Four Related Defendants Indicted For Engaging In Prevailing Wage Fraud Scheme To Defraud The NYC School Construction Authority
Earlier today, in federal court in Brooklyn, Russell Argila, a former shop steward for Local 1 New York of the International Union of Bricklayers and Allied Craftworkers, pleaded guilty to a criminal information charging him with accepting illegal bribe payments in his capacity as a union official. As alleged in court documents, Argila accepted $7,800 in cash bribes from an employer of the bricklayers whose interests Argila represented as a shop steward for the union. Argila was arrested on April 24, 2013.
On July 26 and July 30, 2013, also in federal court in Brooklyn, Muzaffar I. Nadeem, Zainul Syed, Afzaal Chaudry, and Irfan Muzaffar, each of Brooklyn, were arraigned on a separate but related indictment charging them with various offenses involving a scheme to defraud the New York City School Construction Authority (the SCA) by falsely certifying that workers employed on SCA projects were receiving the prevailing wage, as required by law and contract. These defendants were arrested on Feb. 21, 2013.1
The plea and indictment were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; Eric T. Schneiderman, New York State Attorney General; Rose Gill Hearn, Commissioner, New York City Department of Investigation; and Toni Weirauch, Special Agent-in-Charge, Internal Revenue Service, Criminal Investigation (IRS), New York.
“Instead of fighting for the workers he promised to represent, Argila traded their right to earn a legal and a living wage for cash to line his own pockets. As alleged in the related indictment, those defendants cheated workers out of the wages they had earned by the sweat of their brows and laundered the proceeds of this conspiracy to hide their actions and fund an amusement park overseas. There was no holiday for the workers involved, only exploitation," stated United States Attorney Lynch. “This Office and our law enforcement partners will continue to prosecute fraud and corruption throughout the construction industry." Ms. Lynch expressed her thanks to the U.S. Department of Labor, Office of Inspector General, the New York City School Construction Authority, Office of Inspector General, the New York City Police Department, and the New York County District Attorney’s Office for their assistance in the investigation.
As charged in the indictment, Nadeem operated a construction company, SM&B Construction Co., Inc. (SM&B) in Brooklyn, which has been awarded over $72 million in contracts by the SCA since 1997 and has received over $37 million in fraud-induced payments from the SCA since 2008. Chaudry and Syed worked as a foreman and office manager, respectively, at SM&B. Muzaffar is Nadeem’s son. Both New York State Labor Law and its contracts with the SCA required SM&B to pay workers on SCA-funded projects a prevailing wage rate, which was set by the New York City Comptroller. In fact, SM&B paid cash to workers on its projects, including bricklayers and laborers, at rates far below the prevailing wage. As alleged in the indictment, Nadeem, Chaudry, and Syed falsely certified to the SCA that the workers had been paid the prevailing wage, thus committing mail fraud, wire fraud, and conspiracy to commit those crimes.
As further alleged in the indictment, Nadeem laundered over $6 million in proceeds of the charged fraud scheme by funneling it through shell companies. After running these proceeds through the shell companies, Nadeem sent more than $3.3 million from the shell companies to Pakistan, to invest in an amusement park and resort complex called “Waysgoose Park."
To conceal the charged fraud scheme from law enforcement, and to obtain cash to pay the illegally low wages to workers, Nadeem, Syed, and Muzaffar allegedly engaged in illegal structuring, specifically, cashing multiple checks, each for less than $10,000, on a single day, for a total amount of more than $10,000, and thereby avoiding the required filing of Currency Transaction Reports (CTRs). As charged in the indictment, since January 2008, more than $3.6 million in structured checks were written on SM&B’s account. Nadeem and Syed also allegedly arranged for the payment of $30,000 in cash bribes to an undercover SCA Inspector, and allegedly paid $7,800 in cash bribes to a union official.
Argila faces a maximum sentence of five years. If convicted, the indicted defendants each face a maximum sentence of 20 years for the mail fraud, wire fraud, money laundering, and related conspiracy charges, a maximum sentence of 10 years for bribing an undercover SCA inspector and engaging in transactions over $10,000 involving the proceeds of their crime, and a maximum sentence five years for bribing a union official, structuring financial transactions, and other conspiracy charges.
The government’s case is being prosecuted by Assistant United States Attorneys Paul Tuchmann, Lan Nguyen, and Claire Kedeshian.
The Defendants:
MUZAFFAR NADEEM
Age: 57
Residence: Brooklyn, NY
AFZAAL CHAUDRY
Age: 46
Residence: Brooklyn, NY
ZAINUL SYED
Age: 39
Residence: Brooklyn, NY
IRFAN MUZAFFAR
Age: 29
Residence: Brooklyn, NY
RUSSELL ARGILA
Age: 40
Mahopac, NY
1 The charges in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
Source: U.S. Department of Justice, Office of the United States Attorneys
