More than five dozen employees with the New York City Housing Authority were charged with accepting cash payments in exchange for giving out contracts, federal officials said, calling it the largest single-day bribery takedown in the Justice Department's history.
Seventy current and former employees are alleged to have received cash from contractors in exchange for Housing Authority "no-bid" contracts, the U.S. Attorney’s Office for the Southern District of New York announced in a news release. The defendants are accused of demanding over $2 million in bribe money and awarding over $13 million worth of no-bid contracts.
Most of the defendants, 66 of them, were arrested Tuesday in New York, New Jersey, Connecticut and North Carolina on charges that include solicitation and receipt of a bribe, extortion and conspiracy. One defendant was also charged with destruction of evidence and making false statements, according to the U.S. attorney's office.
The Housing Authority's CEO, Lisa Bova-Hiatt, said in a statement that the agency has "zero tolerance for wrongful and illegal activity."
"The individuals allegedly involved in these acts put their greed first and violated the trust of our residents, their fellow NYCHA colleagues and all New Yorkers," Bova-Hiatt said. "These actions are counter to everything we stand for as public servants and will not be tolerated in any form. ... We will continue to work with all of our law enforcement partners to rid the Authority of malfeasance."
Bribes are alleged to have happened when repairs and construction work required the Housing Authority, the largest public housing authority in the country, to use outside contractors, the U.S. attorney's office said.
Contractors are typically chosen in a bidding process; however, there are times when designated staff members can hire contractors of their choosing without soliciting multiple bids, the office said.
The defendants, who were all employees during the alleged scheme, "demanded and received cash in exchange for NYCHA contracts by either requiring contractors to pay upfront in order to be awarded the contracts or requiring payment after the contractor finished the work and needed a NYCHA employee to sign off on the completed job so the contractor could receive payment from NYCHA," the release says.
The defendants typically demanded $500 to $2,000 depending on the size of the contracts, the U.S. attorney's office said. Some employees demanded more.
U.S. Attorney Damian Williams accused the defendants of running the scheme to "line their own pockets."
"NYCHA residents deserve better," Williams said in a statement. "My Office is firmly committed to cleaning up the corruption that has plagued NYCHA for far too long so that its residents can be served with integrity and have the high-quality affordable homes that they deserve. The culture of corruption at NYCHA ends today."
Jocelyn E. Strauber, the commissioner of the New York City Department of Investigation, said the department recommended a reform of the Housing Authority’s no-bid contracting process and that the authority accepted it.
Ivan Arvelo, the Homeland Security Investigations special agent in charge for New York, said Housing Authority residents "may have been cheated out of better services and programs" because of "lucrative, under-the-table deals."
The Housing Authority provides housing in 335 developments across the city and receives more than $1.5 billion in federal funding from the Department of Housing and Urban Development every year. More than 300,000 people live in its buildings, according to NBC New York.
The agency faced scrutiny in the past, and it has been plagued with corruption allegations for years, the station reported. In 2022, numerous workers were fired in connection with allegations of overtime abuse.
The Office of the New York City Public Advocate previously recommended that the Housing Authority create a reliable tracking system for repairs so it could investigate all substandard repairs. The office said Tuesday that the bribery allegations harm "not only tenant trust but tenant safety, as it corrupts the repair process and contributes to dangerous conditions at complexes across the city."
"Our office has consistently raised the failures of management at NYCHA as the worst landlord in the city, but the charges today are nonetheless a staggering statement on the widespread abuses of power and tenant trust at the core of the agency’s deficiencies," the statement read.