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Lend Lease Agrees to Pay $56M in Fines for Fraud Scheme

Lend Lease Project Management & Construction (formerly Bovis Lend Lease), the U.S. subsidiary of the Australian construction company that worked on the Sept. 11 Memorial and Citi Field projects, has admitted to a massive overbilling fraud scheme and agreed to pay up to $56 million in fines and restitution, according to Crain’s New York

 The overbilling scheme involves a widespread practice known as eight plus two which results in paying labor foremen for two hours of overtime that they do not work each day as an incentive to stay on a construction project.  

James J. Abadie, a former executive of the company, pleaded guilty to conspiracy to commit mail and wire fraud based on the overbilling scheme and faces a maximum sentence of 20 years in prison.  Mr. Abadie described the fraud to United States Magistrate Judge Lois S. Bloom, stating that “[f]rom at least 1999 to 2009, I agreed with others at Bovis to continue the existing practice for Laborers at Local 79 to add one or two hours to their time sheets every day whether it was worked or not.  I and others authorized the practice for labor foremen to take vacation and holidays while filling out their time sheets as though they had worked.” 

The investigation into the overbilling, which was conducted by the F.B.I., the inspector general of the Port Authority of New York and New Jersey, the inspector general of the United States Department of Labor, the city Department of Investigation, and the Manhattan district attorney, began in 2009 after a fired Bovis official, Brian S. Aryai, blew the whistle on the company’s illegal practice.

Aryai, a Bovis senior vice president for finance, was fired by Bovis in 2009 after notifying management of what he believed were financial improprieties.  Aryai wrote a letter to the chairman of Bovis’ parent company in Australia, David Crawford.  The March 27, 2009, letter detailed accusations of bribery of union officials and overbilling at a number of project sites.

The company, as part of its agreement to avoid prosecution, admitted to three counts of conspiracy to commit mail and wire fraud based on the overbilling scheme and its evasion of government contract requirements that it hire a certain percentage of minority- or women-owned contractors or those certified by government agencies as disadvantaged.

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