24 Indicted in Kickback Scheme Affecting $100M in NY High-Rise Construction

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Updated Mar 29, 2023
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Twenty-four individuals and 26 companies have been charged with conspiracy in the fourth degree for an alleged kickback scheme that took $7 million from developers through inflated bids and change orders. Various other charges include grand larceny, commercial bribing, commercial bribe receiving, bid rigging and money laundering.
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Twenty-four contractors and construction executives and their 26 construction companies were indicted on charges January 18 in a massive bid-rigging and kickback scheme affecting more than $100 million in contracts and change orders on major high-rise construction projects in New York.

According to the Manhattan District Attorney’s Office, Robert Baselice conspired with subcontractors and associates to inflate bids on construction projects, and then he received payments from those subcontractors after they won the contracts. That resulted in the theft of more than $7 million from developers of such projects as the FiDi Hotel, Hilton Club The Central at 5th New York, the Remy, the Six office building, the citizenM New York Bowery Hotel, the Fifth Avenue Hotel, and the Walker Hotel Tribeca.

The office reports that 24 individuals and 26 companies have been charged with conspiracy in the fourth degree. Various other charges include grand larceny, commercial bribing, commercial bribe receiving, bid rigging and money laundering.

All defendants have pleaded not guilty.

The scheme

Baselice was the vice president of a construction management firm and had authority over its subcontractor bidding process. His job was to give developers of construction projects that the firm managed “truthful and accurate information and acting in their best interests.”

The firm “marketed itself to developers as uniquely positioned to construct high-quality buildings at low costs due to its expertise and industry relationships with non-union subcontractors,” according to the D.A.’s office.

Instead, according to the D.A., Baselice would give inside bidding information to subcontractors to obtain the highest amount within the developers’ budgets.

Baselice would offer inflated prices to developers and then pretend to get tough on the subcontractors to make the developers think he was on their side. He would then present a lower – yet still inflated – price to win the work. The final, inflated price also included his kickback payment from the subs.

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The kickbacks totaled $4.2 million to Baselice and DVA Group LLC, a separate company Baselice owned, and other companies and people related to him, the D.A. said. Another $2.8 million went to companies controlled by Baselice’s associates, including Louis Astuto and Paul Noto. Astuto and Noto would also distribute proceeds to companies owned by Frank Camuso and his family, according to the D.A.

The scheme allegedly went on for eight years between April 2013 and July 2021. The D.A.’s office said the developers “were unlikely to reject Baselice’s recommendations for subcontract awards because if they did, they bore the risk of any subsequent cost overrun.”

Baselice would also recommend change orders that further inflated costs and increased revenue for subs and kickbacks for himself, according to the D.A.

Developers began to complain in some cases about subpar work by unqualified subcontractors involved in the scheme. Examples provided by the D.A. included heating and air-condition firm TRV Mechanical Contractors Inc., which won work on a 32-story condo tower in Chelsea even though its only experience was on small residential projects.

In another example, Earth Structures Inc. was kicked off two projects to pour concrete foundations for the Fifth Avenue Hotel and Hilton Club The Central at 5th New York. The company had accepted payment from the developer but did not pay vendor bills, the office said.

Baselice worked for general contractor and construction management firm Rinaldi Group LLC based in Secaucus, New Jersey, which fired him in 2022 and said it has cooperated with the investigation, reports The New York Times.

The Indictment

All 50 defendants were indicted on a combined 83 charges by the New York County Supreme Court. The indictment was the result of a joint investigation by the Manhattan D.A.’s Office’s Rackets Bureau, the New York City Department of Investigation and the New York Police Department’s Criminal Enterprise Investigative Section.

“When the bidding process is rigged, we all lose,” said Manhattan District Attorney Alvin L. Bragg Jr. “The market suffers from a lack of quality competition, developers are prevented from hiring the best companies at fair prices, and – importantly – honest, law-abiding companies are pushed out by those that broke the law. I hope this indictment sends a message that the Manhattan D.A.’s Office and our partners at the DOI and NYPD will not tolerate bribery, corruption or fraud. We will use our combined expertise and resources to ensure free competition and a fair market.”