The New York Times, April 24, 2012 Construction Company Expected to Admit to Fraud Scheme By WILLIAM K. RASHBAUM
The giant construction company that worked on the Sept. 11 Memorial and Citi Field projects is expected to admit to a massive fraud scheme on Tuesday and pay $50 million in fines and restitution in a deal to avoid criminal charges for overbilling on scores of public and private projects, people briefed on the case said. The company, which changed its name from Bovis Lend Lease to Lend Lease after a fatal fire during its demolition of the Deutsche Bank building, will not be prosecuted criminally as a result of the deal. The man who headed it until the investigation was first disclosed in 2009 is expected to plead guilty to fraud charges on Tuesday morning, the people said. At the heart of the overbilling scheme is a practice that many investigators contend – and many construction executives concede privately – is widespread, so much so that it has a name: eight plus two. It is the practice of paying labor foremen for two hours of overtime that they do not work each day as an incentive to stay on a construction project. In a sign of the reach of Bovis, the public works projects on which the company will admit overcharging city, state and federal agencies for labor include the renovation of the offices of the Brooklyn federal prosecutors who oversaw the investigation and negotiated the deal and the new federal courthouse where it will be finalized on Tuesday, the people said. James Abadie, 55, the former executive expected to plead guilty, will admit to a single count of conspiracy to commit mail and wire fraud in United States District Court in Brooklyn, the people said. The charges, they said, are based on the overbilling scheme, and the settlement with Bovis is based on that and on Bovis’ evasion of government contract requirements that the company hire a certain percentage of minority- or women-owned contractors or those certified by government agencies as disadvantaged. Mr. Abadie's lawyer could not be reached for comment Tuesday morning. The agreement between the company and the offices of the United States attorney in Brooklyn, Loretta E. Lynch, known as a deferred prosecution agreement, and Mr. Abadie’s guilty plea were expected to be announced later on Tuesday at a news conference. The investigation into the overbilling, which was conducted by the F.B.I., the inspector general of the Port Authority of New York and New Jersey, the inspector general of the United States Department of Labor, the city Department of Investigation and the Manhattan district attorney, began in 2009 with the complaints of a Bovis official, a former federal agent named Brian S. Aryai. Mr. Aryai, a senior vice president for finance, was fired by Bovis in 2009 after complaining about what he believed were financial improprieties and he wrote a letter to the chairman of its parent company in Australia, David Crawford. The March 27, 2009, letter detailed accusations of bribery of union officials and overbilling at a number of project sites. Lend Lease did not respond to a request for comment. The fraud investigation began several months after Bovis signed a nonprosecution agreement with the Manhattan district attorney at the time, Robert M. Morgenthau, in connection with the deaths of the two firefighters, Robert Beddia and Joseph Graffagnino. Under the agreement, the company acknowledged failures in connection with the fire, agreed to safety reforms and paid a multimillion dollar settlement to the city. The agreement states that the district attorney can reopen the case if Bovis violates its terms or commits any other crimes. The case follows earlier troubles for the company. Mr. Morgenthau’s office weighed criminal charges against the city for a myriad of failures in inspection and oversight in connection with the fire, which killed two firefighters, but ultimately chose not to go forward against it. Mr. Morgenthau brought manslaughter charges against three construction supervisors and a subcontractor who had worked at the Deutsche Bank building, saying their negligence in dismantling the structure played a critical role in the deaths of two firefighters. All three men were acquitted last summer. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
