The construction company’s plum New York projects included redoing the seats at the Brooklyn Academy of Music’s Harvey Theater, building acharter school in Red Hook, and remaking, from brick and glass, the Fiterman Hall at the Borough of Manhattan Community College after it was damaged in the Sept. 11 attacks.
On Wednesday, the company, Hunter Roberts Construction Group, admitted that it had bilked clients on those projects and others, padding the hours and inflating the rates it charged over eight years in an “overbilling scheme that impacted virtually all of its projects,” according to the United States attorney’s office for the Eastern District of New York.
Hunter Roberts admitted to the conduct and agreed to pay $7 million — $1 million to affected clients and $6 million to the government — in a nonprosecution agreement, a type of agreement where a defendant meets certain requirements in exchange for avoiding a court case.
Prosecutors say that overbilling in the construction industry is widespread, and the United States attorney’s office for the Eastern District, which handled the case, has been investigating similar practices. In 2012, it announced the largest construction-fraud settlement in New York history with a $56 million agreement with Lend Lease, another New York company.
On Wednesday, Kelly T. Currie, the acting United States attorney for the district, said in a statement that the office had a “continued effort to eliminate fraud in New York City’s construction industry.”
Hunter Roberts inflated the bills by altering labor foremen’s time sheets, according to the agreement. The scheme, common in the construction industry, is known as “foremen’s pay” or “gratis” — something a little extra for the people in charge of the project, part of the way companies keep the loyalty of their top supervisors. Had Hunter Roberts made the extra payments itself, it would have been legal, but instead, it billed clients for work that did not occur.
The additions were mostly small — an hour of overtime here, another two hours there. One foreman got “four hours of guaranteed overtime per day, whether worked or not.” When labor foremen went on vacation or took a sick day, Hunter Roberts would falsely report that the workers had showed up on the job. It also paid a group of labor foremen, and one carpenter foreman, more than the contracts with clients specified, without getting the clients’ approval.
Founded in 2005, Hunter Roberts is one of the largest construction firms in New York, the agreement says. Its website says it has worked on the offices of Avon, VH1 and the BBC, the restoration of the bells at Manhattan’s Trinity Church, and parking lots at Yankee Stadium. The company declined to comment on the agreement.
The government began investigating Hunter Roberts in 2011. In the agreement on Wednesday, the company acknowledged that between 2006 and 2013, “as a result of the conduct of certain individuals employed by Hunter Roberts,” it defrauded some clients. The specific clients mentioned were BAM, to replace the seats in its Harvey Theater; the PAVE Academycharter school in Red Hook; Queens Hospital Center; and Fiterman Hall.
According to the agreement, Hunter Roberts has since fired the employees who committed the fraud, has created positions like general counsel and compliance coordinator, and has instituted a number of checks so that it will be difficult to get fraudulent time sheets through.