NY Contractor Arrested For Conducting A Kick Back Wage Scheme

For Immediate Release: November 16, 2005

Demanded that workers pay him $175,000 as a condition of continued employment

State Attorney General Eliot Spitzer and Department of Investigations Commissioner Rose Gill Hearn today announced the arraignment of a Queens construction contractor, Georgios Begakis, on 99 felony and 30 misdemeanor charges stemming from a scheme that forced employees to "kick-back" wages to Begakis on five New York City Housing Authority painting contracts. The felony complaint charged Begakis with falsifying business records to conceal the "kick-backs" as well as grand larceny from the Housing Authority for receiving the payments under false pretenses.

Begakis had been the subject of a previous investigation by the Housing Authority and the Attorney General for failure to pay prevailing wages on Housing Authority Projects. In March 2003, he entered into an agreement with the Attorney General and the Authority which required that he pay employees more than $100,000 in back wages and provided that he and two corporations in which he was a principal agree to be barred from performing public construction work for both New York State and City for five years

The felony complaint alleges that following this debarment, Begakis entered into a joint venture with a new company named Rainbow Renovations, Inc. which, in 2003, was awarded five Housing Authority painting contracts worth in excess of $3,000,000. The current charges stem from these contracts. The painting contracts were subject to the state's prevailing wage law, which requires that specified hourly rates be paid to employees on public work projects, dependening upon their job category.

DOI Commissioner Rose Gill Hearn said: "This defendant greedily forced workers to be underpaid so he could pad his own bank account. Working with our partners in the Attorney General's office, we will make sure that these workers are repaid and make every effort to protect other workers from being victimized by his schemes."

According to the felony complaint, Begakis had 14 employees "kick-back" a total of approximately $175,000 in wages. In the case of two other employees, who were not required to "kick-back" wages, Begakis is alleged to have underpaid their wages.Department of Law:The State CapitolAlbany, NY