Contractor for 1 World Trade Center Is Charged with Fraud

Colin Moynihan, New York Times, August 1, 2014

The owner of a construction company hired to do extensive steel work on 1 World Trade Center was charged on Thursday with fraudulently obtaining $76 million by falsely claiming he was in compliance with requirements for hiring minority and female subcontractors.

The owner, Larry Davis, 63, was accused of using bogus work orders and business records to make it seem as if his company, DCM Erectors Inc., was in compliance with hiring requirements of the Port Authority of New York and New Jersey. He was charged with wire fraud and conspiracy to commit wire fraud, each of which carries a maximum penalty of 20 years in prison.

On Thursday evening, a prosecutor for the United States attorney’s office for the Southern District of New York, Carrie H. Cohen, told a judge in United States District Court in Manhattan that the authorities believed Mr. Davis had carried out similar schemes involving other construction projects.

“The government intends to indict the defendant with additional charges,” she told Magistrate Judge Debra Freeman. “The indictment the government would seek would include other frauds on other buildings that are part of public projects.”

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DCM Erectors was awarded two Port Authority contracts totaling about $600 million to do drafting, engineering and structural steel work on the 1,776-foot office tower at 1 World Trade Center, as well as on the PATH transit hub below the tower. Over time, prosecutors said, those contracts swelled to nearly $1 billion.

Prosecutors said Mr. Davis had close ties to two other companies which DCM Erectors hired as subcontractors to satisfy a contract requiring that he make a good-faith effort to ensure 12 percent of the work was done by a minority-owned company and at least 5 percent by a company owned by a woman.

One of the companies, Solera, which was certified in 1999 by the Port Authority as a minority-owned business, created a joint venture two years later with DCM Erectors. According to the criminal complaint, the owner of Solera, Johnny Garcia, told investigators that the joint venture, Solera/DCM, was set up by Mr. Davis “with the express purpose” of permitting DCM Erectors to obtain minority-owned business credit on public construction projects.

From 2009 and 2012, prosecutors said, Mr. Davis caused DCM Erectors to fake payroll records and purchase orders to falsely claim credit for about $70 million of metal decking work and steel procurement that was supposedly done by Solera/DCM, but was in fact performed by a different subcontractor.

A second company, GLS Enterprises Inc, was owned by Gale D’Aloia, who worked for DCM and managed that company’s payroll before and after forming GLS. But Mr. Davis controlled aspects of GLS’s operations, according to the complaint. {snip}

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