DA Vance, Partners Announce Criminal Charges in Construction Management Industry Bribery And Corruption Case


April 18, 2018

Defendants Sought to Secure Multimillion Dollar Government Contracts Through Alleged Schemes

 

Manhattan District Attorney Cyrus R. Vance, Jr., New York City Department of Investigation (“DOI”) First Deputy Commissioner Lesley Brovner, Inspector General for the Port Authority of New York and New Jersey Michael Nestor, and Metropolitan Transportation Authority (“MTA”) Inspector General Barry L. Kluger today announced the indictment of 13 individuals and 9 companies for engaging in three separate schemes involving bribery, business fraud, and political campaign contributions. The defendants are charged in a series of New York State Supreme Court indictments with Corrupting the Government in the First Degree, Bribery in the First Degree, and Bribe Receiving in the First Degree, among other charges.[1]

“From 2007 to 2016, a handful of industry players transformed our City’s water infrastructure procurement process into their own personal swamp,” said Manhattan District Attorney Cyrus R. Vance, Jr. “For construction management companies, public works are highly-prized jobs, and any competitive edge in the bidding process could mean the difference in the award of a contract worth millions. Today, we’re alleging the complete corruption of this process by several leading construction management companies and executives, and by a mid-level government employee whose leaks to the companies enabled hundreds of millions of dollars in fraud. Since establishing the Manhattan DA Construction Fraud Task Force with partners including DOI, the Port Authority Inspector General’s Office, and the MTA Inspector General’s Office, my Office’s Rackets Bureau has secured a number of notable convictions, and builds on its storied record of success in this industry with today’s indictments. I thank our partners for their strong collaboration in this case.”

DOI First Deputy Commissioner Lesley Brovner said: “This investigation highlights how a City employee and contractors corrupted the integrity of procurement and minority business enterprise programs for private advantage and profit. DOI’s report released today on this Construction Fraud Task Force investigation offers recommendations Citywide to combat corruption in connection with procurement and improve other business practices. DOI thanks its many partner agencies, including the Manhattan District Attorney’s Office, for their collaboration on this investigation.”

PANYNJ Inspector General Michael Nestor said: “I want to thank District Attorney Cy Vance, his staff, and the entire Construction Fraud Task Force for investigating and prosecuting these individuals and corporations, and express my deepest appreciation for their collective dedication and extraordinary commitment to this case. As the indictments indicate, these defendants chose to place their personal benefit ahead of serving with integrity the public and the government agencies they were working for. Those who serve the public in these roles must do so with the utmost integrity. This investigation should serve as a wake-up call and warning to those public servants who might consider abusing their official positions, and to those government vendors and contractors who violate the law and conduct themselves unethically.”

MTA Inspector General Barry Kluger said: “From its inception, under the leadership of District Attorney Cyrus Vance, the members of the Manhattan District Attorney’s Office’s Construction Fraud Task Force have worked tirelessly and methodically to identify individuals and entities in the construction industry who seek to abuse process and commit illegal acts in order to line their own pockets to the detriment of taxpayers. As the MTA Inspector General, I am proud to participate in the exemplary collaborative work of the task force along with our city, state and federal law enforcement partners that led to today’s indictments. The conduct alleged in the indictments shows the lengths to which wrongdoers will go to infect and abuse the processes that were designed specifically to help legitimate minority and women-owned businesses thrive in a challenging industry. The results of this investigation highlight the importance of working together to scrutinize not only our own government employees, but the common vendors and contractors who work on our projects, so that we can prevent illegal and unethical conduct from being repeated from one governmental project to another. We all share the responsibility of ensuring the transparency and integrity of the processes at the very core of our projects. We will continue to work on this crucial mission of bringing to justice those who would corrupt the system for their own personal benefit.”

