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New York Construction Firm Agrees to Big Settlement to Avoid Fraud Prosecution

Under a deal with prosecutors, a construction firm based in Manhattan will pay out $9 million to avoid prosecution for over-billing clients over the years. The company will also be forced to establish a hotline that employees can call to report ethics violations.

We get the news via the New York Daily News:

Plaza Construction billed more than $2.2 million for hours not worked by laborers on projects that included the Brooklyn Navy Yard, Bronx Terminal Market, Federal Reserve Bank, and New York University, authorities said Thursday.

Under the deferred prosecution agreement with the Brooklyn U.S. Attorney's office, Plaza will repay its clients which were defrauding in the scheme going back to 1999.

“The company defrauded its clients and abused the trust placed in it to provide construction services at some of New York's most storied sites,” said U.S. Attorney Robert Capers.

Plaza Construction did not admit to ongoing wrongdoing but instead said the settlement takes care of past business practices. The settlement includes $7 million in penalties paid to the government as well as restitution to clients who were charged too much, per the agreement. 

More background here from real estate website The Real Deal

Plaza, led by CEO Richard Wood, has been under investigation since 2012. It’s just the latest firm that’s been targeted by federal authorities for fraud allegations. In 2012, Lend Lease agreed to pay $56 million to settle charges it overbilled clients on Citi Field and Grand Central Station. Last year, Tishman Construction agreed to pay $20 million in restitution and penalties for overcharging the government on labor costs for the World Trade Center and also the owners of the Plaza Hotel.