How NYC housing officials ignored warnings about potential corruption

Last week’s stunning bust of dozens of New York City Housing Authority superintendents shouldn’t have been a surprise to former agency officials.

Former senior officials of NYCHA were warned about the potential for corruption through its no-bid contract process, The City reported. Had the information been taken seriously, officials could have prevented the scandal now rattling the nation’s largest public housing authority.

In September 2021, the city’s Department of Investigation informed Greg Russ — then chair of NYCHA — that it was investigating bribes paid to superintendents and had referred the issue for criminal investigation. In a letter, the DOI inspector general recommended NYCHA stop allowing superintendents to reward no-bid contracts for small tasks such as repair projects.

Russ and his lieutenant, then-general manager Vito Mustaciuolo, didn’t take the advice.

Around the time, the DOI commissioner also made specific recommendations to NYCHA to prevent corruption. Those recommendations included centralizing the no-bid contract-award process — deals for projects costing less than $10,000 — and creating a list of fixed prices so contractors can’t overbill for services.

Neither of those recommendations were implemented. Housing agency’s leadership argued that no-bid contracts helped accelerate the process of getting repairs done, which was vital for complexes falling into disrepair.  

Everything came to a head last week when the Justice Department apprehended 66 current and former NYCHA superintendents, some at the housing authority’s complexes. It was the largest single-day federal bribery takedown in the Justice Department’s history.

Between 2013 and 2023, the defendants typically sought between 10 and 20 percent of a contract’s value via kickbacks, which could be $500 to $2,000, sometimes more. Those kickbacks added up to $2 million on $13 million worth of contracts, according to officials.

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No top-level managers were named in the myriad of criminal complaints made against NYCHA supers. But there are some elected officials, including Rep. Ritchie Torres, who are questioning the culture at NYCHA and how such widespread alleged corruption could have happened. Torres has previously called for change at the authority.

NYCHA has vowed to adopt all of DOI’s recommendations following last week’s arrests.

— Holden Walter-Warner