The owner of Over Rock Construction LLC, a NY construction service company, pleaded guilty to a fraud conspiracy charge and to a tax violation in connection with a scheme to defraud the New York Power Authority (NYPA). As described in a Department of Justice press release, the charges stemmed from an ongoing joint federal and state investigation into bid rigging and fraud in regards to the award of contracts at the NYPA facility in White Plains. Over Rock was awarded a $3 million contract with NYPA in October 2009 to perform landscaping, snow removal, and masonry work. Throughout the course of the contract Over Rock’s owner participated in a fraudulent scheme that involved submitting fraudulent certified payroll statements and invoices for reimbursement for “no show employees”— individuals who performed no services. In total these fraudulent charges approximated $400,000.
Unfortunately, payroll fraud is not an uncommon occurrence in the construction industry. As evidenced by this case, such fraudulent activity often overlaps into other fraudulent activity such as filing false tax returns. New York State Inspector General Catherine Leahy Scott explained, “This contractor defrauded the State on multiple occasions, repeatedly billing the New York Power Authority for workers who never showed up and by paying significantly less taxes than he owed.”
As part of our Forensic & Valuation Services practice, Aronson LLC helps clients investigate financial statement misstatements and asset misappropriation schemes. To learn more about how our team of Certified Fraud Examiners can assist your organization, contact Bill Foote at 301.231.6299.