New York City’s construction industry is notorious for corruption. Much of the sleaze is small time: if you want to remodel an apartment, for example, you’d better slip the building super some cash just to make sure the elevators keep running when you need them. But some of the corruption is anything but small time. Case in point: Manhattan District Attorney Cyrus Vance has brought charges against four executives from blue-chip Lehr Construction Corporation, alleging that the men “systematically stole tens of millions of dollars from investment firms, insurance companies and law firms as they built corporate offices in buildings across Manhattan,” the New York Times reported on May 4 (“ Four Construction Executives Are Charged With Fraud,” by Charles V. Bagli). Indicted in the case were Jeffrey Lazar, Todd Phillips, Steven Halper and Steven Wasserman. According to Vance, the scheme worked like a classic shell game: Lehr would conspire with subcontractors who agreed to over-bill Lehr for work on certain jobs — charges Lehr would pass along to the client. But Lehr would recover the money from the subs on future jobs, where the subs would under-bill Lehr for work performed, thus allowing Lehr to pocket the difference. According to Vance, “This construction company was corrupt at all levels. Its executives developed — and successfully executed — a scheme to steal millions of dollars from their clients.” The next day, the District Attorney’s office widened its net to include some of the subcontractors who allegedly helped Lehr rig its books. Charged with grand larceny in New York state court, according to the Wall Street Journal, were Arthur Godsell of Godsell Construction Corporation; James Roselle of J.T. Roselle Lighting Inc.; George and Kevin Fotiadis of Liberty Contracting Corporation; James Pappas of P.J. Mechanical; Kenneth McGuigan of Superior Acoustics Inc.; and Michael Hayes of Sweeney and Harkin Carpentry. After pleading not guilty, all the accused were released on $50,000 bail, the Journal reported (“ Subcontractors Charged in Scheme,” by Tamer El-Ghobashy). The four Lehr execs could face jail terms as long as 25 years, according to the New York Daily News (“ Lehr Construction Corp's top executives indicted for $30 million in alleged fraud,” by Brian Kates). And the Lehr prosecution could be just the beginning, the Daily News reported: “Vance said the indictment represents the first prosecution in what he said would be a blitz of the interior construction industry in coming months.”
