Construction Today - December 2017 - 6

LEGAL ISSUES
can be targets for
ยป Contractors
multiple fraud threats, including
from employees and vendors.

CON GAMES

Here's how contractors can minimize fraud exposure. BY SCOTT SHAFFER AND SETH SNYDER

C

ontractors face risks to their businesses - and risks even in simply
completing a project - that are
many and varied. Contractors are
very familiar with the threat of damaged
equipment, injuries, lending disputes,
unexpected change orders, weather delays
and jurisdictional interference, to name just
a handful. Contractors survive and thrive in
the construction industry because of their
ability to navigate such challenges. However, there is another form of risk many tend
to overlook - fraud.

Where Fraud Originates
The critical role that contractors play in the
construction process makes them a target

6

CONSTRUCTION-TODAY.COM DECEMBER 2017

from multiple directions. Contractors can be
victimized by vendors, subcontractors, employees and investment partners and even
other contractors. Here are a few examples
of fraud in construction.
The Fake Architect: Paul Newman was a
respected New York architect. Throughout
his career, he drafted dozens of architectural renderings and affixed hundreds of
stamps to building plans and inspections.
He designed senior centers and renovated
commercial establishments. Municipalities, residential property owners and
businesses alike relied on Newman to get
the job done.
There was only one issue: Newman was
not actually an architect. In June, he pled

guilty to six felony counts of fraud. "As we
allege, for over seven years the defendant
has pretended to be a registered architect,
deceiving hundreds of New Yorkers -including families and senior citizens - with the
sole goal of enriching himself," said New York
State Attorney General Eric Schneiderman.
Inflated Invoices: In 2013, a supplier
in Georgia pled guilty to defrauding a St.
Louis-based construction company to
which he supplied materials. The supplier
inflated the invoices to a co-conspirator
who worked for the construction company and after payment was received for
those invoices, the supplier provided a
kickback to the co-conspirator. The two
fraudsters were charged with multiple


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Table of Contents for the Digital Edition of Construction Today - December 2017

Contents
Construction Today - December 2017 - Cover1
Construction Today - December 2017 - Cover2
Construction Today - December 2017 - 1
Construction Today - December 2017 - Contents
Construction Today - December 2017 - 3
Construction Today - December 2017 - 4
Construction Today - December 2017 - 5
Construction Today - December 2017 - 6
Construction Today - December 2017 - 7
Construction Today - December 2017 - 8
Construction Today - December 2017 - 9
Construction Today - December 2017 - 10
Construction Today - December 2017 - 11
Construction Today - December 2017 - 12
Construction Today - December 2017 - 13
Construction Today - December 2017 - 14
Construction Today - December 2017 - 15
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Construction Today - December 2017 - Cover3
Construction Today - December 2017 - Cover4
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