Tishman Construction $220-million cancer research center project construction was where alleged larceny took place

An accounting manager who embezzled from two major New York City contractors to finance a lavish lifestyle has pleaded guilty in his latest scheme, which involved Tishman Construction Corp. John Hoeffner, a Tishman project accountant since 2004, pleaded guilty on Aug. 4 to grand larceny charges for allegedly forging invoices and altering vendor checks over a two-year period on a university medical school project, says Manhattan District Attorney Robert Morganthau.

Hoeffner will serve at least seven years in prison and repay Tishman $1.4 million as part of the plea agreement. He was terminated in June, says a Tishman spokesman. "Tishman launched an independent investigation as soon as our managers detected suspicious activity," he says. "Once those suspicions were confirmed, we immediately alerted the District Attorney's office and cooperated fully in its investigation."

Hoeffner, 47, was serving as project accountant on a $220-million cancer and genetic disease research center that Tishman was building in Bronx, N.Y., for Yeshiva University's Albert Einstein College of Medicine when the alleged embezzlement began. According to Morganthau, Hoeffner incorporated a phony company with a name similar to a legitimate project vendor in order to execute the scheme, which involved submitting faked invoices to Tishman to be paid. Hoeffner then deposited checks to the phony company into accounts he controlled, says Morganthau. He also allegedly altered checks by adding his own last name. Using the scheme, Hoeffner allegedly deposited a total of about 206 checks worth more than $2.7 million into his personal accounts, according to Morganthau.

Hoeffner, who was arrested on June 13, waived his right to appeal and is set to be sentenced on Sept. 17. He could not be reached for comment.

But Tishman was unaware when it hired Hoeffner in 2004 that he was on probation as part of a settlement in a similar scheme in which he allegedly embezzled $372,000 from contractor Bovis Lend Lease, says the spokesman. Hoeffner agreed to repay Bovis and was not prosecuted, says an industry source.

A Bovis spokeswoman confirms the event but declines to elaborate. "We cannot comment about the specifics of this situation other than to say that the matter was handled and resolved to our satisfaction by the Manhattan District Attorney's office," she says.

According to a court document provided by Morganthau's office, Hoeffner had served as project accountant for Bovis' work on a project at Riker's Island prison for the city's Dept. of Design and Construction. After Hoeffner resigned from Bovis in 2004, "his successor noted numerous irregulaties, including payments of $123,828 made to a company JTM Inc., that had not been an approved subcontractor," says the document. It was later learned that JTM was incorporated by Hoeffner and that he was the beneficiary of funds deposited into the firm's account, the document continues. Morganthau contends that a total of nearly $372,000 was deposited into the account controlled by Hoeffner from the Riker's Island project and other Bovis projects between 2001 and 2003.

Hoeffner agreed to repay Bovis "most of the amount" and was not prosecuted, says an industry source with knowledge of the event. "But it was a wakeup call for Bovis to prevent this from happening again. It put new fraud prevention policies in place."