Seattle Recovers Embezzled Million

Just over a year after discovery that a Seattle city engineer had embezzled a little more than a million dollars from municipal sewer extension projects, the Seattle City Pete Holmes reports that taxpayers have recovered all but $30,000.00 of the stolen funds.  Seattle utility engineer Joseph Phan still faces criminal charges numbering 70 counts of first and second degree theft in connection with the diverted funds. Holmes' diligent and persistent civil court efforts to get back the stolen million have made city taxpayers almost entirely whole. "We shower we will come after you with everything we have to make taxpayers and ratepayers whole," Holmes said in announcing completion of the restitution effort.

Phan was responsible for estimating the costs of hooking up sewer and water lines to new construction for developers anew home owners, drafting the city construction agreements, and collecting payment for the work from those owing the city for the construction. Allegedly Phan opened a bank in his own name into which he deposited the checks from property owners payable to the City, then using the money in the account to buy rental properties and vehicles in his own name, and to make cash gifts to relatives and to his church. He was arrested in March, 2012.

Seattle seized $96,000 from Phan's city pension account, $20,000 from his life insurance, and $43,000 from a college savings account he set up. Phan's scheme was uncovered after he was fired for hacking into his own city utility account to post payments he never actually made. After Phan was terminates, a developer asked the city to transfer funds it had paid to Phan from one property development which never materialized to the account of a different project, and sent in a copy of the check in payment. Seattle could find no record of any deposit of the payment into City accounts, and the following investigation turned up the million dollar embezzlement.

Corruption Probe Could Delay $1.35 Billion Georgia Sewer Construction Project

Water and sewer projects in DeKalb County, Georgia worth a total of more than $1.3 billion could be delayed by execution of search warrants in an ongoing probe of fraud, bribery and bid-rigging in the award of public contracts by the county. One of the finalists for a construction management contract to oversee $800 million worth of the work - Colorado based MWH Americas - was mentioned by name in search warrants executed at the homes of DeKalb County CEO Burrell Ellis and Ellis' former campaign manager Kevin Ross. MWH received the top score among finalists for technical expertise, but county staff recommended awarding the contract to low bidder DeKalb Warer Partners. 

County commissioners last week decided to rebid the construction management rather than risk an award to a company involved in the bid-rigging grand jury investigation. Despite the fact that delays in completing the project imperil federal grants for partial funding of the work, county commissioners want to avoid any appearance that taxpayer funds are going into the coffers of corrupt bidders and county officials. Lee May, presiding officer of the DeKalb County Commission, said, "If we are protecting taxpayers, we have to err on the side of caution."

Ellis and Ross have petitioned the court to unseal a secret grand jury report so they can determine whether they are targets of the corruption probe. 

Scathing Federal IG Report Excoriates Silver Line Project Oversight

Echoing concerns of various Congressmen, Governors and the DOT Inspector General, U. S. Transportation Secretary Ray LaHood last week chimed in on the latest round of scandals surrounding the way the Metropolitan Washington Airport Authority is managing construction of the Silver Line rail link between Dulles International and downtown Washington, D.C. “I have serious questions about how the board has operated. I want the people of the D.C. area to know that we don’t agree with what they’ve been doing,” LaHood said. “The thing that really pushed me over the top with the board is when I read in the Examiner that they gave a former board member a contract. … I think it’s too much inside politics.” One wonders how much inside politics Secretary LaHood thinks would be just the right amount.

The Inspector General report LaHood mentioned details the MWAA board’s weak oversight of the Silver Line project, lax ethics, no-bid contracts, conflicts of interest, and lack of transparency. Confronted with taxpayer and toll payer funded board expenses including a $9,200.00 airline ticket to Prague, a $4,800.00 first class ticket to Hawaii, three $1,600.00 dinner tabs, and two bottles of $119.00 wine, board member Michael L. O’Reilly could only characterize the situation as “a public perception problem. … We’ve gotten better, but we haven’t gotten to the point where people are going to praise us for our frugality.” It seems in Washington, public perception is only troublesome when it is correct.

