NEW YORK CITY—Tishman Construction has admitted to fraudulently overbilling clients and agreed to pay a total of more than $20 million in both restitution to victims and penalties to the federal government. Slapped with charges of mail and wire fraud conspiracy from the federal government, the company also has instituted reforms designed to establish best practices and provide governance and oversight.
In a scheme that allegedly went on for a decade, the US Attorney's Office for the Eastern District of New York claimed Tishman fraudulently overbilled for work on several projects, including World Trade Center Towers One Three, Four and Seven; the World Trade Center PATH Transportation Hub; the Plaza Hotel renovation; the Javits Convention Center expansion and renovation project; the Aqueduct Casino in Queens, and among others.
In an announcement of the agreement issued by the Office, Robert Capers, US Attorney for the Eastern District of New York says, "through a systemic practice, Tishman Construction bilked its clients by charging them for unworked time and at rates higher than those bargained for by their clients. By doing so, Tishman Construction defrauded its clients and abused the trust placed in it to provide construction services on some of New York's most storied buildings."
Adds Michael Nestor, Inspector General, Port Authority of New York and New Jersey, "Tishman's conduct that perpetuated an industry-wide fraud for more than a decade has come to an end. Government contracting agencies, and private clients alike, deserve to be billed strictly for what they bargained for, not duped into overpaying for gratuitous or phantom services.
Assistant director-in-charge of the Federal Bureau of Investigation, NY field office Diego Rodriguez notes, "Over ten years, Tishman Construction improperly billed millions from its clients representing both public and private projects across the New York City area. Today's restitution settlement of more than $20 million should help make right on a practice so wrong."
Asserts Mark Peters, commissioner, NYC Dept. of Investigation, "This type of fraud needlessly drives up construction costs and undermines integrity at these sites. We will continue to work together to root out and stop this type of corruption."
Pursuant to a deferred prosecution agreement filed Thursday, Tishman has accepted responsibility for its fraudulent billing practices and agreed to offer restitution to its clients in the amount of nearly $5.7 million and pay a penalty of about $14.6 million to the government over a two-year period.
The firm's remedial measures include the creation of the position of compliance director at the company, the adoption of a new code of conduct and the revision of time sheet recording and client billing policies.
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
