Attorney General James Secures $200,000 From Contractor Who Faked Diversity Metrics for a Billion-Dollar Public Works Project

While Working on Rochester Schools Modernization Program, Bell Mechanical Deceptively Claimed to Meet Project’s Minority- and Women-Owned Businesses Subcontracting Goals

ROCHESTER – Attorney General Letitia James today announced an agreement with Rochester-based contractor Bell Mechanical Contractor, Inc, after the company falsely claimed to meet state diversity requirements in order to win and maintain contracts on the $1.2 billion Rochester Schools Modernization Program (RSMP) — the largest public project in the city’s history.

Bell Mechanical is required to pay $200,000 in monetary restitution.

“Women- and minority-owned businesses are the backbone of the state of New York,” said Attorney General James. “The diversity standards put in place by local and state governments exist to provide equal opportunities to New York businesses, but those standards cannot be effective when companies like Bell Mechanical attempt to game the system. My office will continue to root out companies that defraud New Yorkers and take advantage of its opportunities.”

State and local law requires contractors to meet certain minimum diversity standards for the hiring of Eligible Business Enterprises (EBEs) as sub-contractors. The RSMP’s Diversity Plan, as adopted by the Rochester Joint School Construction Board (RJSCB), required contractors to subcontract 20 percent of their work to EBEs (15 percent of their work to Minority Business Enterprises and five percent of their work to Women Business Enterprises) or to obtain waivers for these requirements. The Diversity Plan was incorporated by reference into the contracts with every prime contractor; prime contracts were awarded only to contractors that certified that they would meet the diversity sub-contracting requirements.

The Attorney General’s investigation found that the contractors engaged in “labor pass-throughs,” where contractors would hire non-EBEs to perform work, but then run the money and paperwork through EBEs to create the appearance that an EBE had performed the labor.

As part of the agreement, the Attorney General secured commitments from Bell Mechanical to submit to extensive, multi-year compliance, remediation, and training requirements. The Attorney General’s Civil Rights Bureau will actively monitor the contractors’ adherence to these requirements.

In October 2016, the Office of the Attorney General (OAG) announced $825,000 in settlement agreements with five other Rochester-area companies that faked the compliance of state diversity requirements for the RSMP. In 2018, three more contractors reached an agreement with OAG, making the overall settlement amount more than $1 million.

The monetary terms of each settlement agreement are as follows:

  • Concord Electric Corporation ($350,000);
  • Manning Squires Hennig ($200,000);
  • Hewitt Young Electric, LLC ($160,000);
  • Michael A. Ferrauilo Plumbing & Heating, Inc. ($90,000);
  • Mark Cerrone, Inc. ($25,000);
  • Kaplan Schmidt Electric Inc. ($100,000);
  • Landry Mechanical Contractors, Inc. ($117,000); and
  • Nairy Mechanical, LLC ($12,000).

“I want to thank Attorney General Letitia James and her office for their work investigating and exposing efforts to subvert the Rochester Joint Schools Construction Board’s Diversity Plan,” said Norman H. Jones, chair, Rochester Joint Schools Construction Board. “We are proud of our Diversity Plan, which has ensured that minority-owned, women-owned, and disadvantaged business enterprises, as well as women and minorities in the workplace, have meaningful opportunities to participate in the Rochester Schools Modernization Program. Efforts to defeat these important requirements by circumventing the Board’s workforce and business participation goals will not be tolerated. We continue to actively monitor our diversity requirements to ensure that contractors are in compliance and that no further wrongdoing occurs. We do this to ensure that minority-owned, women-owned, and disadvantaged business enterprises are given a fair opportunity bid and work on our construction projects.”

This case was led by Senior Counsel Sandra Pullman of the Civil Rights Bureau, and Assistant Attorney General Maureen Fitzgerald of the Taxpayer Protection Bureau, under the supervision of Civil Rights Deputy Bureau Chief Elena Goldstein and Bureau Chief Jessica Clarke. The Taxpayer Protection Bureau is a part of the Economic Justice Division, which is led by Chief Deputy Attorney General for Economic Justice Christopher D’Angelo, and the Civil Rights Bureau is part of the Division for Social Justice, led by Chief Deputy Attorney General Meghan Faux, and all under the oversight of First Deputy Attorney General Jennifer Levy.