The Real Deal New York

Lehr hit with fraud, corruption charges

May 04, 2011 12:53PM

[Updated 1:41 p.m. with comment from Lehr’s attorney] Manhattan-based construction company Lehr Construction and four of its executives have been indicted on charges of enterprise corruption, scheming to defraud, and grand larceny related to a multi-million dollar fraud scheme, the Manhattan district attorney announced today.

Lehr, which specializes in the interior renovation of construction projects for companies such as Goldman Sachs, SL Green Realty and Tishman Speyer, and the four execs allegedly defrauded its construction management clients of at least $30 million over the past decade. The execs charged are Jeffrey Lazar, executive vice president and director; Steven Halper, finance director; Todd Phillips, executive vice president in charge of operations and Steven Wasserman, chief of estimating department and cost control. Lehr and Halper were also charged with money laundering.

In a statement, Manhattan District Attorney Cyrus Vance said: “They used an over-invoicing scheme to steal from their… clients, and then used general contractor jobs to recover the stolen funds.”

Thefts were supposedly made possible through a recently instigated business model, imagined by Lehr executives, that moved costs from the company’s general contractor projects to its construction manager projects. Lehr, the DA says, had subcontractors overcharge on CM projects, for which Lehr got a percentage, agreeing to perform work for less on the GC ‘lump-sum’ projects.

When contacted by The Real Deal, Lehr declined to comment on the charges. But, William Schwartz of Cooley, Lehr’s attorney, later said in a statement: “Having recently sought the protection of The United States Bankruptcy Court, Lehr Construction is confident that it will complete all of its projects and be able to pay all of its creditors and subcontractors notwithstanding these charges.”

This is not the 32-year old company’s first brush with the law; the owners pleaded guilty to bribery for their role in a bid-rigging scheme at 1540 Broadway in the late 1990s. It filed for Chapter 11 bankruptcy protection in February. TRD

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