Secretary LaHood’s comments on the IG report deftly separated the professionalism of the MWAA Silver Line project staff from the excesses of the board. “I have a great deal of confidence in the executive director of MWAA,” LaHood remarked. “Jack Potter is doing a very, very professional job. He’s trying to clean up a mess, and I have confidence that he can carry off Phase 2 of the line.”

Scandal Plagued SNC Lavalin Poaches CH2M Hill Executive As Its CEO

Rocked by recent police raids on its corporate headquarters and the scandalous departure of three top executives, Canadian engineering giant SNC Lavalin yesterday named Robert G. Card, former CH2M Hill executive and former U. S. Energy undersecretary, as its new CEO. Card is just coming off leadership of the construction of London’s Olympic Games facilities and infrastructure, on time and on budget.

March 26 SNC Lavalin CEO Pierre Duhaime announced his decision to leave the CEO post, and retired from the company in June, in the aftermath of his approval of $56 million in payments of apparent bribes to overseas agents for the procurement of engineering business. Duhaime’s exit followed right after the departure of two senior executives involved in the company’s Libyan operations and possible involvement in a scheme to smuggle one of Muammar Gadhafi’s sons into Mexico. Following Duhaime’s announcement, Canadian Mounties raided SNC Lavalin’s Montreal offices seeking documents related to Libyan bribery schemes.

SNC Lavalin is the ninth largest design firm worldwide, and also has substantial at risk construction contracting operations around the globe.

Target Stores Files RICO Lawsuit Claiming Paving Fraud By Chicago Area Contractor

Target Stores has filed a civil lawsuit in federal court in Minneapolis under the Racketeering Influenced and Corrupt Organizations Act against Bridgeview based Rose Paving Company, LCH Pavement Consultants, United Paving Company, American Pavement Solutions, Asphalt Maintenance, Inc., and officers of several of the named companies, claiming that the defendants conspired to defraud Target of millions in a bid rigging and kickback scheme involving maintenance of parking lots at 1,700 Target stores across the country. Target alleges that LCH organized the participating paving contractors to divide up the $100 million worth of parking lot repair work by fraudulently inflating bids, agreeing to submit non-competitive prices on bids outside their corruptly designated territories, and requesting bids only from contractors in on the scheme.

Target also contends that participating paving contractors overbilled for work never actually performed, and charged for removal and replacement of asphalt all the way down to the substrate when the work done was only a surface overlay. The suit says Target was billed for and paid LCH for hundreds of thousands of dollars in work that was never done, and that LCH paid the contractors submitting false billings and then demanded kickbacks from them.

Store locations named in the complaint as being involved in the fraudulent billings include Target parking lots in Cicero and Lake Zurich. Other locations identified in the lawsuit include stores in California, Arizona, Montana, Virginia, Pennsylvania, Texas, Georgia and New York. Target claims the conspiracy began in 2009 and continued through 2012.

Sealed Court Conviction Left Trump’s Florida Deal To Go South

Records released last week by the U. S. Supreme Court reveal that when Brooklyn U. S. District Court Judge Leo Glasser sealed the record of Felix Sater’s conviction on a guilty plea to joining with crime syndicate members in cheating investors all across the country, while Sater awaited sentencing in the Brooklyn case, the secrecy order enabled Sater to bilk more than 100 other investors in Fort Lauderdale’s Trump International Hotel & Tower. The $200 million Las Olas Boulevard construction project now stands incomplete, empty, and chained off along Fort Lauderdale’s popular beachfront.

Joe Altschul, attorney for 75 of the bilked purchasers of units in the failed condominium hotel development explained why the Brooklyn court’s secrecy order aided in the fraud against his clients: “Each of these purchasers had a right to know who they were dealing with. It’s bad enough that they prop up Donald Trump as the developer, but then you find out that it’s not Trump but a convicted felon already charged in financial shenanigans.”

