NYC's Plaza Construction Corp Charged in 13-Year Fraud Scheme

October 14, 2016



Plaza Construction Corp., which is partly owned by China State Construction Engineering Corp., inflated costs and billed clients for hours not worked to offset administrative costs, federal prosecutors in Brooklyn, New York, said Thursday. Plaza Construction is charged with mail and wire fraud conspiracy for improperly billing its clients more than $2.2 million over a thirteen-year period for hours not worked and for inserting a hidden surcharge into its bills for the purpose of obtaining payments to offset administrative costs. Projects included Brooklyn Navy Yard, Bronx Terminal Market, Federal Reserve Bank of New York, New York University, and Empire State Building. 

According to the U.S. Attorney’s Office for the Eastern District of New York, Plaza Construction engaged in a fraudulent overbilling scheme that impacted a number of its projects for at least a thirteen-year period.  These projects included the Brooklyn Navy Yard, Bronx Terminal Market, Federal Reserve Bank of New York, New York University, and Empire State Building. 

Plaza Construction’s role on construction projects was typically that of a construction manager, which often required it to supply workers from certain trade unions and to supervise the work done by subcontractors or trade contractors. 

From at least 1999 through approximately February 2012, Plaza Construction submitted bills to clients, including government contracting and funding agencies, that contained numerous false statements and material misrepresentations and omissions. 

From August 2004 through February 2012, Plaza Construction systemically inserted a hidden surcharge in its bills to clients that was specifically prohibited and secretly generated additional revenue to offset certain administrative costs. 

For at least 10 years, Plaza Construction also billed its clients for hours not worked by labor foremen from Local 79 Mason Tenders’ District Council of Greater New York and carried out this fraudulent overbilling by allowing labor foremen to be absent from work for major holidays and certain vacation days, providing between five and seven hours of guaranteed overtime per day - worked or not - for a particular senior labor foreman, and added one to two hours of unworked or unnecessary “guaranteed” overtime per day to the time sheets for certain labor foremen. reports the company will not face criminal prosecution because it accepted responsibility for its fraudulent billing practices and agreed to offer restitution to its clients in the amount of $2,226,270.19 and pay a penalty of $5,619,269.92 and forfeit $1,350,317.43 to the government over a two-year period.

The case is U.S. v. Plaza Construction LLC, 16-cr-00532, U.S. District Court, Eastern District of New York (Brooklyn).