PRESS RELEASE

GAMBINO SOLDIER AND SON INDICTED FOR RACKETEERING AND $10 MILLION FRAUD AGAINST MTA IN RENOVATION OF NEW HEADQUARTERS AT 2 BROADWAY – DEVELOPER HIRED BY MTA ADMITS TO BEING MOB ASSOCIATE – UNION BUSINESS AGENT, CONSTRUCTION EXECUTIVE AND ONE OTHER ALSO CHARGED

ROSLYNN R. MAUSKOPF, United States Attorney for the Eastern District of New York, PASQUALE J. D’AMURO, Assistant Director-in-Charge, Federal Bureau of Investigation in New York, and RALPH GERCHAK, District Director, United States Department of Labor, Office of Labor-Management Standards in New York, today announced the unsealing of a 43-count racketeering, extortion, fraud, money laundering and obstruction of justice indictment

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involving the Metropolitan Transportation Authority’s new headquarters at 2 Broadway in Manhattan. The defendants are EDWARD GARAFOLA, a soldier in the Gambino organized crime family, his son MARIO GARAFOLA, an associate of the Gambino family, RICHARD CALABRO, MARIO GARAFOLA’s brother-in-law, and JUNIOR CAMPBELL, a business agent with Local 79 of the Laborers’ International Union of North America. Ms. MAUSKOPF also announced the guilty plea on July 27, 2004 of FREDERICK CONTINI, the developer of the 2 Broadway project, to a one-count superseding information charging him with a 13-year racketeering conspiracy with the Gambino family in connection with various construction projects in New York and New Jersey.¹ Finally, Ms. MAUSKOPF announced the guilty plea on May 6, 2004, of MICHAEL WEISS, President of World Elevator, Inc., to false statements and obstruction of justice charges in connection with the 2 Broadway investigation.

The defendants charged in today’s indictment will be arraigned today by United States Magistrate Judge Joan M. Azrack at the U. S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York. The case is assigned to United States District Judge David G. Trager.

The indictment alleges that the Gambino family’s influence over the 2 Broadway project led to fraudulent overbilling, extortion and kickbacks in at least 10 separate contracts, as follows:

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¹ In April 2002, CONTINI, Diminno, Matthew Joseph Downey, Constantine Vafias, James Roemer, John Vitiello and David Coakley were charged with conspiracy, fraud, money laundering and obstruction of justice in connection with 2 Broadway. All seven have pleaded guilty to various charges, including interstate transportation of property or money obtained by fraud, mail fraud, unlawful payments to union officials and representatives, money laundering, obstruction of justice, witness tampering and conspiracy.

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Contract	Contractor
Operators for Temporary Construction Elevators	Links Construction
Demolition	5 Boro Construction
Demolition	Covin Management
Bathroom Demolition and Renovation	Halpern Construction
Mailroom Demolition
Fireproofing and Manual Labor	Integrated Construction
Steel and Demolition	Inter Metal Fabricators
Asbestos Removal and Demolition	Acoustic Technology
Demolition	Building Core
Elevator Installation and Renovation	World Elevator
Anchorage Remediation, Demolition, Construction	Building Matrix

The indictment estimates that the monetary loss to the MTA and the building’s owner, Zar Realty Management, Inc., as a result of corruption at the project was “substantially in excess” of $10 million.

In pleading guilty to racketeering charges, CONTINI admitted to a long-time association with the Gambino family, primarily through Gambino associate Mario Mastromarino, a Gambino contact in the construction industry and a close associate of EDWARD GARAFOLA. Mastromarino has since died. EDWARD GARAFOLA is the brother-in-law of former Gambino underboss Salvatore “Sammy Bull” Gravano.

In his role as the developer of the MTA’s 2 Broadway base building project, CONTINI conspired with union officials and representatives and other associates of the Gambino and Genovese crime families to participate in, and reap the gains of, a massive fraud involving the renovation of 2 Broadway, an office building with 1.2 million square feet of space leased by

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 the MTA in July 1998 for the purpose of consolidating the operations of the New York City Transit Authority and the Triborough Bridge and Tunnel Authority.² At the time, CONTINI worked for Zar Realty Management, the owner of 2 Broadway and one of the victims of the fraud. The MTA and Zar agreed that MTA would lease the building for 49 ½ years and that Zar would develop the core and shell of the building, while the MTA would finance the project, up to $55 million. Any amount above that would be returned to the MTA in rent abatements over the course of decades. At the same time, the MTA financed the construction of its own offices through a separate contractor. After a legal dispute with Zar, the MTA contracted directly with CONTINI in February 1999 to finish the work that Zar had started.

The criminal schemes at 2 Broadway followed a simple pattern -- CONTINI abused his authority as the MTA’s developer by allowing subcontractors otherwise required to use union labor for various projects to use non-union labor, while billing at the higher union rate and reaping a windfall by not having to pay union benefits. On certain occasions, CONTINI was paid a portion of the difference as a kickback, and on others he simply allowed mob-controlled subcontractors to reap the benefits. Certain subcontractors, including WEISS, who had a $5 million contract to install new elevators in the building, paid kickbacks to CONTINI disguised as legitimate payments for work performed.

The Elevator Operators Scheme

The most significant fraudulent contract related to the use of temporary elevator operators to run the cars during the construction project. On March 11, 1999, CONTINI entered

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²   CONTINI was honored as “Developer of the Year” in 1999, for his work on the 2 Broadway project, by the National Association of Corporate Real Estate Executives.

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into a sham agreement with Links Construction, a company he controlled, to provide labor to operate the elevators, which ran 24 hours a day in 1999 and 2000. The agreement purported to be a straightforward labor contract, in which Links agreed to hire and pay temporary elevator operators from Local 1 of the International Union of Elevator Constructors and Local 14 of the International Union of Operating Engineers. However, Links did not hire any operators at all, but nonetheless billed MTA $14.3 million, a sum nearly $10 million in excess of the amount actually used for elevator operators. The indictment alleges that CONTINI used only a small portion of the billed amount to hire non-union operators and laundered the balance through shell companies. The money was ultimately transported to City Check Cashing in Jersey City, New Jersey, where Robert Santoro, an associate of the Genovese crime family, agreed to cash the checks in exchange for a secret percentage of their face value.³

According to the indictment, after the laundered cash was transported back to New York, EDWARD GARAFOLA was paid $12,500 per week by CONTINI -- as tribute to the Gambino soldier and pursuant to his demand -- through cash payments given to his son MARIO GARAFOLA. The rest of the cash was split among CONTINI, Mastromarino, Gambino associate John Vitiello and the Local 1 and Local 14 representatives responsible for ignoring the flagrant use of cheap non-union labor.⁴

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Santoro pled guilty on September 5, 2003, to money laundering charges in connection with the Links fraud.

⁴   The Local 14 representative at 2 Broadway, Morris DiMinno, also known as “Mickey,” an associate of the Genovese family, pled guilty to conspiracy, interstate transportation of property taken by fraud, obstruction of justice, and unlawful monetary transactions in April 2003. On March 25, 2004, DiMinno was sentenced to 70 months’ incarceration for his role in the scheme.

 

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