Indictment, Arrests and Sentencing
A three-year investigation looking into widespread commercial bribery and fraud in the electrical contracting industry led by the Inspector General for the Port Authority of New York and New Jersey jointly with the Manhattan District Attorney’s Office exposed the involvement of fifteen New York area companies and seventeen individuals as part of a 24-count indictment charging those involved with paying and receiving bribes, as well as falsifying business records.
In early December, two officers of Long Island City based IG Federal Electrical Supply Corporation entered into a Deferred Prosecution Agreement. Chief Executive Officer and Vice President of Operations, Ira Friedman, 52, of Larchmont, pleaded guilty to falsifying business records as did Todd Ehren, 46, of Port Washington, who was vice president of purchasing. Both Friedman and Ehren falsely categorized as expenses; in excess of $1 million of their salaries. Consequently, by under reporting the company payroll records through this salary scheme, IGF underpaid the International Brotherhood of Electrical Workers (Local 3) employee benefit fund by approximately $150,000.
Furthermore, the company acknowledged violating New York State Law by committing commercial bribery, fraud and theft for disbursing bribes to purchasing agents of electrical contracting companies and receiving kickbacks from purchasing agents, in addition to fraudulently filing paperwork claiming to be a woman-owned business (WOSB Program). According to the U.S. Small business Association, filing a company as a “woman-owned business” offers certain advantages. The Federal government is required to award five percent of its subcontract and prime monies to these businesses. The Program sanctions contracting officers to limit competition setting aside various requirements for competition, specifically among small businesses owned by women.
Sentencing for Friedman is anticipated to be carried out in late January, 2014 He is expected to pay approximately $260,000 in back taxes and forfeit $650,000 in addition to serving six months in prison. Ehren’s sentencing is scheduled for early March, 2014 when he will begin a term of four months in jail, as well as paying back approximately $255,000 in taxes and the forfeiture of $650,000.
Two weeks after the Friedman and Ehren sentences were decided, Alan Brite, 65, of Huntington, the president of Benfield Electric Supply Company, Inc. in the Bronx, was charged with disbursing bribes to purchasers at a number of companies to gain business, including raising the price of bids to Unity Electric Company with the intention of paying a kickback to Donald Russo, 54, of Huntington, who was a purchasing agent for that company, according to Manhattan District Attorney Cyrus Vance Jr..
Benfield Data Company and Benfield Controls which are divisions of the Benfield Electrical Supply Company by itself and together with Brite are now charged with an assortment of felonies and misdemeanors. Mr. Brite is personally charged with two counts of the class C felony: Grand Larceny in the Second Degree, three counts of the class E felony: Falsifying Business Records in the First Degree as well as three counts and one count respectively of the class A misdemeanors: Commercial Bribery in the Second Degree, and Commercial Bribe Receiving in the Second Degree.
Donald Russo, 54, of Syosset, NY, thought he had it all figured out. As a purchasing agent for Unity he was the recipient of the bribes paid by Brite’s firm as well as those with the ability to do so from other companies in the construction industry. He didn’t know that an investigation was underway until he and his company were jointly indicted two weeks ago
Russo’s Bar Electrical, located in in Plainview, NY is a shell company which was exclusively set up to accept the bribes, according to the District Attorney’s office.
According to the Indictment, as his take for steering contracts to them, Russo received more than $600,000 from five separate electrical supply companies, including Brite’s company during the years of 2008 through 2012. Prosecutors explained that Russo would bloat the costs of contracts he was in charge of so that a percentage of the proceeds were directed his way in exchange for permitting Unity’s business to be the recipient of companies that would agree to the inflated terms.
Russo was charged with five counts of falsifying business records, two counts and four counts respectively of grand larceny and offering a false instrument for filing, three counts of receiving commercial bribes, as well as four counts of criminal tax fraud.