By MOSI SECRET
Published: February 21, 2013
The leaders of a construction company were charged in federal court on Thursday with defrauding New York City’s School Construction Authority of more than $32 million, paying workers less than they were obligated to, and skimming the rest. Prosecutors said they laundered more than $3 million of the illegal profits to finance an investment in an amusement park in Pakistan.
The firm, SM&B Construction Company, based in Brooklyn, won more than $72 million in contracts since 1997 to renovate and repair school buildings. Those contracts required the company to pay its workers a minimum level of pay set by the state.
Instead, the company paid its workers off-the-books wages that were well below the legal minimum. In one example, bricklayers working on a Brooklyn elementary school who were entitled to $580 a day were paid only $250, prosecutors said. Others working on the same project also came up hundreds of dollars short.
Prosecutors said that $32 million in fraudulent payments came after 2008.
The chief executive of the company, Muzaffar Nadeem; the foreman, Afzaal Chaudry; and the office manager, Zainul Syed, were charged with conspiracy to commit mail fraud in connection with the scheme.
Mr. Syed, along with two others, Irfan Muzaffar and Arun Gandham, was also charged with illegally structuring financial transactions. They are accused of trying to avoid reporting requirements tied to deposits of $10,000 or more by cashing several checks — none of them exceeding $10,000 — on a single day; the sum of those checks exceeded $10,000. They used the cash to pay the low wages to the workers, prosecutors said.
The men were held in custody after afternoon court appearances in Federal District Court in Brooklyn.
Loretta E. Lynch, the United States attorney for the Eastern District of New York, said in a statement that the men shortchanged the workers to line their own pockets. “Their lies resulted in the awarding of contracts they were not entitled to, tens of millions of taxpayer dollars obtained by fraud, and the exploitation of workers,” Ms. Lynch said. “They will now be held to account for their actions.”