State Contractor Pleads Guilty To Fraud And Failure To Pay Workers Approximately $300,000

Attorney General Spitzer today announced that a Maryland-based company, pleaded guilty in Orange County Court to criminal and labor law violations committed in connection with a contract to paint bridges for the New York State Thruway Authority.

Paint City Contractors' president, George Forakis, pleaded guilty to Scheme to Defraud in the First Degree, a felony. The company also pleaded guilty to Scheme to Defraud in the First Degree.

Forakis admitted to engaging in a scheme to illegally obtain a contract with the Thruway Authority to paint five bridges. The $707,665 contract was awarded as the result of its low-bid under a competitive process. The contract required the company to paint bridges located in Orange and Rockland counties, which are part of the state's 641-mile Thruway system. The defendants admitted having deceived the Thruway Authority into believing that the bid proposal was prepared by, and that work under the contract would be performed by, Paint City Contractors when they knew that the proposal was prepared by another company, Argo Contracting Corporation of Ohio, which was ineligible to bid the job since it lacked required certifications.

After commencing work on the projects, Argo abandoned the job and Paint City Contractors took over. In connection with the work performed by Paint City Contractors, Forakis also admitted having engaged in a scheme to pay their employees less than the prevailing wage, in violation of the provisions of Labor Law Article 220. The scheme included the creation and submission of false certified payroll reports to the Thruway Authority for the purpose of concealing and facilitating the underpayments.

Among the conditions of the plea are payments of restitution to those workers financially harmed by the underpayment.

The Attorney General's Labor Bureau has commenced action against Paint City Contractors for reimbursement of employee wages. That case is being handled by Assistant Attorney General Richard Balletta, under the supervision of Labor Bureau Chief Patricia Smith.

The investigation was assisted by investigators from the Inspector General's Office, Department of Labor, and Thruway Authority.

The defendant is scheduled to be sentenced in Orange County Court on December 6, 2001.Also on that date, Mr. Forakis' son, Panagiotis Forakis, the company's vice president of operations is scheduled for a court appearance.

The criminal case is being prosecuted by Assistant Attorney General Mary B. Kavaney, Attorney in Charge of the Poughkeepsie Regional Office, and Assistant Attorney General Christopher P. Borek of the Criminal Prosecutions Bureau.