Interior Contractor Charged For Fraud – In New York?

Believe it or not a contractor has been indicted for fraud for stealing over $30 million from clients over ten years.  And guess where it happened – that’s right, New York City. 

The company was Lehr Construction Corp. and they had a nifty little scheme set up with about six subcontractors with whom they were “in bed”.  It was nifty, until of course, they got caught.   

There are really a couple ways to do construction projects.  One of which is hiring a CM firm who “manages” the job but the subcontractors bill the client directly and the CM firm is paid a fee separate from the subcontractors.  Another method is to hire a CM firm as a general contractor who provides one lump sum for the construction work and then pays subcontractors themselves.  Lehr Construction used a combination of these two construction methods to rip off about $3o million.  

And while it didn’t take a Harvard scholar to figure this out (and these guys certainly were not), it was a little scheme that would probably be hard to track down.  It went like this – Lehr would be working as a CM for a fee on a project and they would wisper in the ear of one of the subcontractors to overcharge the owner.  Then that same sub would be working on another project in which Lehr was acting as a general contractor and the sub would effectively give this money back by charging less than the amount originally bid on the job.  Brilliant right?  Well, until they got caught.  But even then is it really that bad? 

The article said that a few of these guys could spend 1-3 years in prison.  Could is the key word there.  So maybe they go to jail for a relatively insignificant amount of time, what about the $30 million?  How the hell do they get that back? 

I guarantee these crooks still walk with a ton of money – most of which was stashed in retirement accounts or offshore.  So who cares is they spend a year two in some white collar crime resort. 

Is there any way to stop this?