Unraveling an HPD scam

A play-by-play look at corruption in the world of NYC affordable housing

Oct.October 31, 2011 02:14 PM

Wendell Walters, an assistant commissioner at the NYC Department of Housing Preservation and Development
Last month, six developers and Wendell Walters, an assistant commissioner at the NYC Department of Housing Preservation and Development, were arrested on charges of wire fraud, money laundering, racketeering, extortion and bribery. Prosecutors alleged that Walters, a former college basketball player also known as “The Tall Guy” or “The Big Man,” demanded bribes from the developers he selected for multimillion-dollar HPD contracts, pocketing cash, a Harlem townhouse and a Bronx apartment building. The developers, in turn, allegedly solicited kickbacks from contractors seeking construction work, according to the 73-page indictment. Investigators eventually cracked the case with the help of several developers, unnamed in the indictment, who cooperated with the investigation. Walters pleaded not guilty, and is out on $500,000 bail, along with most of the defendants. The Real Deal used court documents to untangle the complex web of corruption.

John Doe #1

(Bob Starzecki)

Unnamed in the indictment, but city records and published reports indicate that Doe #1 is “Bogdan ‘Bob’ Starzecki,” developer of the Guy Brewer North Homes in Jamaica, Queens. Starzecki pleaded guilty to paying Walters about $700,000 — concealing the cash in coffee cups and golf-ball boxes — in exchange for the right to develop the Guy Brewer project, which includes 21 affordable two-family homes.

John Doe #2 
(George Armstrong)

A developer and general contractor identified in published reports as George Armstrong, former head of the New York Housing Partnership. He pleaded guilty to paying Walters at least $20,000 in exchange for the Jerome Stone Development project in Harlem, which involved renovating several brownstones and a five-unit building at 239 West 137th Street. Armstrong also admitted to paying Dunn $50,000 in exchange for being named the general contractor for the Hancock Street project in Bed-Stuy.

Robert Morales and Angel Villanova

Selected by HPD to develop a number of projects between 2006 and 2011, including a small apartment building at 134 Alexander Avenue in Mott Haven. They allegedly demanded kickbacks from Starzecki in exchange for contracting work. Starzecki then allegedly provided fake invoices to cover up the kickbacks, which Morales and Villanova allegedly submitted to HPD for reimbursement.

Stevenson Dunn

A high school friend of Walters. Prosecutors allege he was chosen to develop 18 Bedford-Stuyvesant properties, including 750 Lexington Avenue, after bribing Walters. Dunn is also charged with soliciting kickbacks of at least $50,000 from Doe #2 in order to pay Walters, and threatening violence if #2 refused.

Lee Hymowitz and Michael Freeman

Partners in the law firm of Hymowitz & Freeman. They developed 964 Greene Avenue and other Bed-Stuy HPD projects with Dunn, and allegedly provided sham invoices to cover up kickbacks from contractors.

Sergio Benitez

Developer who claims to have worked on 80 HPD buildings over the years, including the eight-home Palmetto Cluster project in Bushwick, and is featured in an HPD brochure about city affordable housing. He is charged with soliciting kickbacks from Starzecki.

Developer 1:
(Greg Pascal)

Unnamed in the indictment, but according to city documents is the late developer Greg Pascal. The owner of a townhouse at 268 West 139th Street, Pascal allegedly devised a scheme to gift the house to Walters (through Pinckney) in 2004 in exchange for HPD contracts.

Person A: (Ed Pinckney)

Former Boston Celtics player and childhood friend of Walters, who allegedly acted as the “straw buyer” of the 139th Street home in order to hide the fact that the house was in fact a bribe for Walters. Pinckney, listed on property records for the house, is now an assistant coach for the Chicago Bulls. He did not respond to calls for comment left for him with the Bulls.

Developer 2: (Jose Espinal)

Unnamed in the indictment, but court and property records indicate that “Developer 2” is Westchester-based developer Jose Espinal. Espinal allegedly bribed Walters by offering him a deep discount on a six-unit rental apartment building he owned at 2500 Bathgate Avenue in the Bronx. Walters allegedly paid only $60,000 to $80,000 for the building. Espinal, who did not return calls for comment, filed for bankruptcy in 2010, listing Walters as a creditor. 


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