtime, hours that had not actually been worked by foremen.

Federal investigators would not stop there, warned Janice Fedarcyk, assistant director of the New York field office of the FBI, in a press release.

"Whether projects are publicly or privately funded, padding contracts and skirting the law are crimes," Ms. Fedarcyk said in the statement. "And we are watching."