Briefs in the Supreme Court case contend that the Sater case is only one of many in the Eastern District of New York in which prosecutors get judges to seal conviction records of mobsters – records which should be public to protect other innocent investors considering putting money into deals with felons who have already pleaded guilty to financial fraud, but whose convictions the court keeps secret on the supposed basis of a need to protect the lives of crime figures cooperating in government investigations into mob activities. Lawyers involved in this particular case are especially miffed because in passing sentence Sater’s case Judge Glasser took a pass on the traditional measure of ordering Sater to make restitution to the folks he duped while secretly convicted on his guilty plea and awaiting sentencing. There’s nothing about that aspect of the case that could have contributed to avoiding a mob hit on Sater.

When prosecutors and the courts contribute to the ongoing frauds of criminals against the investing public, and then shirk responsibility for making whole the folks they are supposed to protect from mob activities, it makes honest people in the construction business wonder whose side these public officials are on.

Sater owns a $4.8 million condo on Fisher Island, and allegedly paid the mob $1.5 million to be let in on the Fort Lauderdale Trump project. One of the lawyers involved in the Supreme Court case which resulted in release of the sealed record of Sater’s conviction is former federal judge Paul Cassell, who blames Judge Glasser for not immediately making Sater’s guilty plea conviction public. “The court illegally gave away millions to a criminal,” Cassell says. Miami first Amendment lawyer Tom Julin agrees. “It’s the worst thing a court can do. In a day and age when economic crimes can affect massive amounts of people, there’s a real danger in super sealing these kinds of judicial proceedings.”

University Of Illinois To Rebid Tainted Architecture Contract

University of Illinois Trustees voted last week to rescind and rebid a controversial $4.6 million architecture contract awarded to BLDD Architects for renovation of the Urbana campus Natural History Building, now partly closed and crumbling 120 years after it was first built. The tainted contract was originally awarded to BLDD, where architect Bruce Maxey owns 8.9% of the company, and is married to U of I’s associate director of planning Jill Maxey, who is in charge of campus construction. Jill Maxey has been reassigned to a different job on campus.

According to board Chairman Christopher Kennedy, “It was a short discussion. We don’t want any more ethical issues associated with the university. We get public money and we have to hold ourselves to a higher standard.” Before the Trustees’ vote, university administrators had twice refused to go along with a Procurement Policy Board recommendation that the tainted contract be cancelled because of ethical violations. Randy West of BLDD said of the Trustees’ action: “While we are saddened by today’s decision, we are gratified that all involved agree that BLDD made all required disclosures, showing its strong commitment to transparency throughout the process.” Of course, in Illinois, the disclosure that “We have clout and the inside track to this contract,” is apparently all that is required to be “ethical” when it comes to taking millions of taxpayer dollars.

According to Mike Bass, the university’s senior associate vice president for building and financial services, rebidding the contract may delay the project and add to the cost of renovations. Any such added costs should be recovered from the Maxey family and any other university officials involved in letting this sordid episode run on for years before correcting the obvious ethical lapses.

University Of Illinois Gets Second Rap On The Knuckles Over Architect Contract

Wednesday, July 18, the Illinois Procurement Policy Board unanimously rapped University of Illinois administrators on the knuckles over the award of a $4.3 million architecture contract to a firm partly owned by the husband of a university administrator involved in the architect selection process. This second stinging rebuke will sent the matter to the Illinois Inspector General for investigation. The Procurement Policy Board again voted 4-0 to recommend voiding the two year old architecture deal, based on findings that the university administration violated state law when it failed to bring the potential conflict of interest to the attention of the state’s chief procurement officer for higher education Ben Bagby at the time the contract was initially awarded in 2010. Bagby, however, has remained adamant in his defense of the arrangement.

On completing its review of the situation, the Illinois Inspector General’s office can recommend referral of the issue to state or federal prosecutors, or the firing, fining or suspension of university officials. Procurement Policy Board member Ed Bedore could not hold back his disgust with the callousness of university administrators to their ethical obligations to taxpayers. “I just hope the university does a better job with their law students than they do with their attorneys in their offices,” Bedore said. “I would hope that the U of I would take this back, or the board of trustees would open the windows and raise the blinds and shed some light on this.”

