NYCHA

9 Contractors Charged in ‘Brazen' NYCHA Kickback Scheme: Brooklyn DA

An investigation is ongoing into the depth of the alleged problem, with more individuals expected to face charges

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What to Know

  • The Brooklyn district attorney and the city's Department of Investigation have announced charges Monday against more than a half-dozen contractors they say allegedly tried to bribe NYCHA supervisors to win contracts in Brooklyn public housing developments.
  • Nine contractors surrendered Monday morning to face charges of bribery in the third degree. If convicted, they face up to seven years in jail.
  • The case began after a NYCHA official reported a bribery attempt, which led to an undercover investigation that allegedly showed a more widespread problem, Brooklyn District Attorney Eric Gonzalez said. 

The Brooklyn district attorney and the city's Department of Investigation announced charges Monday against more than a half-dozen contractors they say allegedly tried to bribe NYCHA supervisors to win contracts in Brooklyn public housing developments.

Nine contractors surrendered Monday morning to face charges of bribery in the third degree. If convicted, they face up to seven years in jail. Brooklyn District Attorney Eric Gonzalez and DOI officials shared details of the charges at a press conference Monday, adding that he expected additional individuals to also be charged.

"This is significant corruption because honest contractors stand no chance of doing the work if you have to corrupt the process in order to be awarded the contract," Gonzalez said.

According to Gonzalez, on large contracts, vendors and contractors who work with NYCHA have to go through a bidding process. Once they receive multiple bids a vendor is selected to do the work. However, repairs that are less than $10,000 can be awarded by superintendents to contractors. They receive an estimate, they approve the estimate for the repairs and, ultimately, they sign off the payment to the contractor as long as the work is completed to satisfaction. This is done to make repairs quickly, especially for NYCHA residents.

The case began after a NYCHA official reported a bribery attempt, which led to an undercover investigation that allegedly showed a more widespread problem, Gonzalez said. 

In 2019, DOI learned of a number of other alleged contractors who were offering bribes and so undercover investigators were sent to two housing developments in Brooklyn: Red Hook Houses West and the Lafayette Houses in Clinton Hill.

During a period of months, during the height of the COVID pandemic in New York City, these investigators posing as superintendents received many offers of bribes, Gonzalez said. Some contractors were allegedly trying to pay a 10% kickback to NYCHA officials on any contract they were awarded, the district attorney said.

More than 35 of the "brazen" bribes were offered, many of them captured on video, according to the district attorney. In total, about $20,000, gift cards and other gifts were offered as bribes. Gonzalez presented some of these videos during his press conference.

No public housing official has been charged at this point, the sources said. An investigation is ongoing into the depth of the alleged problem.

"We believe that this corruption, unfortunately, goes beyond the nine people charged today, so we want to have this press conference to send a very clear message to anyone who would think about engaging in corruption and fraud that DOI is watching. They will investigate any allegations of corruption. This office stands ready to be partners with them to prosecute and to hold those accountable who will take a bribe," Gonzalez said.

We believe that this corruption, unfortunately, goes beyond the nine people charged today, so we want to have this press conference to send a very clear message to anyone who would think about engaging in corruption and fraud that DOI is watching.

Brooklyn District Attorney Eric Gonzalez

DOI Commissioner Margaret Garnett commended the superintendents who turned down the bribes and reported them to DOI, saying that it is city law to report corruption.

"This investigation focused on the pernicious influence of bribery on NYCHA's small procurement contracting system," Garnett said. "This program has a laudable goal: to give development superintendents the flexibility to get small repairs made quickly without a complex bidding and procurement process. The intent is to improve NYCHA residents' quality of life and give them the same responsive and speedy service that a tenant in a privately-owned building would expect. However, the program -- as it was operating -- was highly vulnerable to fraud and corruption as this investigation shows."

Garnett said they have since worked with NYCHA to reform the small procurement process in order to prevent this type of corruption from taking place.

In a statement, NYCHA said: “NYCHA has zero tolerance for these illegal acts committed by staff and vendors, and worked in partnership with DOI on this investigation. We have implemented significant changes to the systems to prevent this type of malfeasance, including updates and modifications to purchasing oversight, how contracts are awarded and tracked, and post-award contract management. They are all being implemented as part of the Transformation Plan, which was mandated by the 2019 HUD Agreement, and we will continue to do the necessary work to improve.” 

The nine contractors pleaded not guilty in court Monday afternoon.

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