Prosecutors said Tuesday that 70 current and former employees of the New York City Housing Authority (NYCHA) face bribery and extortion charges in what officials say is the biggest number of such charges issued in a single day in the history of the U.S. Justice Department.
The defendants are accused of demanding over $2 million in corrupt payments from contractors in exchange for awarding over $13 million worth of no-bid contracts, according to the Department of Justice (DOJ).
Sixty-six of the 70 defendants were arrested on Tuesday morning in New York, Connecticut, and North Carolina.
All of the accused were NYCHA employees at the time of the charged conduct, which took place at nearly a third of all NYCHA buildings in New York City.
“These 70 defendants are accused of demanding kickbacks and bribes for access to no-bid contracts and lucrative, under-the-table deals,” said Ivan Arvelo, special agent in charge of the New York field office of Homeland Security Investigations (HSI), in a statement.
Roughly one in 17 New Yorkers lives in a NYCHA building, with prosecutors alleging that the pay-to-play bribery schemes wasted millions of dollars and risked residents staying in poor living conditions.
“Make no mistake, this alleged pervasive corruption had the biggest impact on NYCHA residents themselves, who may have been cheated out of better services and programs,” Mr. Arvelo added.
NYCHA, which receives over $1.5 billion a year from the federal government, is the biggest public housing authority in the United States.
“This action is the largest single-day bribery takedown in the history of the Justice Department,” U.S. Attorney Damian Williams said in a statement.
“The culture of corruption at NYCHA ends today,” he added.
NYCHA did not immediately respond to a request for comment.
Prosecutors allege that the defendants demanded and received cash payments in exchange for NYCHA contracts.
The accused NYCHA current and former employees either required contractors to pay up front in order to be awarded contracts or demanded payment once the contractors finished the work and needed an NYCHA staffer to sign off on the job.
Normally, the defendants demanded between 10 percent and 20 percent of the contract value, so between $500 and $2000. In some cases, however, the amounts were greater, with the total amount of corrupt payments demanded exceeding $2 million.
The alleged crimes wasted money and posed a risk to residents, U.S. Department of Housing and Urban Development (HUD) Office of Inspector General (OIG) inspector general Rae Oliver Davis, said in a statement.
“The alleged conduct identified during this investigation harms the effectiveness of housing programs that support more than 200,000 residents,” the inspector general said.
“It also poses a significant risk to the integrity of the HUD rental assistance programs that support housing assistance in New York City and erodes the trust of NYCHA residents in HUD’s programs,” she added.
Members of Homeland Security Investigations and New York City Department of Investigation lead people arrested, after many current and former New York City Housing Authority (NYCHA) employees were charged with bribery and extortion offenses, in New York on Feb. 6, 2024. (Brendan McDermid/Reuters)
The charges the 70 defendants face include solicitation and receipt of a bribe, punishable by up to 10 years in prison, as well as extortion under color of official right, which carries a maximum sentence of 20 years behind bars.
The bribery and extortion scheme exposed as a consequence of the investigation has led to calls to reform the NYCHA’s no-bid contracting process, according to the New York City Department of Investigation (DOI).
“The extensive bribery and extortion alleged here calls for significant reforms to NYCHA’s no-bid contracting process, which DOI has recommended and NYCHA has accepted,” DOI Commissioner Jocelyn Strauber said in a statement.
Ms. Strauber said that senior NYCHA leadership cooperated with the investigation.
Lead Paint Scandal
The bribery and extortion case involving current and former NYCHA staff isn’t the only scandal involving the agency.
In 2018, then-NYCHA head Shola Olatoye was forced to step down after it came to light that the agency had falsified reports to the federal government, falsely claiming that mandated inspections for lead paint had been carried out at NYCHA housing when they had not.
That came after former New York City Mayor Bill de Blasio’s administration admitted that 820 children in NYCHA housing tested positive for high levels of lead and the city failed to marshal an effective response.
Mr. de Blasio himself faced criticism for downplaying the severity of the lead poisoning.
At the time, then-New York Comptroller Scott Stringer called for a complete overhaul of the NYCHA.
“Without these structural changes, today’s announcement will be just another failed attempt to fix what’s broken, and will only serve to banish another generation of NYCHA residents to dangerous, inhumane conditions,” Mr. Stringer said at the time.
“It is as heartbreaking as it is disgraceful that for years our City’s children were exposed to hazardous conditions such as lead and mold, and that multiple administrations lied about it.”