Plaza Construction shells out $9M to settle overbilling claims

Dive Brief:

National contracting firm Plaza Construction will pay $9.2 million to settle claims that it defrauded clients through intentional overbilling, according to The Real Deal. The company will make client restitution in the amount of $2.2 million and pay a $5.6 million penalty, with another fine of $1.3 million payable over two years.
Brooklyn, NY, U.S. Attorney Robert Capers alleged that Plaza jacked up costs, billed for unworked hours and included hidden fees on its invoices for such projects as the Brooklyn Navy Yard and the Bronx Terminal Market.
The district attorney's office, which had been investigating Plaza since 2012, agreed to withhold charges if Plaza can demonstrate it has overhauled its billing process within two years. A spokesman for Plaza said that the company had accepted responsibility "for inappropriate past practices," according to the New York Daily News.

Dive Insight:

Lendlease also settled overbilling claims for $56 million in 2012, and James Abadie, principal of the company's New York office, pleaded guilty to fraud related to projects including the New York Mets' Citi Field and a renovation of Grand Central Station, in New York.

In December 2015, Tishman Construction agreed to pay more than $20 million in restitution and fines for what prosecutors said was mail and wire fraud conspiracy related to $5 million in overbillings from 1999 to 2009. Tishman allegedly invoiced at higher rates than customers had agreed to and billed for hours not worked, with projects including One World Trade Center and the Jacob K. Javits Convention Center expansion. The company said it revised their policies in response to the claims.

In May 2015, Hunter Roberts Construction Group, also one of New York's largest construction companies, admitted to overcharging clients by falsely stating the number of hours worked on employee timesheets, as well as inflating their pay rates. The company agreed to pay $1 million in restitution and an additional $6 million in fines and penalties.

Due in part to these incidents and a building boom across New York City, New York County District Attorney Cyrus Vance Jr. announced in August 2015 the formation of the Construction Fraud Task Force, which has been charged with pursuing incidents of fraud and corruption. Vance said that activities like unsafe worksite practices, bribery, bid rigging and fraud ultimately limits the potential for the city's construction industry.