NY Developer, Union Boss, Plead Guilty in $10 Million Fraud Case

A Manhattan developer and two former union bosses have confessed to defrauding the taxpayers of NYC by helping to steal more than $10 million from the N.Y. Metro. Transportation Authority (MTA).  That brings to four the number of defendants who have pled guilty to the scheme in which developers overcharged the MTA for construction projects, then conspired with officials from Local 14 of the Intl. Union of Operating Engineers (IUOE), and Local 1 of the Intl. Union of Elevator Constructors, to pocket the savings from using lower-paid non-union workers.

On March 31, Frederick Contini pled guilty to his major role in the conspiracy.  In Feb. 1999, the MTA contracted with Contini to renovate a 1.2 million-sq. ft. space on Broadway at a cost of $55 million, which eventually grew to $155 million.  Contini, using a sham company called Links Construction, billed the MTA at the highest possible wage for labor to be supplied by the two unions.  In addition to the use of non-union workers, Contini also inflated the number of hours actually worked. 

Those funds were then spread around to the benefit of the co-conspirators.  For instance, the ex-treasurer of IUOE Local 14, James Roemer, who pled guilty on April 3, pocketed more $800,000 through companies he owned to buy a country home he planned to run as a bed-and-breakfast.  Also pleading guilty the week before was David Coakley, the representative for Local 1 of the IUEC.  In his plea, Contini agreed to forfeit $1 million to the government.  he faces up to eight years in prison.  Roemer agreed to serve at least four years, and as much as five years, three months, in prison, and to repay the funds he stole in the scheme. [New York Times 4/1/03, New York Daily News 4/1/03, New York Post 4/4/03]