New York Contractor Owners Charged with $6.5 Million Fraud

All contractors want to minimize costs. But sometimes that desire leads to lawbreaking. Such was the case for Patrick McCaul and John McGonnell, co-owners of the Bronx, N.Y. construction firm, Tri-Built Construction, Inc. On January 9, the two were arrested and indicted in U.S. District Court in Manhattan for participating in an 11-year scheme to defraud the New York City District Council of Carpenters, an affiliate of the United Brotherhood of Carpenters and Joiners. The pair allegedly used nonunion labor in violation of an existing contract, paid union carpenters off the books, and bribed shop stewards and an office employee of the union benefit funds to assist in the fraud. The union’s shortfall during 1993-2004 came to at least $6.5 million – and that’s just the benefit funds. McCaul and McGonnell each were charged with one count of conspiracy, embezzlement and bribery.

 

Tri-Built is a drywall contractor with a major presence in the New York City area. The firm has done extensive work on construction projects financed by the Dormitory Authority of the State of New York (DASNY), openly advertising itself as a union contractor. The indictment indicates that McCaul, 48, and McGonnell, 51, fully aware of collective-bargaining and prevailing-wage requirements, paid a large number of workers in cash off the books, and at a nonunion rate without benefits. They then used the savings to underbid jobs. To cover the fraud, moreover, the pair bribed union shop stewards at several sites to submit reports underreporting the actual number of carpenters on the job and the hours they worked. Moreover, the indictment notes, McCaul and McGonnell paid money to a union office employee to destroy financial records that potentially could yield evidence of fraud in a future in-house audit.

  

Perhaps the most flagrant violations occurred at a DASNY project, Kings County Hospital in Brooklyn. During just one week, April 14-20, 2004, Tri-Built’s own records show that the contractor hired 37 carpenters who worked a combined 1,313 man-hours. Yet the records Tri-Built submitted to the Carpenters district council reported only 23 carpenters at that job site working 683 man-hours. The report submitted that week by the shop steward receiving monetary bribes from McCaul and McGonnell reported only 21 carpenters working onsite, omitting mention of 16 other employees.   

McCaul and McGonnell were arrested at their homes and were released on $1 million bond each following their court appearance. They face up to a five-year sentence on each charge. In the meantime, to satisfy financial claims, prosecutors anticipate seizing their homes. (U.S. Attorney’s Office, Southern District of New York, 1/9/07; New York Daily News, 1/10/07; New York Post, 1/10/07).