Corruption In Construction Contracts And Costs

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Four veteran construction executives and their company have been charged with systemically stealing tens of millions of dollars from investment firms, insurance companies and law firms as they built corporate offices in buildings across Manhattan.

The four men, who worked at Lehr Construction Corporation, routinely inflated the cost of mechanical, electrical and other subcontractor costs by 10 percent to 13 percent on office projects, according to an indictment unsealed Wednesday in State Supreme Court in Manhattan.

The Manhattan district attorney’s office raided Lehr’s offices 14 months ago, seizing records, hard drives and a “black book” that they said provided a detailed accounting of the scheme. Prosecutors said the company, which also was indicted, and the senior executives — Jeffrey Lazar, Todd Phillips, Steven Halper and Steven Wasserman — stole at least $30 million from 1998 to December 2010. The men were to be arraigned midday.

The indictments are part of a widening investigation by the district attorney into the city’s multibillion-dollar interior construction industry. It is also the second time in 13 years that executives at Lehr, a construction company that at its peak had roughly $500 million a year in billings, has been charged with fleecing their corporate customers, and the third corruption case involving a member the Lazar family, which founded Lehr.

“This construction company was corrupt at all levels,” said Cyrus R. Vance Jr., the Manhattan district attorney. “Its executives developed — and successfully executed — a scheme to steal millions of dollars from their clients.”

Yikes - with crimes like that, it sounds like Lehr Construction should be the recipient of some no-bid contract action from the NYCDOE.