Former HFZ exec, alleged mob members plead guilty in construction scheme

John Simonlacaj pleaded guilty to filing a false tax return in wide-ranging kickback scheme that involved 11 alleged members of the Gambino crime family

New York /
Jan.January 18, 2021 02:30 PM
John Simonlacaj and Andrew Campos (HFZ, Wikia, Getty) 

John Simonlacaj and Andrew Campos (HFZ, Wikia, Getty, iStock)

UPDATED, Jan. 18, 2021, 5:13 p.m.: A former HFZ executive and 11 alleged members of the Gambino crime family pleaded guilty last week in connection to a construction bribery scheme that skimmed hundreds of thousands of dollars from the developer’s luxury condo tower and other projects.

John Simonlacaj, HFZ’s former managing director of development, admitted to submitting a false tax return in relation to renovation work at his home. Simonlacaj was accused of accepting free labor and materials for the renovations from CWC Contracting, a carpentry subcontractor that worked on the XI, HFZ’s $2 billion luxury condo and hotel towers along Manhattan’s High Line.

Simonlacaj didn’t report the work as taxable income, according to federal prosecutors.

Simonlacaj’s cousin, Mark “Chippy” Kocaj, identified as a Gambino family associate, billed HFZ for the work at Simonlacaj’s home, prosecutors said. Kocaj pleaded guilty to wire fraud conspiracy and faces up to 20 years in prison.

The wide-ranking kickback scheme raised broader questions about the real estate industry’s continued mob ties, as The Real Deal reported last April.

In December 2019, Simonlacaj pleaded not guilty to tax fraud and wire fraud conspiracy charges. Having now pleaded guilty to the former charge, he faces up to three years in prison.

An attorney for Simonlacaj said that prosecutors had wrongly accused his client of scheming to defraud HFZ, noting that he had been a “loyal and valued executive for 25 years” and had “never betrayed his employer.”

“As part of the agreement with the Government, John did admit that he should have paid a very limited amount of tax in 2018 related to work on his residence rather than pay in 2019 when he paid all tax that could be due,” Glenn Colton, Simonlacaj’s attorney said in a statement. “For that he accepts responsibility and seeks to put this matter behind him.”

An attorney for Kocaj didn’t immediately respond to requests seeking comment.

Between June 2018 and June 2019, CWC allegedly paid hundreds of thousands of dollars in bribes to employees of multiple development and construction companies in exchange for work and larger payouts.

Andrew Campos, the owner of CWC and a Gambino family captain, pleaded guilty to racketeering conspiracy and faces up to 20 years in prison, according to court documents. Campos and others were accused of paying CWC employees millions of dollars in cash without making the required payroll tax payments and laundering money by issuing checks for construction work that CWC never actually completed. The proceeds of the scheme, according to prosecutors, was used, among other things, to pay for the construction of Campos’ home.

An attorney for Campos didn’t immediately respond to a message seeking comment. As part of their plea agreements, the defendants have agreed to pay $1.6 million in penalties.

“With these guilty pleas, a dozen members and associates of the Gambino crime family are held accountable for committing a litany of crimes in the construction industry that enriched the Mafia at the expense of the American taxpayer, construction companies harmed by their pernicious presence and the U.S. government,” Seth DuCharme, acting U. S. Attorney for the Eastern District of New York, said in a statement.

“The defendants will now have to pay the consequences for their corrupt activities,” DuCharme added.

The guilty pleas come as HFZ confronts a series of other legal and financial challenges.

The Children’s Investment Fund, a London-based hedge fund that provided a $1.25 billion loan for the XI, claims that the developer is behind on its interest payments and is seeking $160 million. The hedge fund’s lawsuit could be a precursor to foreclosure proceedings. Zeckendorf Development and Suffolk Construction are reportedly in talks to take over the XI, though HFZ denies that this is the case.

And last month, HFZ lost its equity stake in an industrial portfolio through a UCC foreclosure auction.

Editor’s note: This story was updated to include a statement from Simonlacaj’s attorney. 





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