A NEW York construction company, owned by a Carrickmore man who emigrated to America in the 1950s, has been convicted of defrauding clients by arranging subcontractors to falsely inflate bills.
Structure Tone, co-founded by businessman Pat Donaghy, agreed to pay a settlement of $55 million, which is just over £32.5 million.
He moved to the US in 1959 and set up the firm with partner Lewis Marino in 1971. Although Donaghy retired from Structure Tone in 1999, their families still own the company.
It is one of the biggest building companies in the United States with reported annual revenues of $3 billion. It admitted overcharging clients by deliberately inflating invoices for electricians, plumbers and other subcontractors working on construction projects between 2005 and 2009. In a statement last week, Manhattan district attorney Cyrus Vance Jnr said, “Structure Tone’s plea and forfeiture of $55 million – one of the largest ever imposed on a construction company – sends out a clear message that this type of activity will not be tolerated.”
Structure Tone overcharged customers by forcing contractors working on projects it managed to add in many cases “unnecessary contingencies” in an addendum to their contracts without the knowledge of their clients. The company then removed these overpayments by inducing the subcontractors to provide discounts on fixed-price contracts on other Structure Tone projects.
Structure Stone has given an assurance that the matter is now resolved and that current projects were not affected.
In a statement the company said, “The record-keeping issues, which form the basis of this agreement, date back to the period from 2005 to 2009, and we have fully co-operated with the authorities from the beginning.”
The company was previously in trouble with the authorities in 1998 when it pleaded guilty to a $2 billion bid-rigging and bribery scandal involving the payment of a bribe to win a $500 million contract to renovate Sony’s former headquarters. On that occasion it paid out $10 million for breaking the law.