By MICHAEL R. SISAK
NEW YORK (AP) — The former head of construction at Bloomberg LP cooked up a lucrative side business, prosecutors say: an electrical-contracting company that he kept humming with $250 million worth of business from the global media and financial-information company.
Prosecutors say Anthony Guzzone’s “brainchild” was part of a broader pay-to-play scheme involving 13 other people — including a construction-company executive and several subcontractors — that bilked Bloomberg out of more than $15 million for construction work at its Manhattan offices.
The defendants surrendered to authorities on Tuesday and were paraded into court, where they entered not guilty pleas. About a dozen state troopers lined the walls. The defendants were released on bail and ordered back to court in February.
“The accusations are one part fairy tale and one part a misguided attempt to turn professional courtesies into a federal case,” Guzzone’s lawyer, Alex Spiro, told reporters after the arraignment.
Bloomberg LP and its general contractor, Turner Construction, were not accused of wrongdoing, and Manhattan District Attorney Cy Vance Jr. thanked the companies for cooperating in the investigation.
“New York’s sky-high construction costs are driven not only by market demand, but by pay-to-play industry corruption that makes it impossible for honest companies to compete,” Vance said in a statement. The charges, he said, “demonstrate that if you are engaging in organized crime that blocks fair competition in Manhattan, our prosecutors will find you, turn over every stone, and shut you down.”
Prosecutors said the defendants took kickbacks — in the form of cash payments they would refer to as “sandwiches” and “lunch,” vacations and home renovations — from subcontractors and vendors who then inflated the bills they sent to Bloomberg for work at buildings on Park Avenue and Third Avenue, where the company has offices.
The scheme ran from 2011 until October 2017, when state police searched Bloomberg headquarters, Turner Construction’s offices and the homes of some defendants, prosecutors said. Bloomberg, which hadn’t been aware of the alleged scheme until then, fired Guzzone and three other employees.
Guzzone, the alleged mastermind, took in millions of dollars in cash and items for his palatial New Jersey home, including stainless-steel appliances, ironwork for its gates and a fancy barbeque, prosecutors said.
The side business he helped set up, Litespeed Electric, was run by employees of Bloomberg’s former electric contractor. It’s accused of giving no-show jobs to relatives of Bloomberg workers and working with a competitor to divvy up kickback-laden projects at the company, prosecutors said.
Assistant District Attorney James Hanley described Litespeed as Guzzone’s “brainchild” and said that “the company was formed with the sole purpose of taking over the contracts at Bloomberg,” starting about a decade ago.
Ty Trippet, a spokesman for Bloomberg LP, said the charges send “a strong message to contractors in New York who engage in fraud: You will be caught.” The company, founded by former New York City Mayor Michael Bloomberg, thanked prosecutors for uncovering the alleged scheme “and for their diligent work and partnership on this investigation.”
Robert Olson, a former Turner Construction executive, and Vito Nigro, a former project manager at the company, were also charged. Olson sat “at the very top of this pyramid of corruption,” Assistant District Attorney Christopher Beard said, and spent some of the $1.2 million he had pocketed in the scheme on vacation homes.
Turner has said the two men were “rogue, dishonest employees.”
“Turner rejects the conduct alleged against two former employees as an absolute betrayal of Turner’s core values of integrity which are followed by the 9000 Turner employees who work hard, honestly, and well every day,” said Thomas Curran, a lawyer for the company.
Prosecutors said at least $3 million was laundered using phony invoices from an electrical-materials distributor.
Angel Ocasio, a former branch manager at the distributor is accused of drawing up 75 fabricated invoices to hide money paid to an electrical subcontractor, whose top executive was also charged. Ocasio’s lawyer downplayed his alleged involvement, telling the judge he was a “lowly data-entry clerk.”