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70 New York Public Housing Workers Arrested in Massive Corruption Scandal

By Nadia El-Yaouti | Posted on February 9, 2024

ABC News

Photo Source: ABC News

Over 70 workers with the New York City Housing Authority were arrested earlier this week by city and federal investigators. The criminal bust is being called one of the largest cases of single-day bribery and corruption in the history of the Justice Department. The overwhelming arrests were on full display as handcuffed former and current NYCHA workers were transported by bus to the courthouse. Others were transported in U.S. Marshals vans.

Southern District of New York attorney Damian Williams announced that at least 70 people have been charged in connection with a corruption and kickback scheme targeting NYCHA public housing facilities. The scheme was believed to have occurred for over a decade between 2013 and 2023.

The scheme involved NYCHA workers, often building supervisors and other building workers, taking bribes or kickbacks in exchange for handing out over $13 million worth of work in contracts. An estimated $2 million was collected by workers in bribe money. The corruption included construction, maintenance, and no-bid contracts for essential services including plumbing and building upgrades for nearly a third of the public housing buildings.

NYCHA buildings are home to over 300,000 residents and are the largest public housing facility in the United States. There are 335 NYCHA building developments across the city, and it’s believed that nearly 100 of those developments were involved in the bribery and kickback scheme.

Officials detail that most of the bribes happened on small-scale jobs like plumbing contracts that were around $10,000 each. In most cases, contractors who agreed to the kickbacks were the ones granted the bid. Officials also share that building superintendents demanded that kickback payments be made before work could begin.

Officials say that the actions of the current and former workers had an impact on these residents because they "may have been cheated out of better services and programs" due to the "lucrative, under-the-table deals,” according to Ivan Arvelo, the Homeland Security Investigations special agent in charge for New York.

The arrests were the efforts of a year-long investigation that spanned all five boroughs and six states. The investigation resulted in the arrest of 55 current NYCHA employees and more than a dozen former employees.

State officials launched the SDNY Whistleblower Pilot Program to help with their investigation. Williams called on contractors who were offered bribes or kickbacks or others who were aware of the corruption to report their experience and added, "Going forward contractors should understand that NYCHA employees should not be asking for a single penny."

New York City Department of Investigation Commissioner Jocelyn Strauber has also called on the public housing authority to make “significant reforms” to their current no-bid contracting process, something the NYCHA says they have done.

“The conduct as alleged drove up the cost of this kind of work and diverted valuable public funds away from public housing and into the pockets of corrupt NYCHA staff," Strauber shared in a statement.

Strauber offered 14 recommendations to improve the current bid process. Among those recommendations were: reforming the micropurchase process, having greater oversight; implementing a review of work outside the review conducted by buildings and superintendents; and implementing prequalified reviews of vendors.

This is not the first time the NYCHA has been under security for worker corruption. In 2021, nine contractors were indicted for bribing superintendents on small repair contracts. In 2022, 66 workers, many of whom were plumbers, and 12 supervisors had been identified for abusing overtime regulations. At least 18 workers were fired for their actions and four others were demoted. The remaining 44 were under investigation by officials. In total, the overtime abuse resulted in over $1.4 million paid out. Some of the payment was made out to workers who were making more than $100,000 in their role.

NYCHA Chief Executive Officer Lisa Bova-Hiatt maintains that despite the corruption that the organization has battled in recent years, they are committed to investigating and charging all who defraud the system.

"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.” Bova-Hiatt shared. "In the past five years, NYCHA has achieved many significant milestones, while remaining vigilant to ensure integrity in every area of our work. We have already made transformative changes to our business practices and will continue to do so. We will not allow bad actors to disrupt or undermine our achievements."

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