New York State Inspector General Catherine Leahy Scott said: “These schemes were infested with contractors corrupting public works projects through sham corporate ownership structures that gave them unfair and illegal advantages worth millions of taxpayers’ dollars. Any debasing of the integrity of government programs meant to assist disadvantaged businesses is deeply troubling and cannot be tolerated. I thank all of my law enforcement partners for their work on this extraordinary case and District Attorney Cyrus R. Vance, Jr., and his office for prosecuting this matter.”

The indictments are the result of a long-term investigation into schemes involving bribery, minority business program fraud, and illegal campaign contributions by construction management companies and high-level executive officers in the industry. The joint investigation was led by the Manhattan District Attorney’s Office’s Rackets Bureau and Construction Fraud Task Force, DOI, Port Authority of New York and New Jersey (“PANYNJ”) Office of the Inspector General, MTA Office of the Inspector General, and New York State Office of the Inspector General, with additional assistance by the New York State Inspector General’s Office, United States Department of Transportation (“USDOT”), the Dormitory Authority of the State of New York (“DASNY”), New York State Insurance Fund (“NYSIF”), and the School of Construction Authority (“SCA”).

Main Bribery Scheme

Between 2007 and 2016, IFEANYI “MANNY” MADU, 56, a former mid-level manager at the New York City Department of Environment Protection (“DEP”), leaked confidential information about millions of dollars in city contracts pertaining to the maintenance of New York City’s water system to certain companies and their executive officers during the procurement and bidding process, which gave them a significant competitive edge over other proposers. Over nearly a decade, MADU, a longtime employee who worked for DEP for nearly 20 years in various capacities, passed the confidential information to the following construction management companies and associated individuals: HAKS ENGINEERS, ARCHITECTS AND LAND SURVEYORS, D.P.C. (“HAKS”), its chairman and CEO, HUSAM AHMAD, 61, its CFO, SHAHID AHKTAR, 47, and an assistant engineer, MUHAMMAD HAQUE, 62; SIMCO ENGINEERING, P.C. (“SIMCO”), its president MUHAMMAD SIDDIQUI, 49, and its co-owner, HUSAM AHMAD; D&B ENGINEERS AND ARCHITECTS P.C. and its former president, HENRY CHLUPSA, 74; and HAIDER ENGINEERING, P.C. (“HAIDER”), and its president and CEO, SYED HAIDER, 60. WALTER GROSS, 55, the former president of CB &I/The Shaw Group, and KYRIACOS PIERIDES, 56, a former associate vice president at Black & Veatch, also participated in the bribery scheme, leading to multiple DEP contracts being awarded to the defendants’ companies.

MADU was rewarded for sharing internal DEP documents, such as scopes of work, schedules for upcoming contracts, non-public cost estimates, and information about individual selection committee members, with the aforementioned companies and executives who, in turn, compensated the defendant with extravagant meals, gifts, hotel stays, Broadway show tickets, employment opportunities for his relatives, charitable donations to organizations he managed, and—most significantly—the award of more than $7.5 million in subcontracts to companies that were affiliated with MADU. Known as the “MADU companies,” these businesses were owned or operated by various members of MADU’s family or close friends, including: CIMC ASSOCIATES, LLC, which was at one point owned by MADU’s wife, JOYCE HARVEY-MADU, 54, and subsequently owned by his niece; JCMS ASSOCIATES, LLC and JCMS ASSOCIATES OF NY, LLC, MCMS; MCC GENERAL OFFICE SERVICES, LLC, which listed MADU’s mother-in-law, BETTY CAMPBELL, 72, as owner; and MCMS ASSOCIATES, LLC., which was controlled by SHELLY MOHAN, 52, MADU’S former assistant at DEP.

MWBE/DBE Certification Scheme

HUSAM AHMAD, the founding chairman and CEO of HAKS, also sought to obtain additional public contracts by gaining control of a company that was certified to participate in the New York State Minority and Women-Owned Business Enterprise (“MWBE”) program and its federal counterpart, the Disadvantaged Business Enterprise (“DBE”) program.

