During a court hearing this winter, alleged loan shark Mark “Chippy” Kocaj urged a federal judge to allow him to work for a Bronx-based construction company.

Kocaj was out on bail, awaiting trial for his alleged role in a mafia-connected construction bribery scheme. In the meantime, he wanted to return to the industry where he’d spent most of his career — but prosecutors weren’t keen on the idea.

“We do have concerns about that company and its connections with organized crime and other misconduct they may have committed,” Assistant District Attorney Keith Daniel Edelman said of the contractor offering the job, according to a transcript of the hearing. “He may be exposed to further violations. He may be exposed to other associates.”

Ultimately, the judge rejected his request.

Kocaj is the cousin of John “Smiley” Simonlacaj — a former managing director at Ziel Feldman’s development firm HFZ Capital Group — and their relationship helped enable a wide-ranging scheme that ensnared at least two New York developers and three construction management firms, prosecutors allege. Kocaj’s attorney, Christopher Booth, and Simonlacaj’s attorney, Glenn Colton, both declined to comment.

One of the projects at the heart of the case is HFZ’s $2 billion condo tower at 76 11th Avenue, known as the XI.

Simonlacaj, who has since been fired from HFZ, is accused of letting the Gambino crime family skim hundreds of thousands of dollars from the condo development and other projects in New York through CWC Contracting — a carpentry subcontractor that allegedly doled out bribes to employees of multiple companies in exchange for work and larger payouts.

“HFZ has not been the target of the government’s investigation, and there has never been any suggestion that HFZ did anything inappropriate,” a spokesperson for the developer said in a statement. “Rather, it appears that HFZ, like the other developers described in the indictment, may have been a victim of the alleged acts.”

In addition to HFZ’s Simonlacaj, an employee at RXR Realty was also allegedly offered kickbacks by CWC, court documents show.

The subcontractor is accused of inflating bills for work that, in some cases, the company didn’t even perform. Instead, the money was allegedly used, in part, to pay for work performed at construction executives’ personal homes. The alleged scheme played out in just one year, from June 2018 to July 2019. But according to prosecutors, in that time period, the little-known subcontractor was able to quietly manipulate some of the biggest names in Manhattan real estate and exploit multibillion-dollar projects.

In addition to HFZ and RXR, CWC’s developer and general contractor clients over the past decade include Gary Barnett’s Extell Development and Tishman Construction, according to an archived version of the CWC’s website and permits filed with the city Department of Buildings. It worked for these firms despite the fact that CWC owner Andrew Campos had previously been accused of mob-related activities. None of the larger development firms or general contractors have been accused of wrongdoing.

The indictment, filed last December against Kocaj, Simonlacaj and nine others, is a case study on how organized crime can still infiltrate New York development projects even at a time when mob activity is much lower than it was in the 1980s and 1990s.

Dozens of subcontractors can work on any given job at one time, creating myriad opportunities to inflate bills and strong-arm workers who may already be indebted to the mafia, several former prosecutors told The Real Deal. And unless a developer is closely monitoring who is working on their site, such behavior can go undetected.

Still, the influence of organized crime in construction isn’t as “systematic or unbridled” as it was decades ago, said Bruce Maffeo, an attorney with Cozen O’Connor and a former prosecutor with the U.S. Attorney’s Office for the Eastern District of New York who served on an organized crime task force in the 1980s.

“You couldn’t pour a yard of concrete in Manhattan without kicking money to the Genovese or Gambino crime family,” he said. “My sense is that it’s not as dramatic as it was 30-plus years ago.”

Federal prosecutors declared last December, however, that the Gambino family is “thriving.” And while the mafia may no longer have as strong a hold on individual trades, real estate in New York will always pose enticing, albeit illicit, opportunities, according to Maffeo.

“This is one of those problems that is never going to go away,” he said. “There’s just too much money involved.”

Tangled ties

HFZ’s luxury condo project along the High Line was already facing headwinds in early 2019, and the ongoing coronavirus pandemic will only make it harder to move units going forward.

No sales had been recorded at the project as of late March, according to property records. However, a spokesperson for Douglas Elliman, which is handling sales at the property, said that eight contracts at the project were signed prior to the coronavirus’ rampant spread.

The twisting luxury condo towers have long been viewed as an ambitious and risky undertaking for HFZ, due in part to predevelopment costs of about $1 billion and a $1.25 billion construction loan. And that was all before the indictment dropped last December.

Executives at HFZ, which oversees more than $10 billion in development, were well aware that Simonlacaj had a previous brush with the law, court records from a separate case show.