University Board of Trustees Chairman Christopher Kennedy indicated that the board would be reconsidering the matter of the architecture contract during its retreat and monthly board meeting in Chicago this week. “The taxpayer should have confidence that their money is being spent without conflict. We don’t want any appearance of conflict when it comes to contracting,” Kennedy said. “We take a lot of public money, and people ought to trust the University of Illinois. The board will hold the university staff to the high standard of no perception of conflict of interest.”

Only the ultimate outcome of this disgusting incident will tell, however, whose “perception of conflict of interest” counts for anything in Illinois public contracting.

University Of Illinois Chooses To Ignore New Anti Corruption Law

In the wake of the impeachment and corruption conviction of former Illinois Governor Rod Blagojevich, the Illinois Legislature created a five member Procurement Policy Board to review and advise state agencies about public contracts where potential conflicts of interest could arise. Governor Quinn appoints one member, and each of the legislative leaders in the Illinois House and Senate appoints a member. Now, in another display of the rampant arrogance which has recently rocked the administration of our state’s biggest and most important public institution of higher learning, University of Illinois officials have chosen to ignore the Board and its contract review process in connection with awards of $4.67 million in design contracts for the $70 million renovation of the school’s 120 year old and partially closed crumbling Natural History Building. The design contracts in question were awarded to BLDD architects, a firm partly owned by the husband of University of Illinois Associate Director of Planning Jill Maxley, who also formerly worked at BLDD.

Despite the obvious conflict of interest in the awards of these 2010 and 2011 design contracts, the university administration refused to alert the Procurement Review Board about the situation until March, 2012. And now, in the face of a unanimous Review Board vote recommending that these contracts be voided for conflict of interest, has announced its intention to go ahead with the conflict laden contracts anyway. Ben Bagby, our state’s chief procurement officer for higher education, has boldly asked the Procurement Review Board to waive the obvious conflict of interest. According to Bagby, “You take a situation and you learn from it. Hopefully these things won’t have reoccurrence so things can be looked at early on and ahead of the game.”

Bagby protests too much, as The Bard says. In the past two years the Procurement Review Board has looked over 678 potential procurement conflicts of interest, and stung the submitting agencies with recommendations that contracts be voided only four times. Three of those recommendations involved University of Illinois contracts with BLDD, including the Natural History Building situation. In the case of the Natural History Building the University claims it put up a so called “Chinese Wall” to keep Jill Maxley out of decisions involving her husband’s firm, but Jill Maxley was still copied on e-mails discussing the project while the BLDD proposal was pending, and Maxley delegated the selection process to her subordinate Tony Battaglia, whose brother in law works for BLDD. Battaglia himself also plays in a band with BLDD employees.

University officials claim they “didn’t realize” they needed to send the conflicts of interest to the Procurement Review Board. For a University boasting one of the state’s premiere law schools, this sort of thinking is unimaginable. There must be dozens of law faculty members who could have been consulted about the issue for free. The winds of arrogance in Champaign blow the stench of corruption all across our state.

Sentencing Next Month In Rhode Island Weatherization Bribery Case

Saul Lemoi, convicted of bribery and kickbacks in a scheme involving the stimulus funded home weatherization program in Rhode Island, faces possible imprisonment for 15 years and fines of up to half a million dollars at an August 23 sentencing hearing. Acting as a senior energy auditor for not for profit Comprehensive Community Action Program which received $1.5 million in Department of Energy home weatherization grants, Lemoi persuaded a co-conspirator to form a company named Weathertight Solutions, then steered $75,000.00 in work to the new business, and prepared invoices to CCAP for Weathertight work which was never performed, and collected kickbacks from the company.

The Weathertight investigation was handled by agents from the Department of Energy and the HHS Inspector General, and the prosecution was headed by U. S. Attorney Peter Neronha.

