I-Team: Whistleblower Claims Taxpayers Paid for No-Show Workers at WTC

An engineer who helped rebuild the World Trade Center claims his former employers charged the Port Authority for what could be millions of dollars in unnecessary labor hours.

The bills were for so-called "standby trades hours," guaranteed payments to senior union members for being on call whether or not they do any physical labor.

Between 2006 and 2009, Magdy Youssef was a structural engineer for Tishman Construction and then for Turner Construction, two companies that managed work on One World Trade and the WTC Transportation Hub.

Youssef says the two construction management firms routinely billed the Port Authority for standby hours without specifying on pay records that the laborers were mostly idle. He also says the standby trade laborers were often completely absent from the job site when he held meetings in construction trailers.

“Personally, me seeing them? I don’t recall that,” Youssef said. “If they are working on the project and they are doing the job that is described as their function –- for example, master mechanic, foreman, safety engineer, and the rest of them –- they should be sitting in these meetings.”

Youssef says the improper billing of standby hours hasn’t been confined to Port Authority projects. His suit says Tishman and Turner billed taxpayers for idle workers on other federally funded construction sites across the country. His suit does not quantify the alleged overbilling except to say that standby hours could amount to millions of dollars per project.

Youssef's claims are laid out in a federal whistleblower lawsuit that alleges the billing of standby hours is a widespread fraud on construction projects all over the region and the country.

According to the suit, the Port Authority was improperly billed $175 an hour for a standby master mechanic, $150 an hour for a standby maintenance engineer and $100 an hour for a standby labor foreman.

"Why should the government, whether it be the federal government, the state government, or city government, be paying for hours that are not worked on the project," said Daniel Kaiser, Youssef's attorney.

Representatives from Tishman and Turner told the I-Team in emailed statements the whistleblower suit is doomed to fail because standby hours are required by collective bargaining agreements.

“Each and every worker on our projects is paid for the hours they work -- hours which are documented, certified, and approved by our clients,” wrote Chris McFadden, a spokesman for Turner.

He added that “Turner does not support labor practices that do not add value."

Youssef's former bosses at Tishman characterized him as a frustrated former worker who once sued Tishman over rights to one of his engineering designs. The lawsuit was dismissed.

“Mr. Youssef has filed suit against us in the past,” wrote John Gallagher, a spokesman for Tishman. “As a result of this history, we are confident that this suit, filed by a disgruntled employee, will be dismissed.”

Tishman and Turner say all standby laborers -- even if they were idle -- reported to the job sites. The construction firms also challenged the notion that on-call laborers are of no value to a project.

In a legal brief filed by Tishman, the construction management firm argued “these workers, while they may not be performing physical labor at the site while standing by, still are performing a necessary function for that contract.”

Collective bargaining agreements do often require contractors to pay for a defined number of standby hours, but Youssef claims Tishman and Turner unlawfully passed the cost of idle workers onto the taxpayers.

According to the suit, Tishman and Turner hid charges for standby workers “by incorporating those extra hours into payment requisitions that they submitted to the government, without disclosing that the costs were associated with standby trade provisions which were required by union collective bargaining agreements which did not represent work actually performed.”

Both Tishman and Turner reps insist the Port Authority was well aware the agency was paying for idle workers. But a Port Authority spokesman declined to confirm that.

"Given the matter remains the subject of pending litigation, the Port Authority is not going to comment,” wrote Port Authority spokesman Ron Marisco in an email to the I-Team.

Last month, the U.S. Attorney in the Eastern District of New York charged Tishman Construction with a different kind of overbilling on World Trade Center projects. Rather than focusing on standby hours, federal investigators found Tishman routinely lied about overtime hours, sick time and vacation time. The company admitted to the fraud and paid $20 million in a deal to defer prosecution.

“Mr. Youssef’s current suit has nothing to do with the deferred prosecution agreement,” wrote Gallagher. “They are entirely separate matters.”

While prosecutors have argued Tishman committed a crime by inflating overtime and other hours, they have not subscribed to Magdy Youssef’s claims about standby hours. Already, two U.S. attorneys and the New York Attorney General have declined to intervene. That usually means prosecutors feel they would be unable to prove the case in court. But Youssef’s attorney believes part of the problem is that the Port Authority has not been eager to cast itself as a victim of overbilling fraud.

“The Port Authority has very close relationships with Tishman and Turner,” Kaiser said. “No one can ever know, but certainly a case like this, you can imagine, would not be attractive to the Port Authority.”

Chris Ward, the former Port Authority executive director who approved many of the contracts to rebuild the World Trade Center, recently took a job with AECOM, the parent company of Tishman Construction.

Ward did not respond to the I-Team's request for comment but, according to the company, Ward’s position with AECOM does not have day to day dealings with Tishman.

Assemblyman Jeffrey Dinowitz (D-Bronx) said there is at least the appearance of a conflict of interest when a former Port Authority executive accepts a job with the very company that has admitted to padding overtime to defraud his old agency.

"There is often an unhealthy relationship between a particular government agency and some of the contractors they are dealing with," Dinowitz said.

Carol Sigmond, a construction attorney who is president of the New York County Lawyers' Association, believes a federal judge is likely to dismiss Magdy Youssef’s whistleblower suit, but she also says Youssef raises an important issue.

"He forces you to consider the question about whether the Port Authority thought through, carefully, all of the standby trades and whether they needed them all.”

Sigmond suggested the Port Authority should have used the enormous size of the World Trade Center projects to bargain with trade unions and reduce the number of idle workers on the construction site.

“You’re paying a lot of money for skilled labor to stand around,” Sigmond said. “There’s no question that if the Port Authority had sat down with the unions and said ‘we don’t want to pay for all this standby time. We want, if necessary one standby electrician. We want to limit the hoists. We want to limit whatever we want to limit’ -- they would have been able to engage in some serious negotiations and they would have had the potential to get some savings for the taxpayers.”  

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