In 2016, he was charged with and pleaded guilty to instructing someone who did business with a company he owned to file a false tax form five years earlier. Managing principal Nir Meir — who helped found HFZ in 2005 — penned a letter to the court on Simonlacaj’s behalf at the time, calling him a “key member” of the firm who “has a reputation for being fair and honest within the industry.”

In the latest case involving CWC, Simonlacaj pleaded not guilty to charges of tax fraud and wire fraud and was released on $250,000 bail on Dec. 6, 2019.

Court documents indicate that HFZ’s Belnord, a landmarked pre-war building on the Upper West Side, was also a target of the CWC scheme.

During a recorded conversation last March, alleged Gambino “crime family soldier” Vincent Fiore discussed hiding payments for work done on an HFZ employee’s Bronx home, according to a detention memo written by U.S. Attorney Richard Donoghue and filed with the court in December 2019.

Fiore wanted the expenses to be attributed to work done on the Belnord, according to the detention memo.

Fiore said CWC had sent employees to work on a home owned by an HFZ employee on Delanoy Avenue in the Bronx, according to the letter. In the recorded conversation, Fiore instructs an unnamed co-conspirator to account for CWC’s payments for work on the Delanoy Avenue home by putting them “against the Belnord.”

A similar scheme is at the center of the charges against Simonlacaj, according to the detention memo.

“I owe [the Worker] some money. I forgot to pay him,” Fiore said, according to court documents. “One is John Si’s house; we owe him some money there.” Fiore then said he also owed the worker some money for working on the HFZ employee’s Delanoy Avenue home, according to the memo.

An employee of HFZ has owned a home on Delanoy Avenue in the Bronx since 1999 and is listed on DOB documents as a representative for the Belnord, according to city records. The employee previously worked for Extell when the company owned the Belnord and was hired by HFZ when Feldman’s firm bought the property in 2015 for $575 million.

There is no indication in court documents of the employee being involved with a quid pro quo. The employee was not charged in the indictment.

HFZ said it fired CWC and its affiliates from all of its projects after learning about the federal investigation, months ahead of the December indictment. Omnibuild, the general contractor on the XI, declined to comment. Omnibuild has not been accused of wrongdoing in the case.

Overall, CWC’s kickback scheme involved employees at two development companies, HFZ and RXR, and three general contractors, one of which appears to be Hudson Meridian, court records show.

Court papers identify a firm as “Construction Company #5,” and the indictment says it worked as the general contractor on an unnamed Yonkers project. Donoghue’s December 2019 memo identified the Yonkers project as Larkin Plaza, RXR and Rising Development’s residential and retail development, where Hudson Meridian was the general contractor.

Hudson Meridian said it fired CWC after the subcontractor abandoned Larkin Plaza following the release of the indictment. CWC is accused of overbilling “Construction Company #5,” and Hudson Meridian has not been charged with any crimes in the case.

“Hudson Meridian has fully cooperated with the U.S. Attorney’s office, and we will continue to do so,” said Daniel Katz, an attorney for the company, who would not comment on whether or not the general contractor is one of the unnamed construction firms in court documents. “Hudson Meridian has not engaged in any wrongdoing and, as far as we know, is not the subject of any investigation.” The same goes for the company’s employees, Katz said.

According to Donoghue’s detention memo, a project manager for Larkin Plaza was offered bribes in the form of free construction materials for a jiu-jitsu gym in White Plains that the manager is “associated with.” In exchange, the project manager was expected to approve change orders at Larkin Plaza, according to the detention memo. The employee is not named, but Matthew Kachmar is listed on LinkedIn as a senior property manager at RXR and is listed on the website of East Coast United Brazilian Jiu-Jitsu in White Plains as its CEO.

The detention memo details another recorded conversation where Fiore expresses frustration with the project manager (Kachmar), saying, “The kid is not even making an attempt,” despite labor and materials for the jiu-jitsu gym costing north of $40,000. RXR confirmed that the change orders mentioned in the letter were never actually performed, and Kachmar did not have the authority to sign off on them in the first place.

Kachmar left RXR sometime in February. He declined to comment for this story. Neither he nor RXR have been accused by prosecutors of wrongdoing.

Although the indictment has already embroiled two major developers, former New York State attorney general and governor Eliot Spitzer framed the federal case as more of a singular event than a widespread problem in the real estate industry.

“I think people see it and view it more as a one-off kickback relationship, rather than something that speaks to a systemic form of organized crime infiltration,” Spitzer, who now runs a private development firm, told TRD. “We did a lot of cases way back in the late 80s and early 90s. It was a different moment back then. Organized crime played a much more significant role in a multitude of industries in the city.”

