D.A. Bragg Delivers Remarks on Indictments in a Wide-Ranging Construction Fraud Scheme

May 2, 2023

Read the press release here

Good afternoon, thank you all for coming on what is, fittingly, the second day of Construction Safety Week.

I’m joined on stage by:

    • Members of my Office’s Rackets Bureau, including:
      • Assistant D.A.s James Hanley and Zachary Weintraub.
      • Deputy Chief Michael Ohm.
      • Principal Deputy Chief Judy Salwen.
      • And Rackets Chief and Acting Investigation Division Chief, Jodie Kane.
    • We’re joined also by our extraordinary partners in government,
      • My long-term colleague, the Commissioner of the Department of Investigation, Jocelyn E. Strauber.
      • And another long-time public servant, the New York City Department of Housing Preservation and Development Commissioner Adolfo Carrión Jr.

We’re all here today to announce charges in a wide-ranging construction fraud case that includes six indictments against eight individuals and six companies. The common factor in all of these schemes is simple: greed at all costs.

Using cash payrolls, ripping off the New York State Insurance Fund and leaving workers uninsured. Conspiring to use minority and women-owned business enterprises solely and explicitly as pass-through entities just to land contracts. Corrupting the fair market, taking jobs from legitimate MWBEs, and running smaller contractors out of business – all, we allege, in the name of greed. Let me tell you the specifics.

In the principal indictment, we allege that JM3 Construction, its owner Lawrence “Larry” Wecker, project manager Michael Speier, and other co-conspirators engaged in multiple criminal schemes to increase their business and revenues to the detriment of their workers and fair competition within this industry.

JM3 was a large, non-union drywall and carpentry company that specialized in government-subsidized affordable housing projects in Manhattan and the greater New York area.

JM3 and two subcontractors operated with large, multi-million-dollar, cash payrolls using a series of shell companies to cash checks that were supposedly payment for legitimate subcontractor services.

None of that cash was reported to NYSIF, the New York State Insurance Fund – meaning workers operating in this very dangerous industry were exposed and underinsured.

The defendants tried to keep injured workers from going to the hospital, so that clients and insurance providers would never discover the jobsite injuries.

And when workers did need emergency treatment – including, in one instance, more than 45 stitches for a workplace injury – the defendants instructed them to lie about where those injuries took place. In total, the defendants defrauded NYSIF of more than $2 million dollars.

But risking their workers’ lives to save on insurance was not the end of the defendants’ greed.

We allege that JM3 engaged in a pervasive and multi-faceted scheme to obtain lucrative, government-subsidized affordable housing contracts by using MWBE firms solely as pass-throughs.

These firms were subcontractors on paper only. Non-MWBE subcontractors and suppliers actually did the work and supplied the goods. And of course, that means that legitimate MWBE firms were disadvantaged of that opportunity.

MWBE firms like Eco Geek Living, LNR Construction, and Urban Strategies of New York were used to secure valuable contracts, but did not perform any construction work or supply any materials. And these were not just tacit understandings, they were explicit agreements.

For example, you’ll see here, “And what does a drywaller do, exactly?” From someone who was supposedly in that business.

It’s clear, we allege, the firms never intended to do any of the construction work they purported to perform – to the detriment of other MWBE companies.

The greed also didn’t stop there. In addition to their insurance and MWBE fraud, Wecker and JM3 allegedly stole money meant for subcontractors by never making good on promised payments – i.e., alleged theft.

One newly formed company’s young executives were forced to shutter their business when JM3’s payments never came through. And, they made sure that they got the best contracts by paying kickbacks in exchange for insider information. Contracts with seriously inflated budgets, to make room for, we allege, illegal substantial bribes.

The wide-ranging impact of this alleged corruption is significant. When the field is rigged, law-abiding companies and legitimate MWBEs are cheated out of much-needed contracts. And when executives care more about their bottom line than their employees, and more about their greed and lining their pockets than the law, hard-working New Yorkers suffer.

Our ongoing work in this area should make clear that we will not tolerate fraud in the construction industry, particularly at the expense of New York’s workers.