Lend Lease (U.S.) Construction LMB Inc., formerly Bovis Lend Lease, and its former top New York City executive on April 24 settled charges of decade-long overbilling, padding time sheets and other fraud on some of the city's biggest public and private projects.
The agreement, with the U.S. Attorney's office in Brooklyn, N.Y., defers prosecution of the firm. It has agreed to pay $56 million in federal penalties and fraud-victim compensation and implement "far-reaching corporate reforms."
James Abadie, 55, who had been executive vice president of Bovis and principal-in-charge of its New York operations, pleaded guilty to conspiring to commit mail fraud as part of the overbilling scheme.
A veteran of more than 30 years at the firm, he left in 2009 at the start of the government's probes into the company's activities. Abadie, who remains a major participant in local industry groups and collective bargaining activities, is listed as a consultant to New York City-based builder Plaza Construction. According to ENR records, his title in 2011 was vice president of operations.
Abadie was a key manager of Bovis' efforts to clean up damage left by the 9/11 terror attack at the former World Trade Center site in 2001, for which he was cited the following year as an ENR Newsmaker.
Sydney, Australia-based real estate services firm Lend Lease Corp. Ltd. in 2011 dropped "Bovis" and adopted the name "Lend Lease" for its U.S. operation.
According to federal documents, Abadie "explicitly and fraudulently directed his subordinates to carry out the practice of adding unworked hours to labor foremen's time sheets, knowing that these unworked hours were billed to clients." The agreement says Abadie was instrumental in adding "about one to two hours of unworked overtime" to daily time sheets of workers in Local 79 of the Mason Tenders' union.
Bovis also admitted to fraud in meeting disadvantaged business requirements by self-performing work it claimed had been subcontracted to minority- or women-owned firms, according to the U.S. attorney in Brooklyn. Court documents detail that, in building a Bronx courthouse in 2000, H.J. Russell & Co., an Atlanta-based minority contractor that was a project sub, "was relegated to a role as a mere pass-through," with Bovis itself "directly managing the union labor."
Projects on which authorities claim the fraudulent activity occurred include New York City-area jobs such as a U.S. Post Office in Brooklyn, the Mets' Citi Field baseball stadium in Queens and the deconstruction of a high-rise damaged in the 9/11 attack.
Bovis management of the latter project was criticized after a 2007 fire at the site resulted in the death of two city firefighters. Jeffrey Melofchik, a former Bovis safety supervisor at the site, was acquitted last year of criminal charges stemming from the incident.
Bovis is also the contractor for the Sept. 11 Memorial at the former Ground Zero site.
In a statement, Lend Lease credits its cooperation in the three-year federal probe and previous "remedial measures" with the federal decision to defer prosecution.
"We accept responsibility for what happened in the past and have agreed to continue to make restitution to the affected clients,” says Robert McNamara, CEO of Lend Lease's Americas region. “We are satisfied that the investigation is now resolved, and we are looking forward to continuing our commitment to projects in New York City.”
Abadie faces a maximum sentence of 20 years in prison and a fine of at least $250,000, says the federal document. He could not be reached for comment.
Under the agreement, Bovis will reform its billing practices and minority-business subcontracting compliance. Among other things, it also agreed to have a full-time auditor in New York to verify union-labor time sheets.