Saturday, June 11, 2016

NY School Construction Bidrigging

Bids Allowed By Contractor In Plea Accord
Published: November 5, 1993

Last year, a New York City school construction contractor suspected of evading Federal taxes made a bid for leniency, the authorities say. Seeking a softer sentence, he offered to help expose a bid-rigging scheme in the school construction and repair programs.

The contractor secretly pleaded guilty and became an undercover informer for Federal prosecutors and for the city's School Construction Authority, the agency that awards school contracts. For their part, besides promising to put in a good word with the judge in his tax case, the authorities agreed to another benefit for the contractor: his company was allowed to obtain $10 million in school work, even though his tax conviction would normally have disqualified him from bidding for such contracts.

The authority's guidelines generally bar companies whose top officers were convicted or implicated in crimes from obtaining school contracts. Despite the tax charges, authority officials said an exception was made to allow the contractor to compete for lucrative school projects because of the assistance he provided in a major corruption case. First Scandal for Authority

In April, partly as a result of his undercover work, two authority employees and 11 representatives of seven contracting companies were arrested on Federal charges of rigging $6 million in bids and paying $140,000 in bribes. The case was the first corruption scandal at the School Construction Authority since it was created in 1989 in an effort to eliminate graft and other problems in the school construction program.

Thomas D. Thacher 2d, the authority's inspector general, and Keith D. Krakaur, a Federal prosecutor in Brooklyn who is in charge of the corruption case, both declined to identify the undercover contractor. But Mr. Thacher said that "no favoritism" was shown to the contractor and that his company obtained the $10 million for school work solely through competitive low bids.

But several defense lawyers in the bid-rigging case questioned the propriety of allowing the contractor to apply for school work after admitting tax violations. They suggested in interviews that his evidence might be tainted because the authority had unfairly rewarded his company to assure his cooperation. Contractor Identified

Public documents concerning the case in Federal District Court in Brooklyn refer to the undercover contractor only as "CI-2" -- for confidential informer, number two. But in sealed court records that have not been made public and that were anonymously sent last week to The New York Times, the contractor was identified as Elias Meris, the principal owner of the Meris Construction Corporation of Brooklyn.

Law-enforcement officials and investigators who are familiar with details of the case confirmed the authenticity of the documents and said Mr. Meris had cooperated in a joint investigation by the United States Attorney's office in Brooklyn and the office of the authority's inspector general. The officials and investigators agreed to discuss the case only if granted anonymity.

Mr. Meris, whose company is at 549 63d Street in Sunset Park, Brooklyn, refused to be interviewed.

The officials said that in the summer of 1992 Mr. Meris was under investigation by Internal Revenue Service agents. Seeking leniency, he told Federal prosecutors of possible bid-rigging by authority employees and other companies, officials said.

There was no evidence, the officials said, that the Meris company had participated in the corruption conspiracy. A Closed Hearing

The officials said Mr. Meris pleaded guilty to a tax charge that they declined to specify at a closed hearing in Federal District Court in Brooklyn.

He also signed cooperation agreements with the United State's Attorney's office and with the authority inspector general's office. The agreements required him to assist in the corruption inquiry and to testify at trials resulting from the investigation, the officials added.

Mr. Meris has not been sentenced on the tax charges. As part of the agreements, officials said, the authority and prosecutors are to notify the judge in Mr. Meris's case of the extent of his aid in the graft inquiry when he is sentenced. Conversations Taped

In his undercover role, Mr. Meris secretly tape-recorded conversations with two authority employees who officials said accepted bribes for rigging bids. One of them, John Dransfield, a project officer, who has been indicted on charges of accepting bribes and money laundering, has pleaded not guilty.

Officials said that the other employee, Mark Parker, a contract specialist, when confronted in January with the evidence obtained against him by investigators, agreed to secretly plead guilty to bribery charges and to work undercover against contractors suspected of engaging in bid rigging.

Mr. Parker's identity also was disclosed in sealed court documents. He was dismissed by the authority in April.

Before the investigation, from July 1990 to May 1992, the authority awarded the Meris company, which specializes in roof and masonry repairs, six contracts, totaling $3.2 million. Since Mr. Meris became an undercover informer in August 1992, the company has been awarded seven contracts, totaling $10 million. 'Peculiar Facts'

Mr. Thacher acknowledged that permitting the contractor to continue obtaining school work after pleading guilty to tax charges was unusual. But he said the arrangement enabled the authority to eradicate a corruption ring, to deter future bid-rigging and to possibly recover more than the $2 million from the defendants through fines and asset forfeitures.

Theodore J. Theophilos, a lawyer for Evangelos Gatzonis, a contractor who is accused of bid-rigging, described the contract awards to the Meris company as "one of several peculiar facts" suggesting that critical evidence in the case may have been withheld by investigators or prosecutors.

Another defense lawyer in the case, Neal Johnston, said the authority had previously disqualified contractors for any felony violation. "Here, they got an admission to a crime and usually that means a softer penalty," Mr. Johnston said, referring to the Meris company. "Leniency should not mean $10 million in contracts."

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