Tishman Construction to pay $20 million to settle overbilling probe

NEW YORK (Reuters) - Tishman Construction Corp has agreed to pay $20.2 million to resolve a U.S. investigation into an alleged fraudulent overbilling scheme involving improper overtime payments to union workers, prosecutors said on Thursday.

The settlement with Tishman, a unit of Aecom and one of the largest construction companies in New York City, will resolve charges that it improperly billed clients on projects including One World Trade Center and the Plaza Hotel.

Tishman agreed to resolve charges filed in federal court in Brooklyn, New York, through a deferred prosecution agreement in which it admitted to fraudulently overbilling clients, prosecutors said.

“Through a systemic practice, Tishman Construction bilked its clients by charging them for unworked time and at rates higher than those bargained for by their clients,” Brooklyn U.S. Attorney Robert Capers said in a statement.

John Gallagher, a spokesman for Tishman, said the company fully cooperated with the investigation.

The settlement, reported earlier Thursday by Reuters, follows similar accords with construction companies in recent years over alleged fraudulent billing practices on projects in New York City.

Lend Lease Construction in 2012 agreed to pay $56 million in fines and restitution as part of a deferred prosecution deal over claims it engaged in a 10-year overbilling scheme.

More recently, Hunter Roberts Construction Group agreed to pay $7 million to resolve an investigation into its own past billing practices.

Prosecutors said from 1999 to 2009, Tishman billed clients for hours that were not worked by labor foremen from union Local 79 Mason Tenders’ District Council of Greater New York.

Tishman carried out the overbilling by fraudulently adding one to two hours of unworked or unnecessary “guaranteed” overtime pay per day to time sheets for labor foremen, which was then billed to clients.

Prosecutors said Tishman also allowed labor foremen to be absent from work for sick days, holidays and vacation, while completing time sheets and billing clients as though they worked those days.

Gallagher in his statement said that since 2009, when these issues in the construction industry were reported in the press, Tishman “recognized deficiencies in our policies on job sites, and instituted enhanced protocols and safeguards.”

He added that Tishman, which Aecom bought in 2010, did not keep any of the funds at issue in the alleged wrongdoing, and said that the money went to labor foremen.

The case is U.S. v. Tishman Construction Corp, U.S. District Court, Eastern District of New York, No. 15-617.

Reporting by Nate Raymond; editing by Sandra Maler, Leslie Adler and Andrew Hay