In 2007, AHMAD acquired a 45% stake in SIMCO, which was MWBE/DBE-certified. AHMAD, who could not claim personal ownership of more than 50% without compromising the company’s MWBE/DBE status, then engaged in a scheme to acquire full control of the company. Working with two intermediaries from HAKS, including SHAHID AKHTAR, 47, the firm’s chief financial officer, and MUHAMMAD HAQUE, an assistant engineer, the defendant supplied the necessary funds to MUHAMMAD SIDDIQUI, a former HAKS employee, to purchase the remaining 55% stake from SIMCO’s founder and assume the title of president, which allowed AHMAD to hide his control of the company. Moreover, by falsely maintaining the company’s DBE status, SIMCO was able to obtain over $10 million in public contracts that it would otherwise not be entitled to obtain. As a secondary part of the scheme, on several occasions, HAKS listed SIMCO as the subcontractor on multiple projects for the MTA and DOT to fulfill the DBE requirement, effectively allowing AHMAD and the companies he controlled to double their profit—both as the general contractor and the subcontractor.

In addition, MADU and his wife, JOYCE HARVEY-MADU established two MWBE certified companies, JCMS and CIMC, which omitted MADU’s involvement in its filings with government agencies in order to accept bribes in the form of profitable contracts from the companies and executives that benefitted from the confidential information MADU provided to them. MADU also helped MOHAN, his former colleague, falsify paperwork stating that MOHAN’s aunt—and not MOHAN—was the listed owner of MCMS Associates, LLC, and thereby obtaining and maintaining MWBE certification.

Political Contributions Scheme

Beginning in 2011, AHMAD also orchestrated a scheme to circumvent New York City campaign contribution limits by encouraging HAKS employees to donate to political campaigns and then reimbursing them through year-end bonuses. Employees were encouraged to donate to campaigns during fundraising lunches held at HAKS’ headquarter—including lunches for the 2013 mayoral campaigns of then-candidates Bill de Blasio, William Thompson, and Joseph Lhota—with the expectation that HAKS would later be awarded public works contracts. For example, in 2013, at least five HAKS employees each contributed $250 to Mayor Bill de Blasio’s campaign. In 2013, at least six employees donated between $150 and $250 to mayoral candidate William Thompson’s campaign. AHMAD was listed as the so-called “intermediary” for each contribution.

In April 2013, DAVID HENLEY, 64, then the vice president of the Division of Capital Planning and Budget at MTA New York City Transit, co-sponsored a political fundraiser for Lhota’s campaign at HAKS with AHMAD. In filings submitted to the New York City Campaign Finance Board, HENLEY claimed to have made an in-kind contribution of $868.03 for the event, and affirmed that we not being reimbursed for it. However, the day after the event, financial records show that HENLEY received a check for $868.03—the exact amount of the contribution—drawn on a joint account in AHMAD’s wife’s name.

The Manhattan District Attorney’s Office’s Asset Forfeiture Unit is also filing two civil forfeiture actions seeking a total of $177,609,293 from the indicted defendants.

Assistant D.A. Diana Florence, Senior Investigative Counsel and Attorney-in Charge of the Construction Fraud Task Force, is handling the prosecution of the case, with the assistance of Assistant D.A. Carey Ng and Assistant D.A. Leah Keith, and under the supervision of Assistant D.A. Michael Ohm, Deputy Chief of the Rackets Bureau, Assistant D.A. Judy Salwen, Principal Deputy of the Rackets Bureau, Assistant D.A. Jodie Kane, Chief of the Rackets Bureau, and Executive Assistant D.A. Michael R. Sachs, Chief of the Investigation Division. Construction Fraud Task Force Coordinator Hildalyn Colon Hernandez, Investigative Analyst Amanda Bauza, Trial Preparation Assistants Matthew Ender-Silberman and Sophia Inkeles, Principal Financial Investigator Evelyn Marrero, and Senior Financial Investigator Nicholas Cangro also assisted with the investigation.

