Construction Industry Crime
New York is a city known for its skyscrapers, startling architecture and constant growth. It’s no surprise that the construction and development industry is booming. Yet, where there is opportunity to make incredible wealth, there is also the temptation to bend the rules. The infrastructure and construction industry of Manhattan was recently rocked with charges for criminal wrongdoing by some of its biggest players. Manhattan District Attorney Cyrus R. Vance, Jr. just announced the indictment of 13 individuals and nine companies for engaging in schemes of bribery, business fraud, and even political campaign contributions.
According to the press release, the allegations involve some of the biggest names in the construction industry using the City’s water infrastructure procurement process for their own financial benefit for nearly a decade. From 2007 to 2016, construction management companies and executives conspired with mid-level government employees to abuse the bidding system. Ifeanyi “Manny” Madu, 56, was a mid-level manager with the NYC Department of Environment Protection, or DEP. He used his position to leak confidential information about multi-million dollar contracts with the city regarding the maintenance of its water systems. This gave construction companies and executives to whom he leaked the information a significant edge over other companies bidding for work who were not in the know. Multiple DEP contracts were subsequently awarded to the dozen or so companies and executives involved in the scheme.
In exchange for Madu’s contribution to these companies, he received expensive meals, luxury gifts, hotel stays, show tickets to Broadway plays and musicals, various employment opportunities for his relatives, and over $7.5 million awarded to companies that were affiliated with Madu. These companies were all owned or operated by either Madu’s close friends or family members, including one owned by his wife, niece and mother-in-law.
Mr. Husam Ahmad was a CEO of HAKS. He is alleged to have committed offences by trying to get public contracts by getting control of a company which could participate through the state’s “Minority and Women-owned Business Enterprise” (MWBE) program and the ‘Disadvantaged Business Enterprise’ (DBE) program through the federal government. Ahmad could not own more than fifty percent of the company without jeopardizing its privileged status; therefore, he engaged in a fraudulent scheme to get full control. He used two intermediaries to purchase the remaining share of the company from the founder and a former employee of the company assumed the title of president. In this way, Ahmad hid the true control of the business, keep its privileged status, and received over $10 million in public contracts that he would otherwise not have been entitled to get. Furthermore, on these contracts, the winning company would often list its subsidiaries as subcontractors, allowing them to double their profit.
Finally, Mr. Ahmad is accused of illegal campaign contributions. He encouraged his employees to donate to various political campaigns – including during lunches held at his company’s HQ – and then would reimburse them through year-end bonuses. The expectation was that his company would then be awarded public works contracts. In addition to the criminal charges lodged against the various individuals and entities, the DA’s office has also filed two civil forfeiture actions against the defendants, totaling $177,609,293.00.