It’s a nightmare for any builder: Mobsters connect with an employee in your company who steers them business and receives kickbacks.
That allegedly happened recently to three New York metro area companies, according to federal prosecutors. The Department of Justice accused three men associated with a subcontractor, carpentry company CWC Contracting, of paying hundreds of thousands of dollars in bribes and kickbacks.
In return, the department alleged, the bribed employees would pad CWC’s bottom line by awarding contracts and approving change orders. Twelve people, most allegedly associated with the Gambino crime family, were charged in the case, which stemmed from a sting operation.
John Simonlacaj
But except for the alleged mob figures, the feds did not name many names in their 56-page indictment other than John Simonlacaj, a former development executive at HFZ Capital Group. The indictment alleged that employees at other real estate firms — “Company #2” and “Company #3” — also received kickbacks from CWC. Those firms and other employees went unnamed in the document, though it did say that Company #2 has a site in Yonkers and another in White Plains.
CWC has worked on a number of HFZ developments. One cited in public records and listed on CWC’s website was the XI, a luxury condo-hotel in Chelsea near the High Line.
On CWC’s website, the company highlighted eight New York projects it said it worked on. Developers of those projects included RXR Realty, Extell Development and prolific hotel builder Sam Chang.
Because CWC was apparently a subcontractor on these projects, it likely flew under the radar of the developers. When contacted by The Real Deal about CWC’s involvement on their projects, some said they were not even aware of it — even after the scandal broke.
Pratt Institute, to cite one example, built one of the projects featured on CWC’s website: a 10-story, 60,000-square-foot student residence hall at 135 Emerson Place in Clinton Hill.
“Construction of the building was managed by a general contractor, Tishman Construction, who was responsible for hiring and managing the work of a large number of subcontractors who worked on the project, including CWC Contracting Corp. for the carpentry work within the building,” a representative said in a statement. Tishman did not respond to a request for comment.
A representative for McSam Hotel Group said CWC was a subcontractor on one of its hotel projects, 525 8th Avenue, hired by a contractor that McSam did not disclose. “McSam Hotel Group does not have a relationship with the company,” the representative said.
Other projects on which CWC worked, according to its website, included a luxury Park Avenue condominium on the Upper East Side, a 33-story condo tower in Midtown, a hotel in Tribeca, a large multifamily building in the Bronx and a big mixed-use development in Yonkers.
Simonlacaj, who has been fired from HFZ, has pleaded not guilty to charges of wire fraud conspiracy and tax fraud.
HFZ said in a statement to The Real Deal that it learned about the investigation into CWC several months ago and removed CWC from its projects.
Construction extortion schemes have been going on for decades, made possible in part because the nature of work sites provides physical access to contractors. In a case last year the Manhattan district attorney alleged that a reputed Bonanno crime family associate and a construction company executive steered a $1.6 million job to a roofer and threatened to kill him and his family if they didn’t kick back $150,000.
The New York Post reported that as the executive waited in handcuffs for his case to be called, “he insisted he was nothing more than a recreational bagpipe player and had nothing to do with the alleged scheme.”
A woman who answered the phone at CWC Wednesday said no one was available to comment. When asked where TRD’s inquiries should be directed, she abruptly ended the call.
Rich Bockmann contributed reporting.