Broward County Inspector General Reports Construction Corruption

In a 77 page report released late last month, Broward County Inspector General John W. Scott charges three local construction companies conspired to cheat county government by using small business set asides improperly. Based on this report, County Administrator Bertha Henry has ordered the county attorney to pursue all available remedies to rectify the fraud.

According to Inspector General Scott’s report, Giannetti Contracting, of Sterling Heights, Michigan, was awarded a contract to supervise construction of a $6.5 million sewer and water construction project in Dania Beach. Giannetti falsely claimed that certified small business Chin Diesel of Pembroke Pines worked on the project. Giannetti issued its check to Chin Diesel for $369,530.00. Although Chin Diesel was listed a subcontractor to Stanford & Sons Trucking, Stanford Trucking’s owner Stanford Amritt, Jr. attempted to pressure Leon C. Chin-You of Chin Diesel into depositing the check and taking money off the top when writing a check back to Amritt for most of the amount. Chin refused to cooperate in the scheme, and falsely claim his company worked on the job.

Giannetti replaced Chin with Spearhead Development Group of Miramar, owned by Amritt’s brother Donovan. Spearhead wrote a check to Stanford Trucking for everything Spearhead received from Giannetti on the project.

The net result is that no small business ever actually worked on the job, and Stanford profited from the fraudulent representations that the set aside was met. “The incidence of contractor misconduct, misrepresentation, falsehoods and scheming necessitates immediate attention by the county,” according to County Administrator Henry.

Corruption Investigation Stymies World Bank Funding For Bangladeshi Bridge

Last year’s arrest of two former executives of Canadian engineering giant SNC Lavalin, coupled with ongoing construction corruption investigations in Canada and Bangladesh prompted the World Bank to announce June 29 that it has canceled funding participation in a $3 billion road and bridge project which would have included construction of the AECOM designed Padma Bridge southwest of Dhaka. The World Bank commitment of $1.2 billion in financing, withdrawn as a result of the corruption charges, leaves in limbo both the future of the project and the fate of financing commitments for an additional $1.7 billion promised from the government of Bangladesh, the Asian Development Bank, Japan International Cooperation and the Islamic Development Bank. Though Bangladeshi officials have promised to find another way to finance completion of the project, its future is imperiled with the World Bank out of the picture and corruption investigations underway since last September.

World Bank President Jim Yong Kim approved the cancelation. The World Bank says it has presented credible evidence of a high level corruption conspiracy among Bangladeshi government officials, SNC Lavalin and others to Bangladeshi Prime Minister Sheikh Hasina, Finance Minister Abul Maal Abdul Muhith and Anti-Corruption Commission Chairman Ghulam Rahman. World Bank officials are urging the Bangladeshi government to prosecute anyone found responsible for corruption on the project.

Detroit Bid Rigging Trial Implicates Mayoral Associate

Last week’s federal court testimony in in the Bobby Ferguson bid rigging trial implicated former Mayor Kwame Kilpatrick’s friend Al White to Ferguson’s allegedly corrupt construction business. According to Detroit Building Authority Capital Projects Superintendent Robert J. Hill, White signed in to one January construction meeting on the $12 million Garden View Estates construction project as a project manager for Xcel Construction Services, the winning bidder, and then signed an April subcontract on the same project as an employee of Ferguson Enterprises. Ferguson has denied any connection between Xcel and the company bearing his name.

Xcel was paid $557,000 to act as construction manager for the Garden View project, and then directed $9 million in demolition and other work to Ferguson Enterprises. In his testimony Hill acknowledged that Xcel and Ferguson Enterprises have the address on Wyoming Street. If convicted, Ferguson faces up to 20 years in prison.

Guam Highway Construction Fraud Costs Federal Taxpayers $913,277.79

A federal grand jury has indicted HUBTECH International Corporation and its CEO Young C. Kim on charges that they defrauded taxpayers of nearly a million dollars on a contract for $1.8 million to repair and rehabilitate culverts along Guam’s Route 2. The indictment alleges that HUBTECH and Kim falsely certified that American made steel reinforcing bars were used on the project, when in fact Kim and HUBTECH knew the steel rebars were manufactured in Korea. The indictment also charges submission of inflated invoices to the U.S. Department of Transportation on the job.

