The Real Deal New York

DEP employee allegedly at center of $165M construction bribery scheme

Companies funneled work to his subcontracting companies: DA
By Kathryn Brenzel | April 18, 2018 02:00PM

District Attorney Cyrus Vance

The former head of contracts and procurement at the city Department of Environmental Protection agency is at the center of a $165 million bribery scheme that funneled work to construction and engineering companies, officials allege.

Ifeanyi “Manny” Madu allegedly provided information on DEP projects to three engineering firms — including the scope of the work and the names of the individuals who would be selecting the winning companies — before they were made public through requests for proposals, according to a summons filed in state Supreme Court in Manhattan. In exchange, these firms allegedly hired subcontracting companies controlled by Madu — including JCMC Associates and CIMC Associates — and another run by his former assistant at the DEP, MCMS Associates. He also received gifts in the form of Broadway show tickets and expensive dinners.

Officials allege that Madu and his affiliates received at least $8.1 million in bribes from 2007 to 2017. Projects included the rehabilitation of the Gilboa Dam and other water-related jobs.

“A handful of industry players transformed our city’s water infrastructure procurement process into their own personal swamp,” Manhattan District Attorney Cyrus Vance Jr. said in a statement. “For construction management companies, public works are highly-prized jobs, and any competitive edge in the bidding process could mean the difference in the award of a contract worth millions.”

Madu, who most recently served as the DEP’s assistant deputy director of engineering audits, could not be reached on Wednesday, and messages left for his companies weren’t immediately returned.

Madu, his wife Joyce Harvey-Madu, and his mother-in-law face criminal charges of fraud, bribery and offering a false instrument for filing. His former assistant at the DEP, Shelly Mohan, also faces related fraud charges.

According to two summonses filed by the Manhattan District Attorney’s Office, the scheme resulted in nearly $160 million worth of contracts being awarded to engineering firms that received advanced notice of the RFPs. HAKS, an engineering firm based in Midtown, raked in $71.5 million in contracts, according to court documents. Woodbury, New York-based D&B Engineers and Architects allegedly took in $73 million, and Haider Engineering in Long Island was awarded $12.8 million.

“The ‘inside’ information that the District Attorney alleges Mr. Haider received is routinely provided in advance of projects. Any subcontractors that Mr. Haider chose, were on a pre-approved list, and highly recommended by the city agency,” Todd Spodek, an attorney for Syed Haider, CEO of Haider Engineering, said in a statement. “This is routine in this business. At no point was there any allegation that Mr. Haider received any additional compensation, or any other quid pro quo.”

HAKS is also accused of circumventing campaign contribution laws. The company urged employees to donate to the campaigns of the 2013 mayoral candidates — Bill de Blasio,  Joseph Lhota and William Thompson — and then reimbursed them through year-end bonuses.  The employees donated $250 million to de Blasio and between $150 million and $250 million to Thompson in hopes of securing work, Vance said. Neither campaign was aware of the “straw donor” scheme, Vance said during a press conference on Wednesday. The Daily News reported earlier on Wednesday that Husam Ahmad had stepped down as the company’s CEO, noting that he and his family had donated at least $58,975 to de Blasio’s campaigns.

This isn’t the first issue raised about the mayor’s campaign donations. Roughly a year ago, Vance and federal officials announced they wouldn’t pursue criminal charges against de Blasio over questions about donations from developers and others who had business before the city in exchange for political favors.

Representatives for the other companies didn’t immediately return calls for comment.

Though Madu controlled the subcontracting companies from his desk at the DEP, he had female friends and family members stand in as the companies’ owners, according to the DA. Both JCMC and CIMC were certified as Minority and Women-Owned Business Enterprises (MWBEs), meaning that the companies that hired them were eligible for certain projects with the state Department of Transportation, the Port Authority of New York and New Jersey and the Metropolitan Transportation Authority. Authorities also discovered that the head of SIMCO Engineering arranged for an employee of HAKS to purchase a majority share in the company in order to qualify for both MWBE and Disadvantaged Business Enterprises status, according to court documents. The HAKS employee was allegedly provided funds from SIMCO to make the purchase. This led to $11.9 million in contracts — including work on the Second Avenue Subway and the Kosciuszko Bridge — to be wrongfully awarded, according to court documents.

All told, the DA’s office is seeking $177.6 million in two civil forfeiture cases related to the bribery and MWBE schemes.

Wednesday’s announcement follows reports last month that officials raided the offices of Turner Construction and Bloomberg LP. Bloomberg may have overpaid Turner $1 million for interior work at its offices, including its headquarters at 731 Lexington. At the time, the New York Times reported that the raid was part of a broader investigation into $100 million worth of fraud.