Family affair

Stationed outside Andre Campos’ Westchester home in February, undercover FBI agents descended on him and his daughter, who had just come back from a doctor’s visit in Connecticut.

The agents searched Campos and his car because, they claimed, he’d used a cell phone, something the court had explicitly prohibited as a condition of his release on bail, according to a motion seeking to revoke his bail. Prosecutors feared he would try to contact organized crime affiliates while awaiting trial.

Though prosecutors moved to revoke his bail based on the incident, they ultimately decided against it, citing “new information in the case.” The nature of that information has not yet been made public, though Campos’ attorney noted that his client had held a paging device — provided by doctors to alert him once his daughter was ready to leave her appointment — that was the same size as a cell phone.

The U.S. Attorney’s Office in Brooklyn, which is handling the case, declined to comment. Campos, along with the other defendants in the case, has pleaded not guilty.

“The government is guilty here of considerable overreach in the scope and nature of the charges,” Henry Mazurek, an attorney for Campos, said in a statement to TRD. “We are looking forward to a fair and accurate presentation of this evidence before the court and at trial, if necessary.”

December 2019’s indictment wasn’t the first brush with the law for Campos. He and Richard Martino, another defendant in the case who allegedly had an ownership interest in CWC, were indicted in 2003 and both served prison time in connection to an internet pornography and adult entertainment phone-cramming scheme. They had pleaded guilty to conspiracy to commit wire fraud in the case.

Campos and Martino were respectively accused of being an associate and soldier of the Gambino family in that 2003 case, but prosecutors ultimately agreed to drop racketeering charges against the two and other defendants in the case. After they served their prison terms, they went into construction.

James Gatta, who was chief of the criminal division in the U.S. Attorney’s Office for the Eastern District of New York from 2007 to 2018, said it’s not surprising that a Gambino crime family member would emerge from prison convicted for illicit activity in one industry, only to enter another.

“Their whole MO is to make money through illegitimate means,” said Gatta, who is now a partner at Goodwin. “Doing it off the backs of large-scale construction projects is as tried and true a mafia play as can be.”

Campos founded CWC in December 2013, though it appears he was affiliated with a different company with nearly the same name long before that.

City Wide Consultants, which is registered to his sister Lisa Campos, was formed in September 2008, according to state records, roughly eight months after Andrew Campos was released from prison. The company shares addresses with CWC Contracting and its other affiliate companies. City Wide, which billed itself as a woman-owned business, also appeared on permits as a superintendent of construction on CWC Contracting projects. On those jobs, both companies are registered through the DOB to Andrew Campos.

City Wide was officially dissolved in June 2016, records show. Lisa Campos, who is not involved in the December indictment, did not return calls seeking comment.

CWC is tied to multiple other affiliates that share the same address or principals, including an interior design company formed in May 2016 called Eastern Interiors and GAC Contracting, which is registered to Campos’ father, George Campos. He is also a named defendant in the December indictment and has pleaded not guilty.

CWC quickly built up its clientele. A review of permits filed with the DOB shows the company kept busy with a slew of smaller projects, including single-home renovations and restaurant and pizzeria rehabs in the Bronx.

Campos’ attorney defended CWC’s work, saying the company “always provided quality interior construction services at reasonable and negotiated rates.”

“All contracts were the result of an open bidding process, and all submitted invoices by CWC were based on pre-negotiated values of labor rates and materials,” Mazurek said. “The work was supervised by third-party construction managers and verified by owner representatives. This process was open and transparent, and subject to multiple levels of reviews.”

The company and its related LLCs also completed work for a convicted mafia member. In 2011, City Wide Consultants was hired to renovate a four-unit building in East Harlem owned by Joseph Urgitano, a Colombo crime family affiliate known as “Joey Cupcakes.” Urgitano was sentenced to 18 months in prison in 2018 for stabbing his girlfriend’s ex-boyfriend.

Passing the buck

Developers aren’t often involved with vetting subcontractors who work on their sites — meaning that responsibility largely falls to construction management firms. However, some owners do ask outside firms to investigate companies before they are hired.

Paul E. Ryan, who conducts reputational reviews of construction and real estate companies and formerly served on a labor racketeering task force for the Manhattan District Attorney’s Office, said organized crime is “still a major factor” that his firm K2 Intelligence checks for when conducting reviews of a subcontractor’s reputation.

“It’s not something that has diminished over time,” he said.

A key part of such reviews, Ryan added, is an investigation into the subcontractor’s principals. Some companies may risk hiring a firm whose leader has a record of indiscretions, but they often build clauses into their contracts to enable the removal of the firm should the project go south. But to have such foresight, he said, an owner or construction manager must have a clear picture of the subcontractor’s history.

