School Construction Authority General Contractor Sentenced To 96 Months In Prison For Long-Running Scheme To Deprive Workers Of The Prevailing Wage

Department of Justice
U.S. Attorney’s Office
Eastern District of New York

Friday, April 1, 2016

Earlier today in Brooklyn federal court, Muzaffar Nadeem, the owner of SM&B Construction Co., Inc. (SM&B), was sentenced to 96 months’ imprisonment, ordered to pay more than $1.3 million in restitution to the IRS, and ordered to forfeit to the government over $7.1 million in criminal proceeds, following his convictions on May 8, 2015, after a four-week jury trial, for mail and wire fraud, structuring financial transactions, federal programs bribery, making illegal cash payments to a union official, money laundering, unlawful monetary transactions over $10,000, subscribing to false tax returns, and multiple related conspiracy charges.

The convictions arose out of Nadeem’s leadership role in a long-running scheme to pay SM&B’s workers a fraction of the prevailing wage on projects funded by the New York City School Construction Authority (SCA), as SM&B was legally and contractually required to do. Nadeem’s co-conspirators Zainul Syed, Afzaal Chaudry and Irfan Muzaffar were also convicted at trial of various crimes for their participation in this scheme. Muzaffar was previously sentenced to 18 months’ imprisonment, and Chaudry was previously sentenced time served, following approximately ten months of imprisonment. Syed is awaiting sentencing. The sentencing proceedings were held before U.S. District Judge Brian M. Cogan.

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Sunshine Week: Beat reporter shines light on schools’ use of federal contracts

By Robert Brauchle

March 16, 2015


Reporter Ryan Murphy began 2014 with a tip that Isle of Wight County Schools may have skirted federal regulations in the construction of the new Georgie D. Tyler Middle School.

Using the state Freedom of Information Act to access copies of contracts, emails and bid documents, the Daily Press Isle of Wight County beat reporter found that the school division had omitted wage standards from the construction contract that are required under the federal Davis-Bacon Act. The effect was to lower the cost of construction by underpaying local workers hundreds of thousands of dollars.

“I spent a couple of months digging into the documents and digging into legislation to figure out exactly what had happened,” Murphy said.

Murphy worked with school administrators to get the documents he needed.

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Contractors Allegedly Paid Workers Below Prevailing Wage, Labor Brokers Demanded Kickbacks On NYC School And Housing Construction Projects


(New York, NY) Attorney General Eric T. Schneiderman and New York City Department of Investigation Commissioner Mark G. Peters announced today the arrests and indictments of a contractor and two labor brokers overseeing New York City School Construction Authority (SCA) and Housing Authority (NYCHA) projects for allegedly underpaying construction workers. The arrests stem from a joint investigation into underpayment and kickback schemes on projects at P.S. 196K, a public school in Brooklyn, and the Pomonok Houses Project in Queens. As alleged in two indictments, several workers were deprived of several thousand dollars each from the alleged schemes. If convicted on the top counts, each defendant faces up to seven years in prison.

“Contractors who work on public projects cannot ignore New York State’s labor laws in order to line their own pockets,” said Attorney General Schneiderman. “In this case and many others, my office is taking aggressive action, including criminal prosecution when appropriate, to ensure that workers are paid the wages they’ve earned.”

“Not only does prevailing wage fraud deprive honest workers of fair pay, but it is a gateway to other schemes that endanger public safety. Exposing and putting an end to prevailing wage fraud is a cornerstone of DOI’s multi-pronged effort to combat corruption in New York City construction. I thank the Attorney General and his staff for their partnership on these important cases,” New York City Department of Investigation Commissioner Mark G. Peters said.

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Workers will get backpay for Windsor school construction

By Ryan Murphy
November 25, 2014, 9:43 PM | ISLE OF WIGHT

Isle of Wight County Schools will pay backpay for hundreds of workers on a school construction job in Windsor who were shorted after the school system failed to include federal wage requirements in contract documents.

The move comes seven months after a Daily Press investigation revealed that the school system had appeared to violate federal law by failing to include the pay rate clauses. The school system used $7.5 million in federally subsidized bonds for the job, which came with strings attached, including paying workers on a pay scale based on local prevailing wages.

The Labor Department opened an investigation into the issue in May. A department spokeswoman said Wednesday that the investigation was still open.
The Isle of Wight School Board approved an order at Monday’s work session to take steps to comply with the federal law, called the Davis-Bacon Act, and to compensate construction workers for the difference between what they were paid and what federal law said they should have been paid.

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