Manhattan District Attorney Cyrus Vance, Jr. continues to pursue white collar crime with equal passion as his predecessor, Robert Morgenthau. According to the New York County District Attorney’s Office, four Lehr Construction executives, as well as the company itself, were indicted by a New York County Grand Jury in connection to allegedly rampant fraud netting those executives in excess of $30 million. Approximately 14 months after Lehr Construction offices were raided, the police arrested Jeffrey Lazar, Todd Phillips, Steven Halper and Steven Wasserman to face a multi-count indictment that includes the “B” felony charge of Enterprise Corruption.
DA Vance and his lieutenants claim that Mr. Lazar, Mr. Phillips, Mr. Halper and Mr. Wasserman bilked subcontractors and clients by increasing alleged construction costs between 10 to 13 percent. This “over-invoicing” scheme was allegedly concocted by Lehr executives. According the the District Attorney’s Office:
“Lehr executives created a document known as the ‘Bid Package,’ which required that every subcontractor who submitted a bid to Lehr on a [construction management] project inflate its bid by including a series of suspect labor ‘contingencies.’ These ‘contingencies’ added anywhere from 10 to 13 percent to the true bid submitted by the subcontractor. After a subcontractor was chosen by the client in consultation with Lehr, that subcontractor would negotiate directly with Lehr and agree upon a reduced actual price for the subcontractor’s work on the project. Lehr and the subcontractor would further agree upon an inflated purchase order price that would be submitted by Lehr to the [construction management]client. The difference between the inflated purchase order price and the actual negotiated price for the subcontractor’s work constitutes the majority of the money being stolen from the [construction management]client. This process would be repeated with most of the subcontractors working on the project, and subcontractors would “hold” the profits from the inflated bills for Lehr.
Lehr would later recover these stolen monies through several methods, including having subcontractors perform work on [general contracting] projects at the reduced rate, thereby increasing Lehr’s profits, or having the subcontractor perform extra work on a particular project at no cost. “
According to reports by local news media, additional business, sub-subcontractors and other individuals may be targets for future arrests and indictments. Certainly, this is not the last the public will hear of these allegations. For these men, however, the potential for incarceration is enormous and may impact their lives well after this case becomes a distant memory. Innocent until proven guilty, Mr. Lazar, Mr. Phillips, Mr. Halper and Mr. Wasserman face the crime of Enterprise Corruption, Grand Larceny in the Second through Fourth Degrees and Scheme to Defraud. Mr. Halper faces the additional crime of Money Laundering in the Second Degree. Enterprise Corruption is a “B” felony punishable by a mandatory minimum of one to three years in state prison and a maximum of eight and one third to twenty five years in state prison. The “C” felonies of Grand Larceny in the Second Degree and Money Laundering in the Second Degree carry a maximum term of prison of five to fifteen years while the “D” felony of Grand Larceny in the Third Degree carries a potential sentence of two and one third to seven years. Lastly, Scheme to Defraud and Grand Larceny in the Fourth Degree are both “E” felonies punishable by up to one and one third to four years in state prison.
It is worth noting that the men were not charged with Grand Larceny in the First Degree for a theft in excess of $1 million despite the allegation of a theft in excess of $30 million. The likely reason for this is that aggregation often occurs (adding the thefts together) where the victims are the same. Here, it appears that there may be different victims with different theft counts. While prosecutors may be able to aggregate from different victims where the scheme is the same, doing so would likely create unnecessary legal issues and would not have any impact on the admissible evidence before the court.
For in depth analysis of the crimes or Enterprise Corruption and Grand Larceny, please follow any of the highlighted links above. Additional information on these and other crimes, as well as interesting cases in the news and legal decisions, is located on the New York Criminal Lawyer Blog.
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