by Federal prosecutors in Manhattan on Tuesday unsealed bribery and extortion charges against 70 current and former employees of the New York City Housing Authority, a sweeping accusation of embezzlement at a troubled organization.
Damian Williams, U.S. Attorney for the Southern District of New York, said it was the largest number of federal bribery charges the Justice Department had filed in a single day.
In describing the scheme, Williams said dozens of employees, including superintendents and assistant superintendents, had accepted more than $2 million in bribes from contractors seeking work on apartment buildings in the city’s five boroughs, since Houses in Stapleton in Staten Island for Eastchester Gardens in the Bronx.
Prosecutors said the plan revealed Tuesday involved cheap repairs, less than $10,000, to things like windows and plumbing — deals that do not go through competitive bidding and are intended to quickly address problems in the buildings.
However, more than $13 million worth of work was misdelivered, prosecutors said, and the defendants demanded payment to authorize the work or approve it upon completion. The accused employees typically received kickbacks of 10 to 20 percent of the contract value, prosecutors said, although sometimes the payments were higher.
In total, nearly 100 housing developments — nearly a third of the authority’s properties — were affected by the plan, Williams said, calling it “classic pay-to-play.”
“This culture of corruption at NYCHA ends today,” he said.
After dozens of arrests in several states early in the morning, Tuesday’s court proceedings gave a sense of the scope of the investigation. By mid-afternoon, several hearings were taking place in six five-story courtrooms of the Federal District Court in Manhattan, attended by various agency representatives, defense and government attorneys, and family members of the defendants. The defendants are due back in court in early March.
As the nation’s largest public housing authority, NYCHA receives more than $1 billion in federal funding. The agency is governed by a seven-person board appointed by the mayor.
Lisa Bova-Hiatt, CEO of NYCHA, said in a statement that the accused employees had “put their greed first and violated the trust of our residents, their NYCHA colleagues, and all New Yorkers.”
He said the agency was working hard to improve conditions in public housing and had alerted investigators to the suspicious behavior behind some of the charges.
“We will not allow bad actors to disrupt or undermine our achievements,” he said.
New York’s public housing system, with more than 300,000 residents, was once a heralded source of housing for the working class. But declining federal government funding over the decades has left the agency in need of an estimated $78 billion in repairs.
Tenants regularly file complaints about old buildings, rodents, leaky pipes and broken elevators in NYCHA’s more than 300 developments. Still, in a city hungry for affordable housing, a NYCHA apartment is coveted: Hundreds of thousands of people crowd waiting lists.
The agency is looking for ways to improve living standards. A plan to transfer some developments to private management and manage others under a new public benefit corporation could unlock billions of dollars from a new stream of federal housing aid.
But in addition to financial problems and decline, the agency has routinely faced accusations of corruption and mismanagement. In 2017, investigators discovered that NYCHA had submitted false documentation to the federal government saying it had conducted lead paint inspections in apartments.
In 2019, as part of a deal with federal prosecutors, the city agreed to appoint a federal monitor to examine NYCHA’s progress in addressing some of its most serious problems, including lead, mold and heating failures. .
In a statement Tuesday, the monitor, Bart M. Schwartz, said the arrests “point to the need for continued systemic changes in NYCHA’s culture and for greater accountability, oversight and enforcement.”
“This is a step in the right direction and reminds NYCHA employees and vendors that they cannot continue to take advantage of residents,” he said.
In the buildings themselves, the accusations did not seem surprising.
“That’s how housing works,” said Michael Jones, 37, a tenant at Robert Fulton Houses in Chelsea, one of the developments mentioned in the plan Tuesday. “It’s all about money. The people who run it always want to be rewarded.”
Mr Jones raised concerns about how corruption could affect the condition of buildings and the toll it could take on tenants. “With the current cost of living in New York and this neighborhood changing, we are at increasing risk here,” he said.
Investors and news organizations have repeatedly noted the potential for misconduct in relation to small quantity contracts, which are also known as “micro-purchases.” In 2019, The City news website investigated how low-level managers of developments had awarded $250 million in contracts to a small group of suppliers.
In September 2021, nine contractors were charged with bribery in connection with micro-procurement schemes.
Margaret Garnett, former commissioner of the city’s Department of Investigation, said at that time that Micro-purchases “have a laudable goal: to give development superintendents the flexibility to make small repairs quickly, without a complex bidding and procurement process.”
But, he added, it is “highly vulnerable to fraud and corruption, as this investigation shows.”
In 476 pages of complaints, prosecutors described in painstaking detail petty corruption, which, in one case, also involved destroying evidence (deleted text messages) and making false statements to investigators. In another case, prosecutors said cash kickbacks from a developer were left in a drawer in a building rather than given directly to the defendant.
In another case, in the Houses in Vladeck On Manhattan’s Lower East Side, an assistant superintendent was forthright about his expectations and agreed to award a contract with a special stipulation.
“You have to take care of me,” the assistant superintendent said, according to the complaint. Shortly after, the contractor paid him $1,000 in cash in the basement of one of the buildings in the development.
Jocelyn Strauber, the city’s investigative commissioner, said Tuesday that her agency had suggested NYCHA officials make reforms to the micro-purchase process, noting that misconduct around these smaller repairs “increased the cost of this type.” of work and diverted valuable resources. public funds diverted from public housing and into the pockets of corrupt NYCHA staff.”
In fact, Mr. Williams said that the practice of extorting contractors had become “business as usual” at many NYCHA buildings and called for contractors who had been extorted to come forward. He also said he will continue the work of rooting out corruption in the city’s public housing.
“NYCHA residents deserve better,” Williams said, adding, “We’re not done yet.”
Olivia Bensimon contributed reporting.
