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
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
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.