State hits minority construction milestone, but questions of fraud persist (The Buffalo News)

State leaders celebrated in December after achieving an ambitious goal set by former Gov. Andrew M. Cuomo: awarding 30% of state construction contracts to businesses owned by minorities and women.

“New York State sets ambitious goals – and my job is to deliver on them,” Gov. Kathy Hochul said, noting the state’s goal for the hiring of minority and woman-owned business enterprises, or MWBEs, is now the highest in the country.

But beyond the hoopla in Albany, the program has seen fraud over the years.

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In the 1980s, The News uncovered a minority contracting scheme on Buffalo’s light rail system that led to federal charges. In that case, Onyx Construction and Equipment Corp., which represented itself as a minority contractor, was awarded a subway construction contract. But Onyx was really created by a white man who was a high-ranking member of a labor union tied to the Buffalo mob.

“It’s one of the programs that we have to consistently try to change, because there are always people trying to massage or change it for their own good,” said State Sen. Sean M. Ryan, D-Buffalo.

Today, Ryan said, the most common form of fraud involves what the inspector general said occurred on the Buffalo Billion projects, where companies owned by minorities and women appeared on paper to be doing a significant amount of work on the $750 million Tesla plant in South Buffalo and two multimillion-dollar projects on the Buffalo Niagara Medical Campus. But according to state documents, the work was really being done by companies owned by white men.

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Companies remain on state list

In reviewing state construction deals, The News found multiple cases where even after allegations of wrongdoing and fines by the government, MWBE companies remained certified by the state. There also was little evidence that white contractors who hired the firms were stopped from participating in large state construction projects.

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Ryan said the state, as well as county prosecutors, need to be more aggressive in cracking down on “unscrupulous contractors.”

“The whole decertification process in NYS is not being used consistently, and you have not seen many prosecutions by county district attorneys,” Ryan said. “It’s 100% whack-a-mole, and the investigative end of it has never been prioritized.”

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New legislation proposed

After reading the story in The News, Peoples-Stokes sent a letter to State Attorney General Letitia James urging her to review the cases involving three contractors – Jennings Construction Services, JHP Industrial Supply Co. and Cannon Electric – that Flynn declined to prosecute. A spokesperson for James confirmed receipt of the letter but declined to comment further.

Peoples-Stokes also co-sponsored a bill that would increase reporting requirements for MWBE contracts while beefing up staff resources for investigating and prosecuting cases of fraud. The legislation, which passed the Assembly last year before stalling in the Senate, would also allow courts to slap companies convicted of MWBE fraud with larger fines. Ryan has co-sponsored the legislation in the Senate.

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