CORPORATE CRIME REPORTER
Construction Giant Lend Lease to Pay over $50 Million, Gets Deferred Prosecution
26 Corporate Crime Reporter 18, April 24, 2012
Australian construction giant Lend Lease Construction LMB Inc. – formerly Bovis Lend Lease LMB Inc. – and James Abadie, the former executive in charge of Bovis’s New York office, were criminally charged in a major fraud scheme.
Abadie pled guilty to commit mail and wire fraud by fraudulently overbilling Bovis’s clients for over a decade.
Bovis entered into a deferred prosecution agreement with the U.S. Attorney’s Office for the Eastern District of New York and the New York County District Attorney’s Office in which Bovis admitted to fraudulently overbilling clients for over 10 years.
The company was represented in the matter by Steven Reiss of Weil Gotshal.
Bovis also admitted defrauding two of its public clients by falsely misrepresenting the work performed by its minority business enterprise partners, thus fraudulently obtaining payments on lucrative contracts.
The deferred prosecution agreement requires Bovis to pay up to $56 million in penalties to the federal government and restitution to victims, and to institute far-reaching corporate reforms designed to eliminate future problems and enforce best industry practices.
Bovis is one of the largest construction firms operating in New York City.
Bovis provides construction, project management and consulting services on large-scale public and private construction projects.
Bovis is a U.S. subsidiary of the company Lend Lease Corporation Limited, which, as of 2009, operated in over 40 countries in Asia and Europe, as well as in Australia and the United States. Bovis’s New York office is its largest.
In 2008, Bovis employed over 1,000 people in the United States, with the majority working in the New York office.
Federal officials alleged that Bovis intentionally and fraudulently billed clients, from at least 1999 to 2009, for hours that were not worked by labor foremen from Local 79 Mason Tenders’ District Council of Greater New York.
Bovis systematically added one to two hours of unworked overtime per day to the time sheets for labor foremen.
Bovis also systematically completed and submitted time sheets falsely listing unworked hours as worked when labor foremen were absent for sick days, major holidays and weeks of vacation. Bovis fraudulently billed its clients for this unworked time and, on public projects, falsely submitted certified payrolls, defrauding taxpayers.
Bovis made extra, undisclosed lump sum and stipend payments to a select group of labor foremen and billed those payments to clients as well.
The clients were unaware of these practices.
Federal officials alleged that James Abadie played a critical role in executing Bovis’s overbilling practices.
As principal in charge, all aspects of project operations and union labor issues fell under Abadie’s supervision.
As the general superintendent for Bovis, Abadie personally oversaw the day-to-day field operations on all projects and had extensive involvement with managing union labor.
While in both positions, Abadie explicitly and fraudulently directed his subordinates to carry out the practice of adding unworked hours to labor foremen’s time sheets, knowing that these unworked hours were billed to clients who were unaware that they were the victims of fraud.
Abadie pled guilty to the mail and wire fraud conspiracy.
Abadie and Bovis employed the fraudulent overbilling scheme across the broad spectrum of Bovis’s projects in the New York metropolitan area, including some of the area’s most important, large-scale public and private construction projects.
Affected projects included: the United States Post Office/Bankruptcy Court in Brooklyn, New York, the Bronx Criminal Courthouse in the Bronx, New York, Grand Central Terminal, the Deutsche Bank building deconstruction in New York, New York, Citifield in Queens, New York -- and the very United States Courthouse in which Bovis was charged and Abadie pled guilty.
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