Construction fraud scheme faked ties to minority, women-owned businesses: Manhattan DA

Written by ABC AUDIO on May 3, 2023

(NEW YORK) — Eight people and six companies have been charged in a series of indictments with pervasive fraud and corruption in the construction industry, motivated by “greed at all costs,” Manhattan District Attorney Alvin Bragg Jr. said Tuesday while announcing the indictments.

The defendants allegedly deceived government agencies that award projects to minority and women-owned businesses (MWBE).

The Manhattan District Attorney’s Office is charging the drywall and carpentry company JM3 Construction, its owner Lawrence “Larry” Wecker, project manager Michael Speier, and other co-conspirators for allegedly taking part “in multiple criminal schemes to increase their business and revenues to the detriment of their workers and fair competition within this industry,” Bragg said.

According to one indictment, JM3 Construction falsified business records to make it seem as though the company was working with minority and women-owned businesses, and awarded lucrative city and state contracts.

“These defendants, as charged, enriched themselves at the expense of a program intended to assist minority and women-owned businesses, by deceiving city and state government entities, part of a series of frauds that shortchanged workers and undermined fair competition,” New York City Department of Investigation Commissioner Jocelyn E. Strauber said.

Bragg alleges that JM3 obtained government-subsidized affordable housing contracts by listing minority and women-owned contractors on paper, while using non-MWBE contractors to do the work, a scheme that the district attorney said put actual MWBE companies at a disadvantage.

“We have zero tolerance for anyone seeking to defraud the city and harm minority and women-owned businesses,” New York City Department of Housing Preservation and Development Commissioner Adolfo Carrión Jr. said in the statement announcing the charges. “We stand by our commitment to diversifying who the city does business with and we thank the Manhattan District Attorney’s office for bringing these bad actors to light.”

Bragg said the company and Wecker stole money from subcontractors and falsified business records, as well as fixed bids for construction projects to guarantee that the company was awarded projects with inflated costs that covered the alleged bribes.

The DA further alleges that JM3 and Wecker inflated the price of a nearly $10 million drywall contract by $400,000, so the company could pay $50,000 to Adrian Esparragoza, a general contractor who gave them the contract.

The district attorney’s office charged Esparragoza with providing insider information to Wecker and Speier to get the contract.

Bragg claims that JM3 Construction used subcontractors with multi-million-dollar payrolls to cash checks, under shell companies, that were allegedly for payments to legitimate subcontractor services.

“None of that cash was reported to the New York State Insurance Fund, meaning workers operating in this very dangerous industry were exposed and underinsured,” Bragg said on Tuesday.

Bragg said the defendants swindled NYSIF out of more than $2 million.