Law enforcement authorities launched a massive takedown Tuesday of NYCHA corruption, busting 70 current and former mid-level bureaucrats they allege pocketed $2 million in bribes to award $13 million in small no-bid “micro purchases” that dodge competitive bidding requirements aimed at squelching corruption.
The corrupt micro-contract workaround — which prosecutors say dates back to 2013 and involved work at nearly 100 developments citywide — is a scheme that’s been hiding in plain sight for years.
A 2019 investigation by THE CITY revealed that NYCHA superintendents across the city had awarded some $250 million in micro contracts to a small number of vendors. This occurred despite repeated behind-the-scenes warnings by the city Department of Investigation (DOI) that this pattern of no-bid awards in amounts just below the trigger for competitive bidding indicated potential “corruption hazards.”
Shortly after THE CITY published the article, Lynne Patton, then-Regional Administrator for HUD’s New York-New Jersey bureau, predicted “fraud charges are forthcoming!”
On Tuesday her hunch finally came true as Manhattan U.S. Attorney Damian Williams announced the unsealing of 476 pages of criminal complaints outlining a pattern that repeated itself again and again due to the power superintendents and assistant superintendents had to hand out small contracts in the push to address a daunting backlog of apartment repairs.
As long as they kept the awards below certain levels — $5,000 was the trigger for many years, upped to $10,000 in 2019 — NYCHA bureaucrats could pick whichever contractor they wanted without soliciting multiple bids. They wound up doing that with a select few vendors, paying out what amounted to millions of dollars in contracts for everything from plumbing to carpentry to painting.
In exchange, the favored vendors kicked back a percentage of the award, usually in increments of $500 to $1,000, prosecutors say.
The potential for this specific type of corruption at NYCHA was well known. U.S. Rep. Ritchie Torres (D-The Bronx), former chair of the City Council’s public housing committee, had called out the no-bid contracts’ vulnerability following THE CITY’s 2019 investigation.
“Back in 2019, I was the first elected official to sound the alarm about NYCHA’s lack of oversight over micro contracts and small contracts. The high risk of corruption was glaringly obvious five years ago,” he said. “I am pleased to see [the U.S. Attorney] prosecuting those who accepted bribes in exchange for steering micro contracts and small contracts to preferred vendors.”
And Bart Schwartz, the federal monitor overseeing NYCHA, also tagged these no-bid contracts as a problem in late 2019, citing an example of his field investigators learning of work billed by a contractor who’d received multiple no-bid contracts that was of poor quality and had to be redone by NYCHA workers.
At Tuesday’s press conference, DOI Commissioner Jocelyn Strauber also pointed out that in 2021, an undercover DOI probe resulted in nine contractors prosecuted by the Brooklyn district attorney for allegedly bribing NYCHA superintendents to win hundreds of the smaller contracts. All nine pleaded guilty.
Then in November 2022, two NYCHA superintendents pleaded guilty to federal bribery charges in a micro-contract case brought by Williams.
Strauber noted that after the 2021 case, DOI made five specific recommendations to NYCHA to tighten controls over the awarding of micro contracts. NYCHA rejected four of the five, including a suggestion that they remove front-line superintendents from awarding small contracts and turn the job over to the central procurement office.
On Tuesday DOI made that same recommendation again along with 13 others, all of which NYCHA Chief Executive Officer Lisa Bova-Hiatt says the authority will begin implementing immediately.
“Our hope, as the U.S. Attorney said, is that this will put a stop to this,” Strauber said. “NYCHA has committed to implementing the reforms we’ve recommended and we’re optimistic that they will do so.”
Historic Bust
The sweeping charges unveiled Tuesday — described by the U.S. Department of Housing & Urban Development’s Office of Inspector General as the largest number of federal bribery charges filed on a single day in the Justice Department’s history — mark a major turnaround from the small-bore one-off cases brought previously to end a scheme that was well known to investigators for years.
