Gambino Soldier, Union Bus. Agent Indicted for Multi-Million$ Fraud in NYC

Officials with the U.S. Attorney for Eastern N.Y., the FBI and U.S. Dept. of Labor announced on Sept. 15 a 43-count indictment involving the Metropolitan Transport Authority’s new headquarters at 2 Broadway in Manhattan.  The defendants include Edward Garafola, a soldier in the Gambino organized crime family, and Junior Campbell, a business agent with Local 79 of the Laborers’ Intl. Union of North America.  The indictment alleges that the Gambino family’s influence over the 2 Broadway project led to fraudulent overbilling, extortion and kickbacks in at least 10 separate contracts.  The indictment estimates that the monetary loss to the MTA and the building’s owner, Zar Realty Management, Inc., as a result of corruption at the project was “substantially in excess” of $10 million.


Having pled guilty to his part in the scheme on July 27, developer Frederick Contini admitted to a long-time association with the Gambino family.  The criminal schemes at 2 Broadway followed a simple pattern — Contini abused his authority as the MTA’s developer by allowing subcontractors otherwise required to use union labor for various projects to use non-union labor, while billing at the higher union rate and reaping a windfall by not having to pay union benefits.  On certain occasions, Contini was paid a portion of the difference as a kickback, and on others he simply allowed mob-controlled subcontractors to reap the benefits.


The most significant fraudulent contract related to the use of temporary elevator operators to run the cars during the construction project.  On March 11, 1999, Contini entered into a sham agreement with Links Construction, a company he controlled, to provide labor to operate the elevators, which ran 24 hours a day in 1999 and 2000.  The agreement purported to be a straightforward labor contract, in which Links agreed to hire and pay temporary elevator operators from Local 1 of the Intl. Union of Elevator Constructors and Local 14 of the Intl. Union of Operating Engineers.  But Links did not hire any operators at all, but nonetheless billed MTA $14.3 million, a sum nearly $10 million in excess of the amount actually used for elevator operators. The indictment alleges that Contini used only a small portion of the billed amount to hire non-union operators and laundered the balance through shell companies.


According to the indictment, after the laundered cash was transported back to New York, Edward Garafola was paid $12,500 per week by Contini as tribute to the Gambino through cash payments given to his son Mario.  The rest of the cash was split among Contini, other Gambino associates and the Local 1 and Local 14 representatives responsible for ignoring the flagrant use of cheap non-union labor.


Another scheme at 2 Broadway involved the use of manual laborers, typically members of Local 79 who perform tasks such as demolition and clean-up at construction sites.  Several companies controlled by Mario Garafola — provided manual laborers at 2 Broadway and falsely represented that they were using union labor when, in reality, they were either using non-union labor or obtaining union labor paid for by two other MTA contractors through extortion.  In furtherance of this scheme, Mario arranged weekly payments of $1,000 to be made to Local 79 bus. agent Junior Campbell who was then a shop steward at 2 Broadway.


The indictment also charges the Garafolas with conspiring to extort money and the services of union laborers from two companies doing business at 2 Broadway, Building Matrix and Building Core. Edward is alleged, in Oct. 1999, to have extorted the proceeds of a check in the approximate amount of $201,000 payable to Bldg. Matrix from the MTA.  Mario is alleged, in addition to extorting money from Bldg. Core, to have extorted the use of unionized Bldg. Core laborers for use on other projects. [U.S.A.O. E.D. NY, 9/15/04]