Topeka Housing Authority Stimulus Spending Fails Federal Audit

The scent of cronyism in contractor selection for local public housing construction surrounds yet another Kansas public housing project for seniors, according to a HUD Inspector General’s audit of the Topeka Housing Authority use of federal stimulus dollars to build Tennessee Town II. The Topeka agency received a total of $12 million in Recovery Act funding, and of that amount $833,000.00 was designated for construction of 16 elderly housing units at Tennessee Town II. According to the IG Audit Report, the process for selection of a private developer for construction of Tennessee Town II was not documented at all in writing, and there was no identification of selection criteria for the builder, or the reasons supporting the final choice.

All the Authority would tell the IG was that the developer was chosen on the basis of conferring with other local housing authorities and then with two potential developers identified in that process. The Topeka Housing Authority claimed it does not have a checklist of procurement policies for its staff to follow. Nevertheless, the agency was able to use public bidding and written award criteria to document contractor selection for its much larger Echo Ridge construction project.

Could it be that local officials thought that by sending out written RFP’s for the big job, they could cover up their cronyism in awarding the little one to their buddies?

Galveston Post Office Repairs Violated Buy American And Davis-Bacon Laws

A recently released audit of the $5,268,344.00 contract for repair of storm surge damage to the Galveston Post Office and Courthouse building during Hurricane Ike found numerous violations by the principal contractor and its subcontractors of stimulus funding buy American and Davis-Bacon requirements. Federal government agencies, it seems, are having at least as much difficulty as various state bureaucracies in complying with legal requirements for spending funds appropriated under the stimulus passed by Congress in 2009.

The federal agency responsible for the repair contract, the Public Buildings Service, has improperly permitted installation of Canadian manufactured replacement boilers, in violation of stimulus appropriation “Buy American” provisions. The value of the $35,210.00 boilers was supposed to promote preservation or creation of US manufacturing jobs, but instead went north into Canada.

Furthermore, PBS permitted numerous violations of Davis-Bacon requirements that tradespeople working on stimulus funded construction projects be paid wages prevailing in the locality of the project for their specific trades. General contractor Jim Cooley Construction failed on numerous occasions to even submit to PBS the required certified contractor and subcontractor payrolls. Auditor interviews of tradespeople employed by Cooley’s subs demonstrated underpayments of up to $11.91 below Labor Department prevailing wage rates for the Galveston area.

When Cooley’s trade contractors did bother submitting certified payrolls to PBS, the required certifications of fringe benefit payments were often missing or fraudulent. Cooley’s major mechanical subcontractor, Lakewood Mechanical, Inc., failed to pay fringe benefits of up to $10.17 per hour for sheet metal workers. As many as 13 Lakewood employees were underpaid benefits in each pay period. Another Cooley sub, Mechanical Plumbing, Inc., certified payment of 243 hours of fringe benefits to a benefit fund that doesn’t even exist.

Texas is an anti-union, right to work state. You have to wonder whether Galveston PBS bureaucrats were influenced by that fact in permitting such gross violations of buy American and prevailing wage laws right under their noses on this construction project.

Manhattan, Kansas Housing Authority Flunks Federal Audit

A recently released stimulus funding audit at the Manhattan, Kansas Housing Authority reveals that the local agency overspent by 19.4% on an improperly issued change order for ductwork insulation asses to a housing contract for renovation of unit HVAC and water heating equipment, and overstated the jobs created by the project by 37.9% in reporting project data to the federal recovery.gov website.

US HUD’s Inspector General audited the Housing Authority’s use of nearly half a million dollars in federal Recovery Act grants and found that the agency improperly issued a change order increasing the scope of work to include duct insulation for an additional cost of $53,220.00 without taking competitive bids, and giving an improperly documented change order to the contractor already on the job for an price inflated by as much as $10,340.00 in undocumented overhead and fees as a result of the Housing Authority’s lack of written procedures for processing contract change orders.

