Prosecutors alleged Larry Davis paid at least two minority-owned businesses for work that those businesses did not do, in order to meet contractual requirements set by the Port Authority of New York and New Jersey to subcontract out work to such businesses.Executives with those two businesses have already pleaded guilty and are cooperating with authorities.
The owner of a steel company that won lucrative construction contracts at the World Trade Center site was charged with fraud Thursday after allegedly cheating on official requirements to use minority workers on the project, officials said.
Larry Davis, 63 years old, whose company DCM Erectors was awarded more than $1 billion in contracts to build One World Trade Center and an adjacent PATH train station, was charged with two counts of wire fraud and conspiracy to commit wire fraud, Manhattan U.S. Attorney Preet Bharara said.
Mr. Davis appeared before U.S. Magistrate Judge Debra Freeman on Thursday. He was released on $100,000 bond, and his travel was restricted to the region.
His defense attorney said Mr. Davis denies the charges and looks forward to his day in court, adding, "We believe the construction industry should stand behind us because this could be anybody."
Mr. Davis is accused of violating the Minority and Women-Owned Business Enterprise Program, administered by the Port Authority of New York and New Jersey.
The program increases the role of minority and women-owned businesses working on Port projects, which includes the World Trade Center site. Under its agreement with the Port Authority, Mr. Davis' company was required to comply with conditions that 12% of its work be subcontracted to minority businesses and 5% to women-owned businesses.
The criminal complaint said DCM was paying two companies to fake their role in the contract by submitting false payroll records to the Port Authority, allowing it to skirt the program's minority requirements.
Mr. Davis has led DCM, one of the city's largest steel companies, since March 1999, serving as its President and Chief Executive Officer. The same company has worked on the Time Warner Center and Bloomberg LP's Lexington Avenue Headquarters.
The company was awarded about $256 million to supply and erect steel at the site in 2007. A second contract of $330 million was awarded to the company in 2009 to perform the same work on a nearby PATH station.
During the course of the project, the contracts expanded to almost $1 billion, officials said.
Two other people running companies involved in the scheme previously pleaded guilty, the complaint said.
One company was Solera/DCM Joint Venture LLC, a minority-owned business owned by Johnny Garcia. Mr. Garcia received the same charges as Mr. Davis and will be sentenced soon. Each charge carries a maximum penalty of 20 years in prison.
According to investigators, Solera/DCM was set up for the purpose of cheating on the requirements of the minority workers program. While it had the appearance of a minority company, nonminority laborers were put on the company's payroll and used on WTC jobs, such as completing metal decking work and steel procurement.
Investigators identified a second business used in the scheme, run by businesswoman Gale D'Aloia, who has also pleaded guilty. Her company, GLS Enterprises Inc., has one client and source of revenue, which was DCM.
The complaint said the Port Authority was told in documents that GLS was conducting surveying work, but investigators found unionized surveyors, who were already on DCM's payroll, had been used to carry out the work.
Mr. Bharara said the fact the charges related to the World Trade Center site made the situation particularly disappointing.
"Larry Davis and his company had the special privilege of working on the World Trade Center Project, which is not only a major project, but is also one that holds a special place in New Yorkers' hearts," he said.
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