(Source: Attorney General Eric T. Schneiderman) - HAUPPAUGE – Attorney General Eric T. Schneiderman today announced a settlement with a Lindenhurst contracting company and its top executives for systematically overbilling New York State taxpayers for emergency construction jobs at upstate prisons. Under the terms of the settlement, the Lin-Kim Company, at 697 Centre Ave., and its officers, Linda Gregorio, Kenneth Buddenhagen and Melissa Peters, have agreed to pay $390,000, or double the amount of actual damages, under the state’s False Claims Act. They are also permanently barred from working for the state in the future.
“My office won’t stand for theft of taxpayer money from anyone, including basic construction service providers such as Lin-Kim,” Attorney General Schneiderman said. “Here, a construction contracting company flagrantly padded its bills and expected it would not get caught. We will continue to aggressively pursue large and small businesses that falsely represent the work they do for the state and we will hold them accountable for any misdeeds that rip off New York taxpayers. By barring these individuals from ever working for the state again, we seek to protect future tax dollars and make contractors think twice before fleecing the public.”
From 2006 to 2008, the Lin-Kim Company was hired by the New York Office of General Services to provide emergency construction repair work at the Otisville Correctional Facility and a second prison, the Arthur Kill Correctional Facility. The Attorney General’s investigation found that Lin-Kim overcharged the state by approximately $195,000 in connection with multiple contracts, with the bulk of the misdeeds related to work done at Otisville. The company used various tactics to overbill, including knowingly misclassifying low-wage work performed at the Orange County prison as skilled labor.
Company president, Linda Gregorio, and Vice President, Kenneth Buddenhagen, both 57, are husband and wife. Gregorio’s daughter, Melissa Peters, 37, serves as a company secretary and bookkeeper.
The matter was investigated pursuant to the New York False Claims Act. As a state senator, Attorney General Schneiderman authored amendments to strengthen the Act. These enhancements, known as the Fraud Enforcement and Recovery Act, allow the state to collect up to triple damages and fines from corporations or people who defraud the government or violate their obligations to pay government entities. In 2011, Schneiderman created the Taxpayer Protection Bureau after he was elected Attorney General. The unit is charged with rooting out fraud that victimizes state and local governments.
Following an investigation by the New York Office of the Inspector General, the matter was referred to the Attorney General’s Office for further investigation and prosecution. The state Office of General Services and the State Comptroller Office also facilitated the investigation.
The Attorney General found that the Lin-Kim Company and its officers:
Submitted falsified documents for reimbursement, including invoices and a check inflating the amount owed;
Misclassified workers’ titles in more than 500 instances to falsely bill at higher pay rates, including for plumbing work when no plumbing work was performed;
Inflated work hours to claim payment for time after employees ceased working;
Overcharged the State $73,536.37 for Unemployment Insurance; and $70,155.33 for Workers Compensation Insurance;
Double billed the State for rented equipment for work at the Arthur Kill facility.
Comptroller Thomas P. DiNapoli said, “By working together in this joint effort, my office was able to uncover this fraud and support Attorney General Schneiderman in his successful effort to recover nearly $400,000 for New York taxpayers. We will continue to energetically pursue any potential theft and misuse of state funds and ensure that violators are dealt with to the full extent of the law.”
Acting Inspector General Catherine Leahy Scott said, “Most contractors who do business with the state are legitimate and hard-working and provide valuable services to the State of New York. However, contractors who think they can steal from taxpayers should know that New York is scrutinizing all transactions, and they will be caught.”
OGS Commissioner RoAnn Destito said, “Governor Cuomo has made it abundantly clear that wasting taxpayer dollars is unacceptable. I am pleased that the Inspector General andour auditors discovered this fraudulent billing and that Attorney General Schneiderman was able to obtain this settlement on behalf of taxpayers.”
This matter was investigated and the settlement was negotiated by Assistant Attorney General Dana V. Syracuse with the assistance of investigators Gerard Matheson, Bradford Farrell and Erin Wolfe. The work was performed under the supervision of the Taxpayer Protection Bureau Chief Randall M. Fox and Deputy Bureau Chief Scott J. Spiegelman. Chief Investigator Dominick Zarella, Deputy Chief Investigator Vito Spano and Investigator Kenneth Morgan worked on the case. Overall supervision of the matter was provided by Executive Deputy Attorney General for Criminal Justice Kelly Donovan.
This investigation was performed in conjunction with the New York State Office of the Inspector General; Robert Curtin, John Lewyckyj, Kieran Broderick, Noreen Van Doren and Howard Zwickel of the New York State Office of General Services; and Hal Silverstein, Stephanie Kelly and Nelson Sheingold of the New York State Office of the State Comptroller.
A copy of the settlement documents can be viewed here.