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Re: Architect Charged for Demanding Kickbacks in Jersey City and Manhattan

Here's how this kind of kickback scheme works. A not-terribly-savvy building owner hires (and trusts) an architect. The architect writes up the requirements for the work and puts it out to bid. On the side, the architect arranges for a contractor to put in an artificially high bid. The architect persuades the building owner that this contractor really is the best bidder, for some non-quantifiable reason. (Or sometimes the only "competing" bids are shams.) The owner says OK to the contractor recommended by the architect. The contractor kicks back part of the extra profit to the architect. Architect and contractor are happy; owner sometimes doesn't even realize there has been a con.

Condos and co-ops are especially vulnerable to this scam, since the building "owner" is a corporation made up of the individuals who own the apartments, and the folks on the board are usually volunteers and don't have a lot of construction experience.

There was a huge scandal a while back in which the building managers hired by condos and co-ops were in on it too. They would arrange for a big job like replacing 1,000 windows or brick pointing a highrise, and the bids were all carefully orchestrated so that they were all above the market rate. The boards of these big buildings often trusted their managing agents far too much. The DA's office successfully brought bid-rigging and kickback charges against many, many companies. I was on the board of my building in NYC for many years, and we thought we were pretty savvy, but sometimes I wonder if we were getting taken for a ride too.

Posted on: 2006/9/15 2:30




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