Construction firm head steals money meant to repair NYC homeless shelters, officials say

The heads of a construction company were arrested and accused of defrauding New York City in connection with their contracting work at homeless shelters, officials said.

The U.S. attorney for the Southern District of New York, Damian Williams, announced in a statement Wednesday, Sept. 21, that the president and vice president of AFL Construction, a Queens-based firm, were arrested on charges of wire fraud, aggravated identity theft and money laundering.

Neither AFL Construction nor the U.S. Attorney’s Office immediately responded to requests for comment from McClatchy News.

The individuals, of East Elmhurst, New York, entered into contracts with the city government worth $12 million to provide landscaping, roofing and snow removal services at shelters, in addition to maintenance work. For about a four year period, starting around 2014, the men used the deals to “fraudulently enrich themselves and steal from the City,” according to the release.

“The charged scheme was vast and involved overbilling for material, false claims to prompt the issuance of paychecks to purported workers and the diversion of those paychecks to defendants,” New York City Department of Investigation Commissioner Jocelyn Strauber said in the release.

Documentation submitted to the city revealed that hundreds of paychecks to alleged workers were never delivered and, instead, the heads of the firm deposited the money into their own business and personal accounts, according to the release. The individuals also inflated the amount of money paid for materials on certain projects, prosecutors said.

The construction company “has been paid at least $8 million for work purportedly performed pursuant to these contracts,” stated the release.

Three other individuals were arrested in connection with their role in helping conceal the scheme, and four of the five individuals involved were also charged in a separate illicit enterprise to fraudulently obtain tens of thousands of dollars worth of Medicaid benefits, prosecutors said. As part of the ploy, they “repeatedly” submitted letters in support of requests for benefits that contained the name of a deceased “project manager,” according to the release.

The individuals were arrested the morning of Sept. 21 and brought before a magistrate judge in the Southern District of New York, according to the release.

If found guilty, the individuals would likely face years of prison time.

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