The audit also revealed that the agency reported its project had created 37.9% more jobs than were actually produced by the half million dollar expenditure. With this kind of inaccuracy from local governments who were awarded stimulus grants designed to improve local area employment, it’s no wonder our political leaders can’t agree on how to go about stimulating further economic growth.

Missing Pittsburgh Contracting Records – Sloppy Recordkeeping Or Cronyism?

An audit of 60 Pittsburgh urban renewal design and construction contracts released May 10 by Pittsburgh Controller Michael Lamb shows that 30 of those files are missing required documentation regarding project advertisements, bid openings and evaluation and ranking of responding proposals. Urban Redevelopment Authority Director Rob Stephany’s only response: “There is room for improvement.” Of course, public and press requests for documentation under freedom of information laws is a useless exercise if the documents which should be in every public contracting file, by the agency’s own rules and policies, are lost or were never created.

Lamb’s audit points out that Stephany’s files don’t even include a checklist at the front identifying the records which should be included in the file. This simple office procedure could lead to better record keeping, or it could serve to point out instances where cronyism replaced “lowest responsible bidder” as the criterion for selection of the winning contractor. Lam’s audit report noted that “Compiling a checklist for the documentation and including it in the front of the file may help keep track of the required paperwork.” Duh! Maybe the absence of a checklist is the agency’s way of hiding misfeasance from public scrutiny.

Fraud Claims Prompt Resignation Of Washington Minority Contracting Director

Televised claims of fraud and lack of responsiveness to Washington DOT minority business certification deadlines have led to the resignation of Washington Office of Minority and Women Owned Business Enterprises Director Cathy Canorro. The resignation followed the third day of televised KING-5 news reports detailing contractor claims of fraudulent certification that unqualified businesses were certified by Canorro as eligible for women and minority set aside work on state projects. Several state ethics investigations regarding conduct at the OMWBE are also underway.

Canorro has also been under pressure from WDOT for failing to timely process applications of contracting companies for minority or women owned business certification, leading to an ultimatum April 17 from Washington Governor Chris Gregoire to shape up or face reorganization of OMWBE. Federal law requirements for MBE and WBE certification to receive set asides called for on numerous federally funded Washington construction projects have been the subject of criminal prosecutions for fraud in several jurisdictions in recent months.

Governor Gregoire’s press official Karina Shagren says the future of the state’s minority and women owned business certification process is uncertain. “A structural review of OMWBE is still underway, as is a top to bottom performance review. Once those reviews are complete, we’ll have a better idea of how the state will conduct the duties of OMWBE moving forward,” Shagren said. “In the meantime, a search will begin to identify candidates to replace Cathy.”

Lend Lease To Pay $56 Million In New York Construction Corruption Settlement

Brooklyn’s U.S. Attorney has agreed to defer prosecution of Lend Lease (U.S.) Construction LMB, Inc., [formerly Bovis Lend Lease] based the agreement of the firm and its former top New York City executive James Abadie to pay $56 million in fines and victim compensation for a ten year long overbilling scheme involving timesheet padding and other abuses. Abadie left Lend Lease in 2009 at the start of the federal criminal investigation into overbilling mail fraud.

According to settlement documents, Abadie “explicitly and fraudulently directed his subordinates to carry out the practice of adding unworked hours to labor foremen’s timesheets, knowing that these unworked hours were billed to clients.”  Lend Lease also admits MBE/WBE fraud in that it self-performed work  it claimed was subcontracted to minority or woman owned businesses, particularly in building a Bronx courthouse in 2000. Other projects affected by the overbilling include a Post Office in Brooklyn, Mets’ baseball stadium in Queens, and demolition of a high rise damages in the 9/11 terrorist attacks.

While prosecution of the business entity has been deferred, Abadie faces $250,000 in fines and 20 years in prison in the ongoing criminal prosecution against him. Lend Lease has agreed to hire a full time auditor to vet union labor timesheets in New York City.