Bribery Alleged In City School Construction

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The New York Sun

Six current and former employees of the city agency responsible for public school construction were arrested yesterday for accepting tens of thousands of dollars in bribes from contractors between 2000 and 2004, authorities said.


The indictments unsealed in federal district court in Manhattan sent a message to Mayor Bloomberg that the anticorruption safeguards he instituted after taking over the troubled School Construction Authority in 2002 may have fallen short.


While calling the alleged bribery “deplorable,” a senior education department official, Deputy Chancellor Kathleen Grimm, said the construction authority has boosted its anti-corruption effort since the alleged incidents took place, making it significantly more difficult for employees to commit such crimes.


Authorities said the indictments were the result of an investigation that had lasted more than two years. The city’s Department of Investigation, the state attorney general’s office, and FBI officials in New York conducted the probe.


Many of the allegations against the employees stem from the June 2004 arrest of a construction authority contractor who was charged with wire fraud and income tax evasion. In a plea deal, the contractor, unnamed in the indictments, told officials of numerous cases of project officers demanding cash for processing payments. The contractor then tape-recorded meetings with the defendants, during which they are heard offering their services, discussing previous bribes, and accepting cash.


One project officer for the School Construction Authority is said to have complained to a contractor that his “pockets were empty” and accepted a bribe before embarking on a vacation to Australia.


Federal prosecutors accused two other employees, one of whom ran the authority’s change order unit, of taking more than $40,000 in bribes and then conspiring in demanding that the contractor perform work on their homes.


In another case, a project officer allegedly exchanged money for confidential engineering estimates for upcoming competitive bids on five public schools.


Five of the six arrested were either current or former project officers whose responsibilities included reviewing requests for payment and change orders, which are issued when a contractor seeks approval for a modification in a building contract. Department of Education officials said the authority employs about 120 project officers and committed to more than $2 billion in contracts in fiscal year 2005.


The defendants who currently are employees at the authority are project officers Neron Holder, Winston Davis, and James Keller. The former employees are Paul Nair, who was the director of the change unit order in 2000, and project officers Melvin Porterfield and Tosif Siddiqi.


In exchange for engineering estimates for bids on five public schools in Manhattan, Mr. Porterfield allegedly accepted from the cooperating contractor who pleaded guilty a total of $5,000 in two sting operations. The contractor told investigators that Mr. Porterfield had previously demanded “numerous” cash payouts before approving and processing requests.


The contractor estimated Mr. Keller received $100,000 in bribes for payments on projects involving Sheepshead Bay High School in Brooklyn. In the case of Mr. Davis, prosecutors charged that he instructed a contractor to submit a fraudulent payment request and took for himself a portion of the money. That was the only fraudulent payment request mentioned in the separate indictments.


Messrs. Holder and Hair were the only defendants said to have conspired together. Each defendant faces a maximum sentence of 10 years and a $250,000 fine. The defendants, who made court appearances yesterday, and their attorneys could not be reached for comment.


William Goldstein, the president of the School Construction Authority, told The New York Sun that its inspector general, Barbara DiTata, who led the investigation, “did a great job” in “ferreting out” the alleged corruption.


School officials defended the safeguards against corruption already in place. In a statement, Ms. Grimm said the construction authority had strengthened audit procedures by hiring an outside auditor, KPMG, and by installing a computerized system that tracks the change order records.


“The SCA Inspector General, through this investigation, has once again given notice to those who work for or do business with the SCA both now and in the past that such acts will not be tolerated,” Ms. Grimm said.


School officials said that under rules that were put in five months, project officers must get approval from supervising officers for all change orders. Before, they could approve change orders of up to $25,000. Officials said the change was not related to the investigation.


In the first year of his administration, the mayor gave the authority responsibility over planning and executing school projects, eliminating the education department’s facilities division. The restructuring came months after a stinging report by a commission the former chancellor, Harold Levy, established said school construction in the city was hampered by “overlapping bureaucracies and not enough accountability.”


The report found that it was costing $425 to $450 a square foot to build schools, almost three times the national average. The mayor also cut jobs and did away with antiquated construction rules in an effort to bring costs down.


The New York Sun

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