Sources Confirm Arrests & Ongoing Investigation Into NYCHA Kickback Scheme

Superstorm Sandy (3)

Arrests have already been made and there is an ongoing investigation into a massive kickback scheme involving New York City Housing Authority (NYCHA) jobs to repair Superstorm Sandy damage, according to sources with knowledge of the investigation.

KCP first reported the kickback scheme last Friday as happening in Coney Island, but has learned since it is a citywide investigation involving construction companies and nefarious characters known on the street as “the coalition,” getting low-income individuals on NYCHA job sites at prevailing wages for  kickback “donations.”

Sources say the city’s Department of Investigation (DOI) is involved in the investigation. The U.S. Department of Housing and Urban Development (HUD) is also looking through several complaints regarding the investigation.

Some sources say the Coalition includes NYCHA tenant association presidents, who use their leadership role to broker jobs between public housing tenants and construction firms. Other sources indicate there are independent coalition members working directly with contractors and subcontractors.

Three unique elements came together to set the groundwork for the kickback scheme. The first being the Federal Emergency Management Agency (FEMA)’s decision to hand over $3 billion to NYCHA in March 2015 to fix and replace boilers, heating systems and other infrastructure breakage due to Superstorm Sandy.

With arguably a blank check from FEMA and little oversight of NYCHA, the next element was Mayor Bill de Blasio insisting on a project labor agreement (PLA), with any contractor doing repair work on NYCHA buildings to utilize construction trade unions at prevailing construction union wages.

The third element is HUD’s Section 3 mandate that requires employment and other economic opportunities generated by federal assistance to public housing authorities to be directed, whenever possible, to public housing residents and other low and very low-income residents.

In order to train low-income workers, NYCHA’s Office of Resident Employment Services (REES) became involved.

Among these people working with REES was Laura Gibson, NYCHA’s Sandy Workforce Development Manager, who has since left the agency.

Gibson, according to several sources,  recently lost her job due to the suspicious circumstances surrounding the kickback scheme. All KCP attempts to reach Gibson have gone unanswered or directed to other agency officials.

Sources say Gibson is one focus of the investigation, but would not confirm or deny if she has been arrested. A good part of the investigation does have to do with certain groups negotiating side deals with contractors to get workers on jobs with contractors.

In, subsequent emails and phone calls to REES a mysterious man seems to be answering phone calls without identifying his job title or the agency he represents.

In 2009, REES offered a wide array of services through partnerships and collaborations with local organizations to include financial empowerment and resident business development, along with existing employment, adult education, and training programs. REES is committed to connecting residents to high quality programs in neighborhoods throughout New York City. The city agency refers to this new economic empowerment approach as the “Zone Model.”

NYCHA did not reply to allegations in time for publication.