Dive Brief:
- New York father and daughter construction executives Anthony and Jamie Rotondaro have been sentenced to prison — one to three years and two to six years, respectively — following their convictions for second-degree grand larceny, according to Newsday.
- Both Rotondaros previously pleaded guilty to "misappropriating" at least $350,000 in customer down payments made to two construction companies they owned.
- Manhattan District Attorney Cyrus Vance said the Glen Cove, NY, contractors' conviction and sentencing was an example of how "fraud permeates nearly every corner of the city’s construction industry," according to Newsday.
Dive Insight:
Although the Rotondaros' businesses were headquartered on Long Island, they were prosecuted based on fraud committed in New York City. Last year, the city formed a construction fraud task force to identify and prosecute corruption in New York's building industry. The district attorney's office said at the time that activities including fraud, bribery and larceny put the integrity of the city's construction industry at risk.
In November, the 2015 Kroll Global Fraud report revealed that 75% of companies in construction-related industries — including engineering and infrastructure — experienced some kind of fraudulent activity during the year. Second only to the retail industry, the type of fraud reported in construction included theft of physical assets or stock (36%), procurement (24%) management (32%) and regulatory or compliance breaches (18%). However, only 1% reported misappropriation of funds, as in the case of the Rotondaros.
In another case of misappropriation of funds earlier this year, a former Navy contractor pleaded guilty to giving false statements to the federal government that he had paid subcontractors $1.2 million on a $4 million contract when he had not. Navy officials caught on to Persaud when unpaid subcontractors walked off the project, leaving his bonding company to pay the amounts due. Persaud faces a fine of $250,000 and five years in prison.
New York state prosecutors also recently charged a Long Island, NY, contractor, Arbor Concrete Corp., and its owner with 139 counts of fraud for allegedly scamming employees out of more than $250,000 in union benefits. Authorities said that the company filed false certified payroll documents with the Port Authority of New York and New Jersey while performing under a contract at John F. Kennedy Airport. Prosecutors said Arbor falsely indicated in the reports that it had paid more than $268,000 in required prevailing wage benefits.