CONSTRUCTION CONTRACTORS INDICTED FOR $10 MILLION
SCHEME INVOLVING NEW YORK CITY CONTRACTS
17 April 2006
(Brooklyn, New York) -- ANDREW CATAPANO, president of AFC Enterprises, Inc.
(“AFC”), JOHN
RUGGIERO, vice-president of AFC, and JOHN MIKUSZEWSKI, a licensed professional
engineer
and consultant to AFC, were indicted on charges of conspiracy, unlawful labor
payments, mail
fraud, money laundering, and filing false income tax returns in connection with
New York City
contracts through which they derived $10 million in criminal proceeds. ALEXANDER
URBAN, a former employee of Con Edison, was indicted on charges related to his
receipt of bribes from CATAPANO and MIKUSZEWSKI. The indictment was returned by
a federal grand jury in Brooklyn.(1)
The defendants are scheduled to be arraigned Friday, April 14, 2006, at 9:30
a.m., before United States District Judge Sterling Johnson, Jr., at the U.S.
Courthouse, 225 Cadman Plaza
East, Brooklyn, New York.
The charges were announced by ROSLYNN R. MAUSKOPF, United States Attorney for
the Eastern District of New York, MICHAEL J. THOMAS, Special Agent-in-Charge,
Internal Revenue Service-Criminal Investigation, New York, NED E. SCHWARTZ,
Special Agent-in-Charge, U.S. Department of Transportation, Office of Inspector
General, GORDON HEDDELL, Inspector General, U.S. Department of Labor, ROSE GILL
HEARN, Commissioner, New York City Department of Investigation, and RONALD
WALKER, Inspector-in-Charge, Postal Inspection Service, New York.
Between 1990 and 2004, AFC, a construction firm headquartered in Glendale, New
York, was awarded numerous New York City public works construction projects to
build schools, maintain roadways, and build and improve sewers. According to the
indictment, beginning in 1990 and continuing through 2002, the defendants
participated in a series of schemes to defraud the members of Locals 14 and 15
of the International Union of Operating Engineers, various public utility
companies, including Con Edison, and the City of New York.
In the scheme to defraud Locals 14 and 15, from 1990 through 2001, CATAPANO and
MIKUSZEWSKI are charged with paying bribes to union officers in exchange for
those officers permitting AFC and its related companies to hire fewer members of
Locals 14 and 15 than required under the companies' collective bargaining
agreements with the unions. As a result, the companies were able to save
millions of dollars in wages that they were legally required to pay.
In a related scheme, beginning in the late 1990s and continuing through 2001,
CATAPANO and MIKUSZEWSKI allegedly paid bribes to representatives of various
public utility companies, including URBAN, then a representative of Con Edison,
for “interference work” performed by AFC's related companies on New York City
contracts. Interference work is work a contractor must perform to move utility
lines as part of a larger construction contract. Utility companies, in exchange
for receiving permission from New York City to run their utility lines under
City roadways, are required to reimburse contractors for their time and material
costs in performing this work. In exchange for bribes paid by CATAPANO and
MIKUSZEWSKI, URBAN and other utility company representatives caused the
utilities to pay inflated bills submitted by the defendants
for the interference work on contracts worth over $11 million.
In addition, MIKUSZEWSKI and RUGGIERO are charged with conspiring between 1993
and 2002 to violate the Minority Business Enterprise program of the City of New
York by falsely representing that a minority owned and operated company was
doing subcontract work on construction contracts when, in fact, all the work was
being performed by AFC and its related companies; CATAPANO, MIKUSZEWSKI, and
RUGGIERO are charged with
laundering the proceeds of their bribery schemes between 1990 and 2001 through a
series of complex financial transactions designed to conceal the source of the
cash and then using the
laundered cash to continue bribing union officers and utility company
representatives; and
MIKUSZEWSKI is charged with subscribing to false tax returns for his contracting
company, Alpert Contracting, Corp., himself, and another shareholder of Alpert
for the years 1998, 1999,
and 2000, thereby concealing $400,000 in unreported income by Alpert.
“We will aggressively investigate and prosecute construction contractors and
their co-conspirators who engage in bribery and other fraudulent means to line
their own pockets,”
stated United States Attorney MAUSKOPF. “The integrity of New York City public
works projects must not be compromised by those who feed at the public trough.”
Ms. MAUSKOPF stated that the investigation is continuing.
IRS Special Agent-in-Charge THOMAS stated, “Uncovering the trail of money was a
key aspect in taking down this alleged crime ring. People think they can hide in
a sea of complex financial transactions to escape from their law abiding
obligations. Nearly 2,100 people were sentenced last fiscal year for engaging in
money laundering and tax evasion schemes which IRS Special Agents investigated.”
U.S. Department of Transportation Special Agent-in Charge SCHWARTZ stated,
“Because the demand for federal highway funds is greater than available
resources, we need to ensure that every dollar is being spent well and as
intended. This indictment is the latest example
of the solid work being done by the Federal Construction Fraud Task Force to
jointly take action against those who seek to defraud the government by
unlawfully diverting public funds for private gain.”
U.S. Department of Labor Inspector General HEDDELL stated, “Bribing union
officials in order to circumvent collective bargaining agreements will not be
condoned. This indictment serves as a clear warning to those who would break the
law at the expense of U.S. workers. My office is committed to working with other
law enforcement agencies and the U.S. Attorney to fight this type of
corruption.”
NYC Department of Investigation Commissioner HEARN stated, “Resorting to bribery
and conspiracy to secure lucrative publicly funded roadway construction projects
is illegal, and now these defendants will find themselves at a dead end serving
time in prison. I applaud the hard work and diligence of everyone involved in
this investigation, and am pleased that the deeply rooted corrupt practices of
these defendants have been exposed.”
The counts of conviction carry the following maximum sentences: money laundering
– 25 years imprisonment, mail fraud – 20 years imprisonment, conspiracy and
unlawful labor payments – five years imprisonment, and filing false tax returns
– three years imprisonment and the payment of back taxes. In addition, the
government is seeking to forfeit $10,000,000 from the defendants.
The government's case is being prosecuted by Assistant United States Attorneys
Charles Kleinberg and Burton T. Ryan, Jr.
The Defendants:
ANDREW CATAPANO
Age: 49
JOHN RUGGIERO
Age: 55
JOHN MIKUSZEWSKI
Age: 58
ALEXANDER URBAN
Age: 56
(1) The charges in the indictment are merely allegations, and the defendants are
presumed
innocent unless and until proven guilty.