Investigations

Guisseppe (Joseph) Scalamandre and his brother Fortunato (Fred) Scalamandre, co-owners of several major construction companies in the New York City area, pleaded guilty in U.S. District Court in Central Islip, NY, in connection with a scheme in which the Scalamandres issued nearly $1 million in corporate checks to their subcontractors to pay fraudulent invoices generated at the Scalamandres' direction. The checks were cashed and the funds returned to the Scalamandres for use in paying organized crime to influence unions. In a related case, earlier guilty pleas were made public in the case of two minority business enterprises (MBEs) - Mohawk Industries, of Westbury, NY, and V.V.S.S. Company, Inc., of Flushing, NY, and their principals - who admitted they acted as fronts for the Scalamandres and other contractors on public projects. One of the largest MBE frauds in U.S. history, the case involved approximately 60 fraudulent MBE subcontracts with a total value of over $40 million. Of these, approximately 46 subcontracts totaling $26 million were on contracts let by DOT grantees, including projects to repave area highways and rehabilitate transit stations. As part of their plea agreement, the Scalamandres consented to placing their multimillion-dollar construction firm, Peter Scalamandre & Sons, under the supervision of a court-appointed monitor for the next five years. The Scalamandres' sentencing is scheduled for January 18, 2002. OIG investigated this case with the U.S. Attorney's Office, IRS Criminal Investigation Division, U.S. Department of Labor OIG, FBI, Postal Inspection Service, and New York City Department of Investigation.