Contractor Charged in Kickback and Money Laundering Scheme Involving Con Ed Projects
Defendant Paid Con Ed Supervisors to Approve Inflated Invoices and Expedite Payment
Russell Ball, the founder and CEO of Roadway Construction, Inc. (“Roadway”), has been charged with paying, and offering to pay, tens of thousands of dollars in bribes to Consolidated Edison (Con Ed) supervisors in connection with construction projects in Manhattan which Roadway performed for Con Ed from 2002 through 2004.1 The defendant’s initial appearance is scheduled later today before United States Magistrate Judge Roanne L. Mann at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.
The charges were announced by Benton J. Campbell, United States Attorney for the Eastern District of New York; Peter J. Smith, Special Agent-in-Charge, Office of Investigation, United States Department of Homeland Security, Immigration and Customs Enforcement, New York (ICE); Patricia J. Haynes, Special Agent-in-Charge, Criminal Investigation, Internal Revenue Service, New York; and Robert E. Van Etten, Inspector General, The Port Authority of New York and New Jersey, Office of the Inspector General.
Ball’s case is the product of the government’ ongoing investigation that led to the filing of federal criminal charges against ten Con Ed supervisors on January 14, 2009, for collectively receiving more than $1 million in kickbacks from contractors in exchange for the supervisors’ agreement to approve inflated and/or fraudulent payment invoices, as well as expediting the payments on those invoices.
Roadway is a general contracting company located in Brooklyn, New York, that specializes in the design and construction of subsurface utility systems. Many of Roadway’s contracts have been with Con Ed, performing what is known as “interference work.” In connection with subsurface construction projects in New York City, such as water main repair and manhole construction, Con Ed typically contracts with companies like Roadway to move existing subsurface gas and electric lines – interference work – so that the prime construction work can be performed. Companies performing interference work are paid by Con Ed based on either purchase orders or invoices itemizing the company’s labor, equipment, and other costs.
According to the complaint, many of the interference work projects that generated the kickbacks involved either Metropolitan Transit Authority construction sites or New York City Department of Environmental Protection water main repairs. Ball allegedly paid the kickbacks in exchange for Con Ed’s approval and payment on Roadway invoices that often contained inflated costs, such as inflated labor, and/or equipment expenses, and to ensure that Con Ed paid Roadway in a timely manner. Initially, the kickbacks were paid in cash to a Con Ed supervisor, who shared the proceeds with other Con Ed supervisors involved in the scheme. In 2004, at Ball’s request, the kickbacks were paid by check as part of a money laundering scheme in which the Con Ed supervisor submitted bogus invoices to Ball from a shell company; Ball drafted checks on Roadway’s account payable to the shell company; and the Con Ed supervisor gave the checks to another participant in the scheme who was able to cash the checks. The Con Ed supervisor then split the proceeds with other Con Ed supervisors. The total amount of kickbacks paid by check was approximately $30,000.
Mr. Campbell expressed his grateful appreciation to the investigating agencies – ICE, IRS, and Port Authority/IG – and emphasized that the investigation is continuing.
If convicted, Ball faces a maximum sentence of 10 years’ imprisonment and a $250,000 fine.
The government’s case is being prosecuted by Assistant United States Attorneys Monica Ryan, Daniel Brownell, and Sarah Coyne.
Name: RUSSELL BALL
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