“You can’t get there without knowing what you are dealing with,” he said.

CWC’s general contractor license is registered to Campos, according to the DOB, and his criminal history is readily available online. The 2003 indictment involving the Gambino family was covered by multiple media outlets, and federal prison records online show he spent nearly two years behind bars. At the time, the New York Sun even wrote a profile detailing Campos’ legal woes, as well as his friendship with hip-hop mogul Sean “Diddy” Combs.

It’s unknown if the construction managers that hired CWC were aware of his record — and if they weren’t, how this information slipped past background checks.

If owners take more of an active role in the vetting process, such risks could become less of an issue, according to Ryan.

“When owners and developers are involved in the process for selection and the oversight of subcontractor selection, it mitigates these types of concerns,” he said. “The more people who are looking, the less this would become an issue.”

Katz, the attorney for Hudson Meridian, said Campos’ previous indictment did not come up in the background check on CWC, and the firm is now reviewing their process for vetting subcontractors. Hudson Meridian is no longer using the vendor who conducted the background check, but it did not make this decision because of the CWC case, according to Katz.

RXR indicated that as a result of this case, the company “no longer relies on construction managers or general contractors to perform background checks.” Every trade contractor working on an RXR job now must “be prequalified and fully vetted.”

HFZ said it has commissioned “a top-to-bottom review of those policies to ensure the integrity of our operations going forward.” The company has also hired outside attorneys, auditors and investigators to assess if the firm was financially harmed by the defendants, according to HFZ’s spokesperson.

Multiple developers who CWC has claimed it worked with either downplayed their relationship or denied that one exists at all.

Campos’ firm worked on Extell’s 11-unit condo project at 1010 Park Avenue, for instance, where it was a carpentry and drywall subcontractor for Gilbane, the project’s construction manager. But a spokesperson for Gary Barnett’s development firm said, “Extell has no contractual or other relationship with CWC, who completed their work for Gilbane and was paid in accordance with their contract.”

CWC was one of 68 subcontractors who worked on the Park Avenue condo tower, according to Gilbane. A spokesperson for the company would not comment on the specifics of the company’s vetting process for subcontractors.

“Gilbane has maintained the highest standards of business conduct and ethics throughout its 150-year history,” a company spokesperson said in a statement. “Gilbane has cooperated fully as a witness in the government’s investigation and will continue to do so.”

But the December indictment hasn’t deterred other construction companies from seeking out some of the defendants.

Although the court denied Kocaj’s request to work for the Bronx-based construction company that prosecutors claimed had ties to organized crime, for instance, a federal judge is now reviewing his request to work for an elevator company instead.

Gerald McMahon, a defense attorney who has represented multiple clients with alleged mafia connections, said that, while certain industries are barred from hiring people who have any suspected affiliations with organized crime, construction is not one of them.

“It’s pretty much ad hoc. Whatever companies want to do, they can do, and so I think that’s why you would have disparate treatment in the construction industry, as opposed to some other industries,” he said. “There is no hard and fast rule. This is America. If you’re charged with a crime, you’re presumed to be innocent.”

Reputational risk

Denying or minimizing the relationship between a developer and a controversial subcontractor is a fairly common coping strategy for companies looking to mitigate damage from a scandal, but it may not be enough to protect a firm’s reputation.

The division of labor in construction makes it particularly vulnerable, said Glen McGorty, a former federal prosecutor and an attorney with Crowell & Moring, who also serves as the federal monitor for the city’s carpenters union — which has been under court supervision for decades, due in part to former leaders’ involvement with organized crime.

“There are many layers, and anytime there are layers, there’s the opportunity for fraud,” McGorty said.

Michael Bachner, a former prosecutor in the Manhattan DA’s office who now heads his own criminal defense firm, said that prosecutors have recently started to take a closer look at the mob’s continued involvement in real estate.

“Over the last year, it appears that various law enforcement agencies have now refocused their attention on what they are claiming to be involvement of organized crime in some levels in the construction business and businesses related to that area,” he said, adding that recent cases might be the first sign of more crackdowns to come.

Gatta said the ebb in organized crime activity in New York City can largely be attributed to law enforcement’s persistence in targeting the mafia. This includes large-scale takedowns that federal prosecutors led in Brooklyn in 2007 and 2011, which led to the arrests of several “made members” in La Cosa Nostra families.

“The mob is a hierarchy,” Gatta said. “When you incapacitate the leadership of a mafia family, the administration, the captains and the soldiers, it makes it much harder for the organization to operate. It takes a while for them to go through the system and get back out again.”