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Turner Construction Targeted in Kickback Investigation

Wednesday, February 28, 2018

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An investigation that officials say could lead to unearthing $100 million in construction fraud is underway in New York City.

The New York Times reported Monday (Feb. 26) on a series of sweeps made in October by New York State Police and the Manhattan district attorney in which they investigated the offices of Bloomberg L.P. and Turner Construction.

What Happened

According to the Times report (which spoke to several people on condition of anonymity because they were not permitted to disclose information), computers and files from various employees at both companies were seized as the officials looked into bribery, bid-rigging and kickbacks in the interior construction industry.

© / TomasSereda

An investigation that officials say could lead to unearthing $100 million in construction fraud is underway in New York City.

Turner Construction, a general contractor responsible for major construction projects, oversees work on the financial news company’s New York offices, which is what the investigation is focused on. Officials say that subcontractors are accused of paying bribes and kickbacks to Turner and Bloomberg executives to land work in a pay-to-play scheme.

Because such an arrangement would be flagged in Turner’s computing systems (the company gives its employees computers and tablets with which to track bids and work records), employees from Turner didn’t even keep the records, investigators noted. Instead, records of the construction were on Bloomberg staff computers, which showed that Bloomberg projects were inflated by about $1 million.

Both Bloomberg and Turner say that “an isolated group of rogue employees” were responsible, and at least eight people from the establishments have been fired.

Thomas Curran, a lawyer for Turner, told the Times there was “a systemic effort to escape detection by avoiding Turner’s compliance program.”

Ty Trippet, a spokesperson for Bloomberg, added that they are fully cooperating with the investigation: “We are grateful that the appropriate law enforcement authorities brought this to our attention.”

No arrests have been made, though, and officials think that’s just the tip of the iceberg in terms of interior construction fraud in the city.

Other Cases

While the district attorney pursues its investigation, a lawsuit is also making its way through the system. Nastasi & Associates, a subcontractor, filed a suit last year against Bloomberg, Anthony Guzzone and other executives for $15 million. (Guzzone was the global head of construction at Bloomberg and one of the employees who has been fired. His lawyers noted that he denies any wrongdoing.)

That suit accuses the defendants of severing ties with the company to hire different subcontractors so that they could “achieve higher profit margins for themselves, which they could not obtain by awarding bids and contracts to the lowest bidder; and embezzle upwards of $100,000,000 from Bloomberg.”

In addition to the current cases, Bloomberg dealt with something similar in 2014 when then-general contractor Structure Tone Inc. was hit with a $55 million fine and felony fraud for the same type of subcontractor inflation kickback scheme.

Though no one from Bloomberg was directly targeted in that investigation, that case is what prompted the company to pick up Turner as its new contractor.

Even though the offices of Bloomberg have been central in multiple investigations, the report notes that the company as a whole is not accused of any wrongdoing and the $100 million figure that officials gave the Times reportedly covers more companies than Turner, though that remains to be seen.


Tagged categories: Ethics; Fraud; Good Technical Practice; Laws and litigation; Lawsuits; North America

Comment from Eugene Ninnie, PE, AIA, LEED AP, (2/28/2018, 9:45 AM)

Play to pay scheme?.....LMAO!!!!....Pay to Play is New York City and New York States motto. I saw it for years from 1990-2007 when I had an A/E/C company. It is typical for New York State as a whole. This is just the tip of the iceberg. It also occurs at smaller levels but it is the norm. It starts with NYS politicans. For the last 40-45 years they have created a rat ship where nepotism, payoffs and back door politics being conducted at the useless game of Golf ran on for years. This spreads like the plague to others who see it as the way to do business in NY. AND THIS IS WHAT YOU GET. They have essentially ruined a once good state to do business. I moved my company from NY, to Nevada and Wyoming, fired all the NY employees and hired all WESTERN employees with better attitudes and a much more sense of urgency. Best decision, because the company now has three offices in two states. That would have never happened in NY. No problem here and we can compete and win projects, unlike the rampant nepotism, payoffs and kickbacks along with the high taxes to chip away are ones hard earned money in NY From 1949 to 1961, more than 2.6 million of East Germany's 17 million population escaped to West Berlin or West Germany, a hemorrhage of humanity that led the Communists to construct the infamous Berlin Wall in 1961.The state of New York, with about 19.5 million people, has no known plans to erect concrete barriers or barbed wire fences. But from 2000 to 2010 it suffered an exodus of some 3.4 million New Yorkers — nearly a million more people than in Germany's post-war experience and more than that of any other state. Most New York refugees left to seek big relief from New York's state tax on income, which starts at almost 6.5% and reaches nearly 9% for the overly successful. On top of that are high sales taxes that approach 9% in New York City, but 7% in some other areas. New Yorkers who leave an estate of more than $1 million to their loved ones get hit with a state death tax reaching 16%, bringing billions into state coffers. Cuomo admits that "working families can't afford to pay the ever-increasing tax burden , no thanks to his past linage of loser politicians JUST LIKE HIM... and this state has no future if it is going to be the tax capital of the nation. My advice if you are a business in NY is to MOVE to other states where the business climate is competitively fair with low taxes or no taxes like Nevada, Texas and Wyoming, are the norm

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