Plaza Construction Corp., one of New York City’s largest construction companies, says it has resolved charges of overbilling clients and the government for at least 13 years on projects including the Federal Reserve Bank of New York and the Empire State Building.
The company, partly owned by China State Construction Engineering Corp., inflated costs and billed clients for hours not worked to offset administrative costs, federal prosecutors in Brooklyn, New York, said in mid-October.
The U.S. agreed not to prosecute the company if it shows within two years it’s reforming its practices.
Plaza agreed to pay $9 million in penalties in lieu of being indicted for fraudulently overbilling clients more than $2.2 million.
“Plaza is pleased to have resolved this matter, which focused on historical conduct that was corrected by Plaza in the years leading up to today’s announcement,’ Cathy Callegari, a spokeswoman for the company, said in an e-mail. “Plaza performed an internal investigation, cooperated fully with the government’s inquiries, and has previously and willingly corrected past conduct.”
Plaza Construction provided construction management on several large city projects, supplying workers from trade unions and supervising the work of subcontractors, prosecutors said.
The prosecutors assert that from 1999 to February 2012, the company submitted bills to clients filled with false statements and omissions.
As well, from 1999 to 2009, the company billed clients for work that was never done, including job foremen from a mason’s union who falsely claimed to be on duty on major holidays. It also guaranteed that some senior job foremen were paid between five to seven hours of overtime each day, whether or not they worked, prosecutors said.
Bloomberg reports that he case is just the latest Brooklyn federal prosecutors have brought against construction companies and contractors for overbilling clients. Lend Lease Construction LMB Inc., the contractor once known as Bovis Lend Lease LMB Inc., agreed in 2012 to pay as much as $57 million to settle charges by the U.S. government that it overbilled clients for more than a decade.
As well, Tishman Construction Corp., agreed last December to pay more than $20 million in restitution and penalties for fraud involving overbilling the government for labor costs on high-profile projects including the Freedom Tower and the Plaza Hotel.