Manhattan District Attorney Cyrus Vance, Jr. recently announced the indictment of American Standard Testing and Consulting Laboratories, (ASTC) its owner, Alan Fortich, 44, and five other defendants for falsifying concrete testing and inspection reports, as well as manipulating government programs to obtain jobs for which they were otherwise ineligible.
According to a report from the DA’s office, the defendants are charged with Enterprise Corruption in the First Degree, Scheme to Defraud in the First Degree, Offering a False Instrument for Filing in the First Degree, and Falsifying Business Records in the First Degree.
Documents filed in court said ASTC is a company hired by contractors, engineers, architects, and others to perform tests and inspections relating to the strength and quality of concrete, as mandated by the New York City Building Code. For more than 10 years, the defendants submitted thousands of fraudulent test reports, regularly skipping vital safety tests and creating false reports to create the impression that the tests were performed.
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During the same period, ASTC is also charged with lying about its credentials in order to obtain licenses from the New York City Department of Buildings it was otherwise not entitled to obtain, and about its small business qualifications to obtain work it was otherwise not eligible to perform. During the time period covered in the indictment,
ASTC is charged with falsifying testing on private and public projects, including:
- Yankee Stadium
- The Intrepid at Hudson River Park
- Jacob Javits Center
- Memorial Sloan Kettering Cancer Center
- Weill Cornell Medical College
- Columbia University
- Air Control Tower at LaGuardia Airport
- East Side Access
- Port Authority Bus Terminal
- Lincoln Tunnel
- Metro North Croton-Harmon Locomotives Shop
- New York City public schools
- Second Avenue Subway
- Fulton Street Transit Center
In these cases, additional steps have been taken to ensure the safety and stability of the projects.
The victims of ASTC’s fraud include the:
- Metropolitan Transportation Authority MTA and its associated agencies New York City Transit, Bridges and Tunnels, MetroNorth, and Capital Construction
- Port Authority of New York and New Jersey
- New York City Department of Design and Construction
- New York City School Construction Authority
- New York City Department of Buildings
- Numerous private owners and engineers
Under the New York City Building Code, before any construction project can start pouring concrete, a structural engineer must specify the strength of concrete needed. An independent testing lab must obtain the raw materials for the concrete from suppliers and test four different proportions, or recipes, and create a report known as the “mix design test report,” which makes a recommendation as to which mix should be used. These reports are valid for only one year from the date of testing because many of the basic ingredients of concrete sand, stone, water and cement are natural and change over time. Strength results for concrete can vary vastly depending on the type of sand or cement that different supplier’s use. If the size of the sand or stone changes, it can impact the quality and strength of concrete.
Over a 12-year period, the indictment charges ASTC, Alan Fortich, and professional engineers Michael Rabkin, Shamim Akond, Richard Kasparian and Bruce Pumo, with creating, signing, and certifying thousands of false concrete mix design test reports, in which they did not actually test the four proportions of concrete reflected in these reports. None of the close to 3,000 test reports in ASTC’s computer database contained legitimate test results.
According to documents filed in court, Fortich created the false mix design test reports and then Rabkin, Akond, Kasparian, and Pumo certified the reports accuracy. ASTC then filed the false reports with professional engineers, who relied on these false reports in assessing their projects.
Additionally, under the NYC Building Code, any concrete poured at a project must be tested, and the lab is required to report the results of this so-called “cylinder testing” to the project engineer. The reliability of this testing is essential to the integrity of the project.
According to court documents, ASTC, Fortich, Rabkin, Akond, Kasparian and Pumo created, signed, and certified thousands of false concrete cylinder test results and reports over an 8-year period.
ASTC and Fortich are accused of lying about ASTC’s credentials to city agencies and public authorities in order to work on the very same projects where they are accused of falsifying thousands of concrete tests. They did so in two different ways.
First, ASTC and Fortich are accused of defrauding the MTA through the Disadvantaged Business Enterprise DBE program, a federal program that provides funding to the MTA by the United States Department of Transportation. The DBE program was designed to help businesses owned by women or a member of a designated minority group whose personal net worth, excluding his or her personal residence and the equity stake he or she owns in the company, does not exceed $750,000. For at least four years, ASTC and Fortich are accused of consistently lying to the MTA about his net worth in order to qualify for projects such as the Fulton Street Transit Center and the MetroNorth Croton-Harmon Locomotives Shop.
Second, the indictment also charges that for more than five years, ASTC committed a similar fraud to qualify for work with the City of New York as a Local Business Enterprise LBE. Specifically, Fortich recruited a legitimate LBE to pose as a front for ASTC so that ASTC could continue to work on City projects it was ineligible to perform. Fortich paid tens of thousands of dollars in kickbacks to the other company.
In order to obtain a license to test concrete from DOB, a lab must employ a director who is either a professional engineer or a registered architect, and who personally supervises the technical aspects of the lab’s testing of concrete. Upon receiving the license, the lab director certifies to DOB that he or she and the lab will follow the NYC Building Code.
The indictment charges that Rabkin, Akond, Kasparian and Pumo falsified their licensing applications as a result of the testing fraud described above.
A slight variation on the scheme occurred when Fortich, his brother, Alvaro Fortich Jr., 32, and Rabkin formed HT Laboratories, a separate, short-lived fraudulent venture and falsely obtained a concrete testing license.
This investigation previously led to the October 2008 indictments of Testwell Laboratories and its top executives, V. Reddy Kancharla and Vincent Barone, and several other employees and professional engineers associated with the company. Testwell, Kancharla, and Barone were convicted after trial of Enterprise Corruption and related counts. In addition to monetary fines, Kancharla was sentenced to 7 to 21 years in prison, and Barone was sentenced to 5 1/3 to 16 years in prison. Testwell was also ordered to pay millions of dollars in reparations for its fraud. Several other Testwell employees pled guilty to related crimes.
In July 2010, Stallone Testing Laboratories and its lab director, professional engineer William Bayer pled guilty to Scheme to Defraud and were fined thousands of dollars.
Author Robert Elliott, executive vice president, Amaxx Risk Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers Compensation costs, including airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. See www.LowerWC.com for more information. Contact: [email protected].
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