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Steel Contractor Indicted on WTC Project

Tuesday, October 21, 2014

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A federal grand jury has charged a steel erector and its CEO with using shell minority-led "partners" to land nearly $600 million in contracts on the World Trade Center Project.

DCM Erectors Inc. of New York City and president and CEO Larry Davis were indicted Oct. 8 by a grand jury in U.S. District Court in Manhattan on charges of wire fraud and conspiracy to commit wire fraud, authorities announced Friday (Oct. 17).

WTCTransitHub_DCM
DCM Erectors

Authorities say DCM established nominal joint ventures with W/MBE-certified firms, then farmed out the work to other companies or did the job itself. The contracts included a $330 million agreement for steel fabrication and erection on the World Trade Center transit hub (pictured).

The indictment follows an 18-month investigation and plea deal involving Davis that was withdrawn over the summer. The partners in the fraud, who were paid for their cooperation, have already pleaded guilty.

The investigation continues.

22,305 Tons of Steel

The indictment alleges a "fraudulent scheme" by Davis and DCM to violate the Minority- and Women-owned Business Enterprise Program (M/WBE) to gain:

  • A $256 million contract in 2007 for work on the 104-story 1 World Trade Center; and
  • A $330 million contract in 2009 for work on the 800,000-square-foot WTC Port Authority Trans-Hudson (PATH) Transportation Hub.

DCM fabricated and erected the superstructures—22,305 tons of structural steel in all— for both projects, which are being developed by the Port Authority of New York and New Jersey.

DCM is a subsidiary of The Davis Group, a Toronto-based conglomerate of 11 companies owned and/or managed by Larry Davis.

DCM's sister companies include Harris Structural Steel Fabrication LLC, a bridge fabrication and coatings company managed by DCM, and MRP LLC steel fabricators, both based in New Jersey.

1WTC_DCM
DCM Erectors

Both DCM Erectors and its CEO, Larry Davis, are accused of defrauding set-aside programs to win WTC contracts.

Cost overruns on both WTC projects ballooned DCM's contract value to about $810 million as of a year ago, reports say. (The cost of the transit hub, estimated at $2 billion in 2007, is now $3.4 billion.)

The 16-acre World Trade Center Project received about $2.2 in grant funds from the Federal Transit Administration. DCM has been involved with projects on the site since clean-up after the September 11 attacks.

The company also has a $136 million contract related to the 4 World Trade Center construction.

How It Worked

Authorities say DCM developed joint ventures with an MBE and WBE in order to gain the contracts, then found another subcontractor to do the work, or completed the work itself.

DCM established a joint venture with minority-owned Solera Construction Inc., of Ossining, NY, "for the purpose of using it to satisfy MBE requirements on public construction projects," according to the Department of Transportation's Office of Inspector General, which is leading the multi-agency investigation.

DCM Erectors

DCM fabricated and erected the structural steel for 1 World Trade Center, a contract that has well exceeded its original $286 million value. DCM has been involved in demolition and construction at the site since shortly after the September 11 attacks.

From 2009 through August 2012, Davis and DCM claimed about $70 million of MBE credit on the value of work performed by the joint venture, while all of the work was performed by DCM or a non-minority contractor.

The New York Post reported this summer that Solera owner Johnny Garcia, 66, had been paid $2 million to go along with the scheme.

DCM established a similar JV with WBE-certfied GLS Enterprises Inc., owned by Gale D'Aloia, 48, a former employee of Davis. She reportedly received $575,000 over three years for her role in the scheme, authorities said.

Davis allegedly used phony business records and work orders to make it appe - See more at: http://therealdeal.com/blog/2014/08/01/wtc-steel-contractor-charged-with-criminal-fraud/#sthash.xDEb3kz6.dpuf

Neither of the smaller partners has a website, and neither could not be reached for comment.

Both Garcia and D'Aloia have pleaded guilty in the case and are awaiting sentencing, reports said.

Money for Nothing

The New York Times reported a year ago that the Solera work had actually been carried out by AC Associates, a metal deck erector based in Lyndhurst, NJ. GLS operated as a "subcontractor that received money but performed no work," sources told the newspaper.

DCM
Port Authority of New York and New Jersey

The 16-acre World trade Center Project is being developed by the Port Authority of New York and New Jersey.

Two years ago, the Wall Street Journal reported financial problems on the projects, saying the Port Authority had been been "quietly advancing money to the contractor" and paying some of the subcontractors directly.

The investigation is continuing, reports the DOT's OIG, which is pursuing the case with the Internal Revenue Service and the Department of Labor's OIG.

   

Tagged categories: Commercial Buildings; Commercial Construction; Contractors; Good Technical Practice; Government contracts; Infrastructure; Laws and litigation; North America; Protective Coatings; Steel; Structural steel; Transportation

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