“We were trying to send a message with a 70-person takedown — a message that can’t be missed by anyone out there who thinks that this behavior is acceptable or will be tolerated,” Williams said. “Right here, right now, they should know that it won’t be.”
The high-profile rollout involved 700 law enforcement personnel from multiple agencies, including the Department of Homeland Security, the U.S. Marshals and the NYPD, with arrests taking place in four states. All those busted who are currently on NYCHA’s payroll were immediately suspended, and NYCHA began scrambling Tuesday to replace them with other workers.
The pervasiveness of the problem was evident via a stunning map prosecutors presented depicting every NYCHA building where this scam took place — nearly 100 of NYCHA’s 320 developments, housing 200,000 residents.
The investigation rested in part on the cooperation of contractors who were hired to address a wide variety of repair requests NYCHA has been struggling to address for years. The premise behind offering superintendents the no-bid option was to skip the slower procurement process required of bigger contracts and get the work done faster.
One of the new cases appears to have grown out of the 2022 cases filed against two NYCHA superintendents for taking bribes. A co-conspirator listed in one complaint fits the description of Leroy Gibbs, who pleaded guilty to taking $2,000 in bribes to award a contractor $9,950 in micro contracts at Douglass Houses in Manhattan when he was a superintendent there.
After his plea, investigators discovered text discussions the individual, who is identified as CC1, had that he’d tried to delete in which he discussed bribes with Angela Williams, a manager at the Farragut Houses in downtown Brooklyn, the indictment alleges.
The complaint states that CC1 had pleaded guilty on October 7, 2022 to committing bribery while he was a superintendent at Douglass Houses. That’s the date Gibbs pleaded guilty to those charges as superintendent at Douglass.
In February 2020 CC1 pressured contractors to pay Williams up to $5,000 for work at Farragut. This pattern continued into February 2022, when CC1 texted Williams asking her to approve no-bid contracts for favored vendors because he had been transferred to another NYCHA job where he no longer had that ability.
“Babe could you put a company through for someone? All you would need to do is sign the documents as the approved and get anyone to sign as the requestor. Then send it in. You will receive 5 per.”
“This has been my side hustle … lol 1K per,” he added, referencing his habit of demanding $1,000 per micro contract awarded.
Gibbs was arrested soon after, retired from NYCHA and then pleaded guilty in October 2022. Shortly before Gibbs was to be sentenced in January 2023, investigators noted multiple calls between Williams and CC1 on the same day.
Not long after those calls, Williams’ personal cell phone underwent a “factory reset,” wiping out most of the data and text messages prior to that date. Confronted by prosecutors, Williams claimed she went to a Manhattan store for the reset, but the GPS data in her phone put the location of the reset in Brooklyn. Williams resigned from NYCHA in February 2023.
Many of the cases were made with the help of contractors, who appear to have learned from each other by word of mouth that bribes were required to obtain work from NYCHA.
The indictments describe multiple vendors who admitted to paying bribes for the no-bid work and testified to the grand jury in exchange for immunity from prosecution. Three vendors told investigators about paying off one superintendent at three different Brooklyn developments — Taylor Wythe and Independence Towers, both in South Williamsburg, and Cypress Hills in Ocean Hill.
One contractor told investigators the superintendent at those complexes, Tara Lucas, told him he needed to “take care of” her, so he paid her $1,500 cash for contracts worth $5,000 and $3,000 for contracts worth $10,000 — all under the cut-off that would have required competitive bidding.
In a statement issued shortly after the takedown was announced Tuesday, NYCHA CEO Bova-Hiatt promised sweeping changes to how the authority handles smaller contracts for faster repair work.
“NYCHA has zero tolerance for wrongful and illegal activity,” she said. “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.”
Prosecutor Damian Williams also made clear that the investigation of contract corruption at NYCHA remained active, and encouraged vendors who’ve encountered shakedowns by authority employees to come forward.
“Contractors who paid NYCHA employees should not be afraid to speak out,” Williams said. “The culture of corruption needs to end today.”