NEW YORK—An international construction firm will have to pay more than $50 million after allegedly being caught in fraud on multiple work sites.
Multiple government agencies teamed up to deliver a deferred prosecution agreement with the firm on Tuesday at the United States district courthouse in Brooklyn.
The firm, Land Lease (US) Construction LMB Inc., formerly known as Bovis Land Lease LMB Inc., admitted to fraudulently overbilling clients for over 10 years, according to a U.S. Attorney’s office release. It had more than 1,000 employees in the United States, mostly in New York, and is one of the largest firms in the city.
James Abadie, former principal and head of the firm’s New York office, pleaded guilty on Monday to conspiring to commit mail and wire fraud.
From 1999 to 2009, the construction firm concocted overtime on the timesheets of labor foremen, one or two hours per day, alleges the document. They also placed hours on timesheets when labor foremen were sick, on holiday, and on vacation. The third accusation is that Bovis paid “a select group” of the foremen. All of these monies were paid by the clients.
In the prosecution agreement, Bovis admitted to all of the above charges, according to the release. When called for comment Tuesday afternoon, Bovis said no one was currently available to comment, and didn’t call back or email before press deadline.
Projects that Bovis had worked on include Grand Central Terminal, Citi Field, and the 9/11 Memorial. The release wryly notes that they also worked on “the very United States Courthouse in which Bovis was charged and Abadie pleaded guilty this morning.”
Abadie was in charge of all projects and union labor.
“Abadie explicitly and fraudulently directed his subordinates to carry out the practice of adding unworked hours to labor foremen’s time sheets, knowing that these unworked hours were billed to clients who were unaware that they were the victims of fraud,” states the document.
He could be sentenced to up to 20 years in jail and a fine of a quarter million dollars.
The second “scheme” includes defrauding the Minority Business Enterprise requirements, which dictate that a certain percentage of subcontracts awarded by the firm in charge of overall construction must be minority or women-owned businesses.
In two alleged cases, Bovis used minority firms as “mere pass-throughs,” doing the bulk of the work themselves.
Up to $56.6 million will be paid to the federal government and victims, including Local 79 Mason Tenders’ District Council of Greater New York, which all the labor foremen were from.
Under the agreement, Bovis must create new policies, such as a code of conduct, and hire a full-time auditor who will mainly focus on making sure the union time sheets aren’t being messed with anymore. Each worker on construction sites will “certify the accuracy” of all their hours on timesheets as well.
Bovis will also create a new position for conducting minority and women-owned business compliance.
FBI Assistant Director-in-Charge Janice K. Fedarcyk stated in the release, “Today’s proceedings mark the culmination of a three-year investigation into a systemic pattern of audacious fraud by one of the world’s largest construction firms. The overbilling fraud affected city, state, and federal public building projects. If you are a New York City resident, Bovis indirectly swindled you on three different levels. Whether projects are publicly or privately funded, padding contracts, and skirting the law are crimes. And we are watching.”