Assistant D.A. Jonathan Chananie and Assistant D.A. Lynn Goodman, Chief of the Asset Forfeiture Unit, are handling the civil asset forfeiture actions.

District Attorney Vance thanked the following agencies and individuals for their assistance with the investigation: DOI, and in particular, First Deputy Commissioner Lesley Brovner, Deputy Commissioner and Chief of Investigations Susan Lambiase, Associate Commissioner Andrew Brunsden, Associate Commissioner James Flaherty, Chief Investigator James McElligott, Assistant Inspector General Tiffany Ingraham, and Inspector General Gregory Cho; PANYNJ Officer of the Inspector General, and in particular, Director of Investigations Steven Pasichow, and Police Investigators Mark Gaw and Joseph Macchiaroli; MTA Office of the Inspector General, and in particular, Inspector General Barry L. Kluger, Senior Principal Investigator Jill Turner, and C. Chin; NYS Inspector General, and in particular, Senior Investigative Counsel Kenneth Michaels; DASNY, and in particular, Investigative Auditor of the Office of Internal Affairs Brian Dow; U.S. DOT, and in particular, Special Agent Rebecca Sidhu; NYSIF, and in particular, Senior Forensic Auditor Granville Mo; and SCA, and in particular, Inspector General Felice Sontupe, Deputy Counsel Office of the Inspector General Celeste Sharpe, Assistant Inspector General Nick Scicutella, and Investigator Tiffany Coles.

