Deutsche contractor indicted for grand larceny


By Julie Shapiro

To the list of charges levied against John Galt Corp. workers since the fatal fire at the Deutsche Bank building, the district attorney added a new one this week: grand larceny.

Robert Chiarappa, 45, Galt’s former purchasing agent, is accused of stealing $1.2 million from the Lower Manhattan Development Corp., which owns the building, and Arch Insurance Group, Galt’s bonding company.

Chiarappa told the project’s vendors to submit false invoices for unnecessary supplies, like gloves, plastic sheeting and protective gear, according to prosecutors. Then, once Chiarappa approved the payments to the vendors and they got paid, the vendors are accused of giving Chiarappa cash and jewelry, leasing him three luxury cars, including a Mercedes and a BMW, and paying for his vacation to Turks and Caicos Islands, according to the D.A.

“He had expensive taste,” Manhattan D.A. Robert Morgenthau said.

Chiarappa’s indictment comes two weeks after Morgenthau announced a slew of more serious charges against Galt, the subcontractor hired to clean and demolish the Deutsche Bank building. The D.A. charged Galt with manslaughter and criminally negligent homicide in the August 2007 death of two firefighters in a blaze at the contaminated building. Galt executives knew about a gap in the building’s standpipe that left firefighters without water on the day of the fire, but hid it rather than fixing it.

Galt is a reincarnation of Safeway Environmental Corp., sharing many of the same employees, including Chiarappa, and both companies have mob ties, according to the D.A.

“This indictment drives home the point that D.O.I. has been making for years, that integrity and safety go hand-in-hand,” Rose Gill Hearn, the Dept. of Investigation’s commissioner, said during Tuesday’s press conference announcing the indictments.

The city D.O.I. warned the Lower Manhattan Construction Command Center, a subsidiary of the L.M.D.C., that it was a mistake to allow contractor Bovis Lend Lease to hire Galt in 2006. The construction center’s responsibilities include preventing fraud in large projects Downtown.

Mike Murphy, spokesperson for the L.M.D.C., declined to comment on the decision to hire Galt. Deb Wetzel, spokesperson for the L.M.C.C.C., said her agency was not involved in that decision.

“We couldn’t have been more unequivocal in saying that John Galt should not be hired,” said Julie Menin, chairperson of Community Board 1. “We were not listened to…. I’m not at all surprised by the D.A.’s report.”

Chiarappa pleaded not guilty Tuesday to four counts of grand larceny in the second degree and two counts of grand larceny in the third degree. He was held on $100,000 bail and faces up to 15 years in prison. His lawyer did not return a call for comment.

Asked if Chiarappa’s schemes jeopardized safety at the Deutsche bank building, Morgenthau replied, “Not that we know of.”

The Deutsche Bank project had many monitors and auditors, including the U.S. Department of Housing and Urban Development, which funds the L.M.D.C., but it is understandable that none of them caught the fraud, said Daniel Castleman, chief assistant district attorney.

“Audits are only as good as the documents you look at,” Castleman said. “If you have the ability to go behind the documents, you can find this kind of fraud.”

The L.M.D.C. and Arch Insurance Group roughly split the $1.2 million loss, Castleman said, and the D.A. will try to make sure both are repaid. Chiarappa’s theft likely exceeded $1.2 million, because he may have padded legitimate invoices in addition to creating entirely fabricated ones, Castleman said.

The L.M.D.C. released a statement thanking the D.A. for undertaking the investigation, but the agency may not technically have lost the money at all. As on all of its contracts, the L.M.D.C. withheld a percentage of the payments, pending a post-project audit. The amount the L.M.D.C. retained was greater than the amount Chiarappa stole.

The indictments will likely keep coming, as Morgenthau said Galt is still under investigation and Chiarappa may not have been the only person taking money. Two weeks ago, Castleman said the L.M.D.C. and the construction command center were also among the groups being investigated by a grand jury looking at the Deutsche contracts.

The D.A. is also prosecuting the vendors, who are accused of keeping just over half the money from the false invoices, but Morgenthau declined to name them or even say how many were involved. A possible reason that Morgenthau did not name the indicted vendors is that they are cooperating with the investigation.