Real Estate Developer Sergio Benitez Sentenced To 22 Months’ Imprisonment For Defrauding NYC Department Of Housing Preservation & Development
Earlier today, Sergio Benitez, a developer of affordable housing projects in Brooklyn for the New York City Department of Housing Preservation and Development (HPD), was sentenced to a term of imprisonment of 22 months followed by three years of supervised release, including a three-year ban from applying for any other city or governmental housing contracts, based on his conviction for wire fraud conspiracy. He was also ordered to pay $228,200 in restitution to the City of New York and fined $10,000. Benitez previously paid an additional $228,200 in forfeiture to the government. The sentencing proceeding was held before United States District Judge Nina Gershon at the U.S. Courthouse in Brooklyn, New York.
The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); Daniel R. Petrole, Deputy Inspector General, United States Department of Labor (DOL) Office of Inspector General; and Rose Gill Hearn, Commissioner, New York City Department of Investigation (DOI).
Benitez was arrested on October 6, 2011, as part of a seven-defendant case involving corruption at HPD and ultimately pleaded guilty to wire fraud conspiracy. According to the government’s filings and other public records, Benitez was a major real estate developer of affordable housing projects sponsored by HPD. Benitez defrauded HPD by demanding kickbacks from a construction contractor in return for hiring him as the general contractor on the Cooper Decatur Cluster affordable housing development in Brooklyn. From 2006 until Benitez’s arrest, the contractor paid two percent of the funds he received from HPD to Benitez, for a total of $228,200 in kickbacks. In order to cover the cost of these kickbacks, the contractor inflated his invoices to HPD by a similar amount. To disguise the kickbacks, Benitez issued sham invoices to the contractor from one of Benitez’s several companies, All Boro Painting & Repairs, Inc. In the meantime, Benitez was featured as a model real estate developer in the New Housing Marketplace Plan issued by HPD in early 2011, where he was quoted as saying, “I’m originally from Brooklyn, and I see my work as a way of giving back.”
“Sergio Benitez claimed that he was ‘giving back’ to Brooklyn, but in reality, all he gave the people of the City of New York was a hefty bill for his own corruption. In taking hundreds of thousands of dollars in kickbacks, Benitez stole from the very community he had pledged to serve, by diverting funds meant for affordable housing construction into his own pockets,” stated United States Attorney Lynch. “Today’s sentence shows that even the most influential real estate developers will be brought to justice if they steal public funds for corrupt personal gain.”
FBI Assistant Director-in-Charge Venizelos stated, “While Sergio Benitez publicly touted his community-minded commitment to Brooklyn, he was privately taking kickbacks whose cost was passed on to the city. Actions speak louder than words, and his actions were self-serving and deceitful.”
DOI Commissioner Gill Hearn stated, “This developer hurt low-income New Yorkers, fleeced the taxpayers, and is going to prison for milking the City’s affordable housing program for kickbacks. His undoing in this joint investigation should warn off anyone tempted to tack the cost of corruption onto the City’s bill.”
United States Attorney Lynch thanked the Internal Revenue Service, Criminal Investigation, New York; the United States Department of Housing and Urban Development; and the New York City Police Department for their cooperation in this case.
To date nine defendants, including HPD’s former Assistant Commissioner, two other supervisory officials at HPD, and six real estate developers and general contractors have pleaded guilty to charges including racketeering conspiracy, bribery and wire fraud conspiracy in connection with the government’s ongoing investigation of widespread corruption of the affordable housing industry. Benitez is the third defendant to have been sentenced.
The government’s case is being prosecuted by Assistant United States Attorneys Cristina M. Posa, Anthony Capozzolo and Claire Kedeshian.
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