New York Construction Firm Avoids Prosecution for Overbilling Clients
Dec 20, 2016
New York, NY(Law Firm Newswire) December 20, 2016 – A Manhattan-based construction company will pay $9.2 million in penalties and restitution for defrauding clients for 13 years on various city projects including New York University and the Empire State Building.
Plaza Construction, one of New York City’s biggest construction firms, is partially owned by China State Construction Engineering Corp. The company was charged with mail and wire fraud conspiracy for engaging in a scheme that overbilled clients more than $2.2 million. Clients included government contracting and funding agencies.
Plaza owes $2.2 million in restitution to clients and must pay a penalty of $5.6 million. The construction company is also required to pay the government $1.3 million. Because Plaza accepted responsibility for its fraudulent billing practices, the authorities decided not to pursue prosecution. The company has two years to show it is making efforts to change its business practices.
“Financial crimes of this nature are likely to result in serious long-term consequences. Penalties can be severe, and companies can suffer loss of reputation,” said Peter Brill, a New York criminal defense attorney. “In this case, Plaza Construction must show it has truly changed its practices in order to avoid further prosecution.”
For at least 10 years from 1999 to 2009 Plaza Construction overbilled clients for unworked hours to obtain additional revenue to offset administrative costs, the Brooklyn federal prosecutors said. In addition, the bills the company submitted to clients allegedly contained hidden surcharges and false statements. The case was filed in the U.S. District Court, Eastern District of New York.
The company allowed labor foremen to be absent from work for major holidays and certain vacation days. According to prosecutors, some senior workers received from five to seven hours of guaranteed overtime each day, regardless of whether they actually worked.
Plaza acted as a construction manager on a range of substantial city projects. The company mainly supervised the work of subcontractors and supplied trade union workers. Projects included the Federal Reserve Bank, Brooklyn Navy Yard and Bronx Terminal Market
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