Feds: $56M settlement with NYC construction firm

A construction company whose projects included the stadium where

the New York Mets play and the Sept. 11 Memorial agreed to pay up

to $56 million in penalties and restitution after admitting a

decade-long fraud that included routinely overcharging customers

and ignoring minority hiring mandates, authorities announced


A deferred prosecution agreement in U.S. District Court in

Brooklyn described the penalty and restitution to be paid by Lend

Lease U.S. Construction, a division of an international

construction company that employed more than 1,000 workers during

the 10-year stretch from 1999 through 2009.

FBI Assistant Director-in-Charge Janice K. Fedarcyk said the

deal capped a three-year investigation ”into a systemic pattern of

audacious fraud by one of the world’s largest construction


U.S. Attorney Loretta E. Lynch said the company ”deceived their

customers and stole taxpayer dollars” while abusing a program

designed to benefit and train minority contractors.

”The defense of `everyone does it’ will not be a shield against

law enforcement,” she said.

In court papers, prosecutors described how the company routinely

overbilled clients including federal, state and local government

contracting agencies. The government said James Abadie, who

formerly led the company’s New York office, pleaded guilty Tuesday

to conspiring to commit mail and wire fraud for overbilling Bovis’

clients for more than a decade. Abadie, 55, faces up to 20 years in


The company regularly added up to two hours of unworked overtime

to timesheets for labor foremen and charged customers for weeks

when foremen were on vacation or out sick, court papers said.

The government said the company also duped the states of New

York and New Jersey into believing it had complied with programs

designed to boost the participation of small construction companies

and companies owned by women or minorities on public construction

projects when it had not.

Although New Jersey eliminated its minority and women-owned

portion of its program in 2003, obligations incorporated into

contracts for public construction projects remained intact, court

papers said.

As an example of how minority hiring requirements were dodged,

prosecutors described an instance in which Lend Lease U.S.

Construction falsely claimed that a company certified as a minority

hiring unit would perform 100 percent of the general contract work

on construction at the Bronx Criminal Courthouse.

In reality, Lend Lease U.S. Construction performed most of the

work itself by directly managing the union, the government said. It

said the company placed many of its long-term union employees on

the minority-hiring compliant company’s payroll, hired other

workers and relegated the smaller company’s role to providing

paychecks for work performed by or at the direction of Lend Lease

U.S. Construction employees.

In a statement, the company said it has fully and extensively

cooperated in the probe since 2009.

”We accept responsibility for what happened in the past and

have agreed to continue to make restitution to the affected

clients,” said Robert McNamara, chief executive officer of Lend

Lease Americas region.

The company was formerly known as Bovis Lend Lease LMB Inc. or

Bovis. It was still known as Bovis when a fatal fire occurred

during its demolition of the former Deutsche Bank building in lower


Other projects on which it worked included the federal

courthouse in Brooklyn, the U.S. Post Office and U.S. Bankruptcy

Court in Brooklyn, Grand Central Terminal in Manhattan and various

schools in New Jersey’s Abbott Districts, where authorities say the

company also acted fraudulently to avoid complying with minority

hiring laws.

The deferred prosecution agreement spares the company from three

counts of conspiracy to commit mail and wire fraud if it carries

out its promises over the next two years.

The company has pledged to pay the $40.5 million penalty, along

with restitution of more than $15 million to victims of the

overbilling scheme and to comply in the future with all federal and

state criminal laws. It has already paid the city of New York $5

million, $4 million of which is credited against the $40.5 million


The company also acknowledged in the deal that it has fired or

forced resignations of officers and employees responsible for the

misdeeds and reduced the responsibilities of others involved in the


The government said it permitted the company to avoid criminal

prosecution because of its extensive cooperation, its acceptance of

responsibility, remedial actions it took voluntarily and its

assurances that it will be a model of integrity in the construction

industry in New York.