Manhattan District Attorney Alvin Bragg unveiled on Tuesday the indictment of eight people and six companies in what he called a wide-ranging construction industry fraud scheme.
This announcement comes on the second day of National Construction Safety Week and highlights the plight many construction workers have befallen due to corruption where their well-being is disregarded and compensation for injuries are swept under the rug. According to the DA’s office, the indictment charges JM3 Construction LLC, a large non-union drywall and carpentry company, with its principal executives Lawrence Wecker, 82, Michael Speier, 46, Joseph Guinta, 57, Lisa Rossi, 52, and Marcos Pinheiro, 65, (in addition to their companies) with enterprise corruption.
Bragg’s office found these unscrupulous construction executives and subcontractors had conspired to use minority and women-owned businesses to obtain affordable housing development contracts, and during their scheme they allegedly engaged in payroll and insurance fraud, and other forms of corruption. Bragg asserts that their criminal acts affected numerous affordable housing projects as well as placed construction workers at risk for the sake of greed.
“The common factor in all of these alleged schemes is greed at all costs,” said District Attorney Bragg.
It was this level of disregard for construction workers and an insatiable greed that triggered a red flag for investigators when they noticed suspicious check-cashing activities. According to the Manhattan DA’s Office’s Rackets Bureau, these check-cashing activities were observed during a separate investigation into individuals who received bribes for Minority and Women-Owned Business Enterprises (M/WBE) fraud schemes.
These individuals now face 60 criminal charge counts, which include conspiracy, insurance fraud, grand larceny, money laundering, falsifying business records, commercial bribing, scheme to defraud and offering a false instrument for filing.
The investigation found that JM3 Construction LLC, which specialized in government-subsidized affordable housing projects, engaged in a wide array of criminal schemes to earn a quick buck. These criminal acts include falsifying records to cover up multi-million-dollar cash payrolls in which checks were cashed from shell companies under the guise that they were for legitimate subcontractor services. Payroll usually garnered about $150,000 a week and included weekly cash payments to subcontractors Pinheiro and Guinta. It was allegedly found that none of the money went toward workers’ compensation insurance providers or tax authorities. Additionally, during this time, executives and subcontractors consistently swept workers’ injuries under the rug so that insurance providers would not be made aware of the cash payroll.
Companies MSG Construction Corp. and JACG Construction LLC were found to have committed fraud against the New York State Insurance Fund (NYSIF) by making false statements in regard to the sheer size of their workforce and payroll amounts to reduce the workers’ compensation insurance policies. These companies are found to have allegedly defrauded NYSIF (MGS Construction defrauded $1.7 million and JACG Construction LLC defrauded $360,000 in NYSIF premiums).
According to the DA’s office JM3 Construction Enterprise engaged in M/WBE fraud were:
- National Urban League, 126 West 126th Street, Manhattan
- The Fountains, 888 Fountain Avenue, Brooklyn
- Vital Brookdale, 535 East 98th Street, Brooklyn
- 79 Avenue D, Manhattan
- Via Vyse, 1812 Vyse Avenue, Bronx
- Story Avenue East, 1520 Story Avenue, Bronx
- 14 LeCount Place, New Rochelle
Affordable Housing units that were affected include:
- Affordable housing development projects were affected, including:
- Victory Plaza, 11 West 118th Street, Manhattan
- Nevins Street Apartments, 50 Nevins Street, Brooklyn
- Long Island College Hospital Redevelopment, 347 Henry Street, Brooklyn
It was stressed during a press conference on May 2 that the city agencies, especially the Department of Housing Preservation and Development (HPD) Commission, have a zero tolerance for those seeking to defraud MWBE programs.
“These defendants, as charged, enriched themselves at the expense of a program intended to assist minority and women-owned businesses, by deceiving City and State government entities, part of a series of frauds that shortchanged workers and undermined fair competition. I want to thank the Manhattan District Attorney’s Office and all the agencies that worked on this wide-ranging investigation for their commitment to expose and prevent construction fraud,” New York City Department of Investigation Commissioner Jocelyn E. Strauber said.
All eight defendants pleaded not guilty in court and were released on their own recognizance.