Defendant Information: 
HUSAM AHMAD, D.O.B. 1/21/1957
Queens, NY
Charged:
  • Offering a False Instrument for Filing in the First Degree, a class E felony, 7 counts
  • Bribery in the First Degree, a class B felony, 4 counts
  • Corrupting the Government in the First Degree, a class B felony, 2 counts
  • Scheme to Defraud in the First Degree, a class E felony, 1 count
SHAHID AKHTAR, D.O.B. 7/15/1970
Monroe, NJ
Charged:
  • Bribery in the First Degree, a class B felony, 3 counts
  • Offering a False Instrument for Filing in the First Degree, a class E felony, 5 counts
  • Corrupting the Government in the First Degree, a class B felony, 2 counts
  • Scheme to Defraud in the First Degree, a class E felony, 1 count
BETTY CAMPBELL, D.O.B. 4/29/1945
Amityville, NY
Charged:
  • Corrupting the Government in the First Degree, a class B felony, 4 counts
  • Bribe Receiving in the First Degree, a class B felony, 10 counts
HENRY CHLUSPA, D.O.B. 12/16/1943
Smithtown, NY
Charged:
  • Corrupting the Government in the First Degree, a class B felony, 1 count
  • Bribery in the First Degree, a class B felony, 4 counts
CIMC ASSOCIATES LLC
Lindenhurst, NY
Charged:
  • Corrupting the Government in the First Degree, a class B felony, 6 counts
  • Bribe Receiving in the First Degree, a class B felony, 11 counts
  • Offering a False Instrument for Filing in the First Degree, a class E felony, 4 counts
D&B ENGINEERS AND ARCHITECTS P.C.
Woodbury, NY
Charged:
  • Corrupting the Government in the First Degree, a class B felony, 1 count
  • Bribery in the First Degree, a class B felony, 4 counts
SYED HAIDER, D.O.B. 3/15/1958
Melville, NY
Charged:
  • Corrupting the Government in the First Degree, a class B felony, 1 count
  • Bribery in the First Degree, a class B felony, 1 count
WALTER GROSS, D.O.B. 11/18/1962
New York, NY
Charged:
  • Corrupting the Government in the First Degree, a class B felony, 1 count
  • Bribery in the First Degree, a class B felony, 1 count
HAIDER ENGINEERING, P.C.
Farmingdale, NY
Charged:
  • Corrupting the Government in the First Degree, a class B felony, 1 count
  • Bribery in the First Degree, a class B felony, 1 count
MUHAMMAD HAQUE, D.O.B. 1/5/1956
Elmwood Park, NJ
Charged:
  • Bribery in the First Degree, a class B felony, 1 count
  • Corrupting the Government in the First Degree, a class B felony, 2 counts
  • Scheme to Defraud in the First Degree, a class E felony, 1 count
  • Offering a False Instrument for Filing in the First Degree, a class E felony, 4 counts
DAVID HENLEY, D.O.B. 8/11/1953
Brooklyn, NY
Charged:
  • Offering a False Instrument for Filing in the First Degree, a class E felony, 3 counts
HAKS ENGINEERS, ARCHITECTS AND LAND SURVEYORS, D.P.C..
New York, NY
Charged:
  • Bribery in the First Degree, a class B felony, 3 counts
  • Corrupting the Government in the First Degree, a class B felony, 1 count
  • Offering a False Instrument for Filing in the First Degree, a class E felony, 3 counts
JCMS ASSOCIATES LLC
Massapequa, NY
Charged:
  • Corrupting the Government in the First Degree, a class B felony, 2 counts
  • Bribe Receiving in the First Degree, a class B felony, 5 counts
  • Scheme to Defraud in the First Degree, a class E felony, 2 counts
JCMS ASSOCIATES OF NY LLC
Massapequa, NY
Charged:
  • Corrupting the Government in the First Degree, a class B felony, 2 counts
  • Bribe Receiving in the First Degree, a class B felony, 5 counts
IFEANYI “MANNY” MADU, D.O.B. 2/12/1962
Massapequa, NY
Charged:
  • Corrupting the Government in the First Degree, a class B felony, 5 counts
  • Bribe Receiving in the First Degree, a class B felony, 11 counts
  • Scheme to Defraud in the First Degree, a class E felony, 2 counts
  • Offering a False Instrument for Filing in the First Degree, a class E felony, 2 counts
  • Offering a False Instrument for Filing in the First Degree, a class E felony, 1 count
JOYCE HARVEY-MADU, D.O.B. 3/27/1964
Massapequa, NY
Charged:
  • Corrupting the Government in the First Degree, a class B felony, 6 counts
  • Bribe Receiving in the First Degree, a class B felony, 11 counts
  • Scheme to Defraud in the First Degree, a class E felony, 1 count
  • Offering a False Instrument for Filing in the First Degree, a class E felony, 1 count
MCC GENERAL OFFICE SERVICES, LLC
Amityville, NY
Charged:
  • Corrupting the Government in the First Degree, a class B felony, 5 counts
  • Bribe Receiving in the First Degree, a class B felony, 8 counts
SHELLY MOHAN, D.O.B. 8/29/1965
Queens, NY
Charged:
  • Scheme to Defraud in the First Degree, a class E felony, 1 count
  • Offering a False Instrument for Filing in the First Degree, a class E felony, 1 count
MCMS Associates, LLC
Queens, NY
Charged:
  • Scheme to Defraud in the First Degree, a class E felony, 1 count
  • Offering a False Instrument for Filing in the First Degree, a class E felony, 1 count
KYRIACOS PIERIDES, D.O.B. 1/29/1962
Franklin Square, NY
Charged:
  • Corrupting the Government in the First Degree, a class B felony, 1 count
  • Bribery in the First Degree, a class B felony, 1 count
MUHAMMAD SIDDIQUI, D.O.B. 5/25/1968
New Brunswick, NJ
Charged:
  • Corrupting the Government in the First Degree, a class B felony, 1 count
  • Scheme to Defraud in the First Degree, a class E felony, 1 count
  • Offering a False Instrument for Filing in the First Degree, a class E felony, 3 counts
SIMCO ENGINEERING, P.C.
New York, NY
Charged:
  • Corrupting the Government in the First Degree, a class B felony, 1 count
  • Scheme to Defraud in the First Degree, a class E felony, 1 count
  • Offering a False Instrument for Filing in the First Degree, a class E felony, 3 counts