Manhattan District Attorney Cyrus Vance, right, and Department of Investigation Commissioner Mark Peters arrive for a press conference to announce the indictment of 50 defendants involved in widespread housing fraud, Feb. 10. (AP Photo/Bebeto Matthews)
Manhattan District Attorney Cyrus R. Vance Jr., Department of Investigation Commissioner Mark G. Peters and New York City Police Commissioner William J. Bratton announced the arrest of 50 New York City employees Tuesday, in what Vance described as a “network of corruption.”
The arrest involved employees in the Department of Buildings (DOB) and Department of Housing Preservation and Development (HPD). They were charged with taking advantage of the city’s huge construction opportunities by accepting diverse bribes hatched by contractors and property owners, the prosecutors said.
“In all cases, the actions disadvantaged and harmed tenants in all buildings, and the public’s confidence in local government,” Vance said. The schemes also “compromised fair competition in our city’s housing and real estate development markets,” he added.
The nearly two-year investigation started as an inquiry into bribery with a Department of Buildings inspector, and eventually revealed $450,000 in bribes resulting in 26 distinct indictments, an indicator of how pervasive the schemes are. The case implicated 106 properties, mostly in Manhattan and Brooklyn.
“It’s no secret that when you have a large agency with a large number of people who are relatively moderately paid, who have huge individual expression over large financial projects, that’s the ground for potential corruption” Department of Investigation Commissioner Mark G. Peters said.
Investigators found that contractors and property owners bribe city inspectors in exchange for expediting inspections, dismissing complaints of properties, clearing serious building code violations, and attempting to evict tenants to make way for higher-rents and other illegal usages, according to Peters.
Contractors and property managers choose to bribe building employees to bypass proper buildings department channels so they can sell their properties quickly and clear existing violations without spending resources to fix the problem, said the prosecutors.
“You can’t sell your property if it has an existing housing violation,” Vance said. “Even if you have taken steps to clear the safety problems, you still have to wait your place in line to schedule an inspection.”
The first phase of the investigation was completed early Tuesday afternoon: 49 of 50 defendants were in custody, including 11 Department of Buildings employees and five housing inspectors, as well as two buildings department borough chiefs (Manhattan and Brooklyn). Also arrested were 22 property owners and managers, two contractors, and six expeditors, prosecutors said.
The defendants are charged with felony crimes including bribery, bribe receiving, falsifying Business Records, tampering with public records and official misconduct. The indictments were filed in New York and Kings counties.
Vance said sweeping corruption to the dynamic real estate markets is propelled by the influx of people coming into the city.
“Today’s cases demonstrate that the same surging demand that drives the pace of development can inspire the taking of shortcuts, and the taking of bribes,” Vance said.
Both Vance and Peters said the investigation against possible corruption in the heated housing market is an ongoing process.
“The real solution here is constant surveillance,” Vance said.
The press conference can be watched here.
