Indexbit Exchange:Feds make dozens of bribery arrests related to New York City public housing contracts

At least 70 current and former NYCHA employees charged in corruption case

NEW YORK -- Dozens of New York City Housing Authority workers are accused of corruption for allegedly taking millions of dollars in exchange for work contracts. 

Seventy current or former employees are now facing extortion and bribery charges, and potentially decades in prison.

NYCHA -- the largest public housing authority in the nation -- receives more than $1.5 billion a year from the federal government. One in 17 New Yorkers lives in a NYCHA building. There are 335 developments.

The bribes -- more than $2 million in total -- allegedly took place at nearly one-third of all NYCHA buildings across all five boroughs of New York City. 

Sixty-six of those facing charges were arrested Tuesday morning in several locations, including New York City, New Jersey, Connecticut and North Carolina. They were arraigned in federal court, and all were released on $50,000 bond, with travel restrictions. 

Prosecutors say superintendents or assistant superintendents demanded bribes from contractors for repairs or construction work on NYCHA properties, and if they didn't pay up, they'd award the work to someone else.

"As we allege, the 70 defendants charged today allegedly demanded over $2 million in bribe money from contractors in exchange for giving out over $13 million of work on NYCHA buildings. And if the contractors didn't pay up, the defendants wouldn't give them the work. That's classic pay-to-play, and this culture of corruption at NYCHA ends today," said U.S. Attorney Damian Williams. "The corruption we've alleged infected every corner of the city. As the charges show, superintendents accepting and extorting bribes from contractors had become business as usual, occurring at almost 100 NYCHA buildings across all five boroughs. That's nearly a third of all NYCHA buildings." 

NYCHA Bribery Complaint by CBSNewYork Scribd on Scribd

Williams said it was the largest single-day bribery takedown in the history of the Justice Department.

"The bribery and extortion charged here allegedly exploited the no-bid process for goods and services under $10,000, commonly referred to as micro-purchases," Department of Investigation Commissioner Jocelyn Strauber said. 

Williams said the contracts, under $10,000 each, involved essential work like plumbing and window repairs. They were no-bid contracts, where superintendents and assistant superintendents could hire the workers directly. They then wouldn't sign off on payment to the contractors without a kickback, the feds said. 

"It's very sad that that's happened in the city," NYCHA resident Valerie Charles said.

"I feel like that's part of me being ripped off. I'm in NYCHA. Can't we have honest people working for us?" one resident said. 

At a news conference, the city's Department of Investigation laid out 14 recommendations for NYCHA, which we're told NYCHA has agreed to. Some of them are already in the process of being implemented.

"They focus on reform of the micro-purchase process to protect it from abuse while maintaining efficient service for NYCHA residents," Strauber said.

"NYCHA has ZERO tolerance for wrongful and illegal activity," said NYCHA Chief Executive Officer Lisa Bova-Hiatt. "The individuals allegedly involved in these acts put their greed first and violated the trust of our residents, their fellow NYCHA colleagues and all New Yorkers. These actions are counter to everything we stand for as public servants and will not be tolerated in any form. In the past five years, NYCHA has achieved many significant milestones, while remaining vigilant to ensure integrity in every area of our work. We have already made transformative changes to our business practices and will continue to do so. We will not allow bad actors to disrupt or undermine our achievements."   

Watch Jennifer Bisram's report

"Time and time again the defendants allegedly enriched themselves at the expense of NYCHA residents and contractors who were pursuing the real American dream by lining their own pockets by these illegal back door deals," Homeland Security Investigations New York Special Agent in Charge Ivan J. Arvelo said. 

Officials credited multiple agencies for the historic takedown, including the HSI NY document and benefit and fraud task forces.

The first investigation started back in 2013, and now 50 current and 20 former NYCHA employees are facing federal charges.

"It really expanded from 2021 until now as investigators uncovered more evidence and information about the investigation, one subject led to another subject," HSI NY Deputy Special Agent in Charge Darren McCormack said. 

It's important to note that officials said all repair work and construction were completed at the buildings, so NYCHA residents weren't affected in that way, but officials say they believe there is more illegal conduct going on at NYCHA buildings.

"These victims may have been cheated out of better services and programs meant to improve their lives because the superintendents were allegedly more interested in a secret payoff than finding the best value for NYCHA," Arvelo said.

Watch Elijah Westbrook's report

Cheyanne Nazario, in the Lower East Side's Vladeck Houses, says repairs are slow to come. The indictment alleges her assistant superintendent told a no-bid contractor "You need to take care of me" before being paid $1,000 in cash by the contractor.

"They're not very speedy with doing anything, so it doesn't surprise me that they take bribes from people or they just don't do anything," Nazario said.

Federal authorities announced a new whistleblower program following the arrests. They said NYCHA residents who know of any corruption or misconduct can report it and remain anonymous, adding it's possible the program could lead to even more arrests.

All of the charged NYCHA employees are being suspended, effective immediately, and the roles will be filled so residents don't feel the disruption, Williams said.

In:
• NYCHA
• Bribery
• New York City