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NY Construction Execs Charged with Fraud

Thursday, July 26, 2018

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Two men were indicted in an Albany, New York, court for allegedly stealing the identities of minority-owned Lorice Enterprises Inc. and Precision Environmental Solutions Inc. as well as for allegedly fraudulently securing several million in construction contracts, all while failing to pay $400,000 in pension wages to over 50 employees.

If convicted of all charges, Michael Martin, 47, of Latham, and D. Scott Henzel, 52, of Albany, may each face up to 10 to 20 years in state prison.

Martin was also charged with a separate indictment, which alleges that that he stole over $150,000 from a minority-owned business in accordance with a fake lease agreement, and over $200,000 from Allegheny Casualty for filing a false insurance claim for the same business.  

Fraudulent Business Dealings

Martin served as president and owner of Eastern Building & Restoration Inc., an Albany-based general contractor, from 2004 to 2014. Henzel worked as the controller for Eastern.

© iStock.com / heliopix

Two men were indicted in an Albany, New York, court with stealing the identities of minority-owned Lorice Enterprises Inc. and Precision Environmental Solutions Inc,. and fraudulently securing several million in construction contracts, all while failing to pay $400,000 in pension wages to over 50 employees.

Between April 2012 and September 2015, Martin and Henzel allegedly offered a partnership to Lorice and Precision as an educational opportunity; the men would teach the minority-owned businesses about successful operation and bidding on construction projects. As it turns out, Martin and Henzel allegedly took over both of the businesses, using them to fraudulently acquire several million in public works contracts that had been awarded to Eastern; these projects required a portion of funds granted be paid to minority contractors.

As a result of the takeover, Lorice and Precision effectively only became minority-owned businesses on paper. Prosecutors also alleged that finances were mixed in with those of Eastern and Moisture Barriers, a roofing company owned by Martin.

Martin also reportedly failed to pay out 50 laborers $6 per hour in pension funds. Between March 2012 and February 2014, Martin and Henzel underpaid Eastern’s workers more than $400,000 in pension benefits, as well as more than $100,000 on a project with the New York State Dormitory Authority. Both men had allegedly falsely certified on all of their public works contracts that these pension payments had been made.

Eastern went out of business in February 2014, claiming financial inability to complete several contracts.

Separate Indictment

Martin’s separate indictment alleges that he stole $150,000 from Precision through a fake lease agreement and $200,000 from an insurance company through filing a false insurance claim on behalf of the company. In this, Martin moved Precision from Eastern’s former headquarters in Albany to a new location, where he created a fake rental agreement between Precision and a fictitious company Martin controlled. Martin then withdrew the fake rent payments monthly, which totaled $150,000.

Martin also allegedly stole $200,000 by claiming that Precision was a subcontractor for Eastern, and that it was never paid for work by the "parent company" on a construction project Eastern had gotten from the New York State Office of General Services.
 
The charges came to light due to an investigation conducted by the Attorney General’s Criminal Enforcement and Financial Crimes Bureau and the New York State Office of the Inspector General, as well as the state Department of Labor.
 
“As we allege, the defendants crafted a shameful and elaborate scheme to line their pockets at the expense of minority-owned businesses, New York taxpayers, and their own employees,” said New York Attorney General Barbara Underwood. “We will continue to aggressively root out fraud and protect New Yorkers from those who seek to game the system."
 
In all, the Albany indictment charges Martin and Henzel jointly with one count of Failure to Pay Prevailing Rate of Wage or Supplements (a class D felony), three counts of Identity Theft in the First Degree (a class D felony), three counts of Offering a False Instrument for Filing in the First Degree (a class E felony) and one count of Scheme to Defraud in the First Degree (a class E felony). The other indictment charges Martin with two counts of Grand Larceny in the Second Degree (a class C felony) and one count of Insurance Fraud in the Second Degree (a class C felony).
 
Henzel has since been released on $10,000 bond, while Martin failed to make bail and was remanded to custody. Lawyers for neither party have commented on the case.

   

Tagged categories: Contractors; Criminal acts; Ethics; Fraud; Government

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