CASE 2: THE SINGLE-CLIENT COMPANY

 

At a co-op in the Bronx, some of the maintenance employees set up their own company to do renovations on the building – charging more than double the going rate for the services. The managing agent knew all about it – and, in return for a 10 percent kickback on the company's $50,000 to $70,000 annual billing, let it go on for five years until they were all caught.

"It was a middle-income building in a middle-income neighborhood," says Kessler. "I walked in and met the president of the board. She suspected the building was spending more on certain items than they should. She also told us she suspected that some of the employees might be corrupt."

In the process of cross-checking vendor invoices against board payments, the investigators discovered that with one company all the invoice numbers were consecutively numbered – which meant they never had any other clients.

Before making any accusations, however, the investigators had to verify. They visited the supposed street address of the company – and found it was only a mail drop. They then ran database searches that turned up the fascinating fact that the wife of a building employee was listed as this renovating company's president.

Kessler's firm broke the news to the board over the phone, giving the president a head's up about what the final report would detail. "She was taken aback because it wasn't what she was expecting," Kessler says.

Despite finding the six-figure overbilling, the kickbacks, and the personal betrayal of trust, however, the board merely fired the employees and discharged the managing agent. As too often happens, the board, not wanting to draw attention to its own inattention, did not pursue prosecution. The wrongdoers were free to go back into the workforce because the board didn't want to look bad.

Which means, of course, they may be in your building right now.

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