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Manhattan District Attorney Robert M. Morgenthau announced today the indictment of JOHN PASSARETTI, KURLAND PASSARETTI GROUP (''KPG''), ZELIG FEKETE, and MILLENNIUM FLOORS, INC. for engaging in a larceny and commercial bribery scheme on seven projects for which PASSARETTI AND KPG were retained as architects, amounting to over $300,000 in kickbacks, $250,000 of which was stolen from their clients.
The defendants are: JOHN PASSARETTI, KPG, ZELIG FEKETE and MILLENNIUM FLOORS, INC. PASSARETTI, an architect licensed in New York, along with his partner, SCOTT KURLAND, formed KURLAND PASSARETTI GROUP, in 1993, which was located at 104 West 27th Street in New York County. FEKETE, of Monroe, New York, is the president of MILLENNIUM FLOORS, INC., a flooring distributor located at 60 Nostrand Street, in Brooklyn, New York.
PASSARETTI's partner, SCOTT KURLAND, pleaded guilty on Tuesday, September 12, 2006 to Grand Larceny in the Third Degree, Commercial Bribe Receiving in the First Degree, and Filing a Fraudulent Income Tax Return for his criminal activity. He is scheduled to be sentenced to one year in jail.
KPG was hired to be the architect and design consultant on seven commercial projects located in New York County and Jersey City, New Jersey. As the architect, PASSARETTI and KPG entered a contractual, fiduciary relationship with its clients to bid and select the general contractors and subcontractors selected to perform the work. PASSARETTI and KPG were, in some instances, further hired to select furniture and design specialized woodwork and lighting for each project. On the projects that KPG performed design work, it was entitled to an additional fee based upon the percentage of furniture, woodwork and lighting costs. At all times, the clients relied on KPG to keep costs down.
The indictment charges that PASSARETTI and KPG demanded and received monetary kickbacks and services from general contractors, subcontractors and fixture providers on the seven commercial projects listed in the indictment. The kickbacks were generally 10% of the overall contract price. In almost all instances, the costs of the kickbacks were passed on to KPG's clients through inflated purchase orders, approved by PASSARETTI and submitted to the client for payment. Upon the (over)payment from the client to contractor, the contractor would pay the balance owed to KPG in one of three ways: cash handed directly to PASSARETTI and his partner, checks issued to a separate KPG account run out of PASSARETTI'S home or checks issued at the direction of PASSARETTI and KURLAND to a third party company. In the instances that monies were paid to a third party company, KPG generated false invoices on various companies' letterhead to reflect purported monies owed on work performed. The third party checks were given to PASSARETTI and KURLAND and were subsequently cashed at check cashing entities by ZELIG FEKETE, and the monies, less a fee, were returned to PASSARETTI and KURLAND. Approximately $200,000 worth of third party checks was laundered by FEKETE through the use of check cashers.
Furthermore, services such as painting and general contracting work were provided for PASSARETTI'S home and KPG's offices.
MILLENNIUM FLOORS, INC is a flooring distributor, owned by FEKETE, which provided the flooring on a number of the projects. The indictment charges that KPG used MILLENNIUM FLOORS, INC. on a majority of the projects listed in the indictment and as a way to facilitate the larceny and commercial bribery scheme. Contractors were instructed by PASSARETTI and KURLAND either to inflate purchase orders on MILLENNIUM work, or to issue checks to MILLENNIUM for purportedly legitimate work when none was performed. In the instances MILLENNIUM was overpaid or given payment for work not provided, FEKETE would return the money to PASSARETTI AND KURLAND.
MILLENNIUM FLOORS, INC. has not filed any city, state or federal tax returns for at least the last six years. FEKETE has worked for and received an income from MILLENNIUM for the last six years. FEKETE received an average of $25,000 a year from MILLENNIUM. FEKETE has not filed city, state or federal personal income tax returns for the last six years.
The defendants have been charged with Grand Larceny in the Second Degree and Third Degrees, Commercial Bribe Receiving, Money Laundering in the Second Degree, Combination in Restraint of Trade and Falsifying Business Records in the First Degree. The defendants are to be arraigned today before New York State Supreme Court Justice Edward McLaughlin.
Assistant District Attorney Kelly Donovan, the Deputy Unit Chief of the Labor Racketeering-Construction Industry * Force, presented the case to the grand jury and will be in charge of the prosecution. Assistant District Attorney Michael Scotto is Chief of the Labor Racketeering Unit-Construction Industry * Force.
The investigation was conducted by the District Attorney's Labor Racketeering Unit and the New York State Police. Also assisting the investigation were Senior Financial Investigator William Tamparo and Lisa Pearlstein, a paralegal with the Labor Racketeering Unit.
Mr. Morgenthau thanked: New York State Police Superintendent Wayne E. Bennett, Major Frank H. Koehler, Lt. George K Nohai, Senior Investigator Gustav Talleur and Investigator Scott Enser; the New York State Department of Taxation and Finance; and the New York City Department of Finance.
Grand Larceny in the Second Degree is a class C felony which is punishable by up to 15 years in prison. Grand Larceny in the Third Degree is a class D felony punishable by up to 7 years in prison. Money Laundering in the Second Degree is a class C felony punishable by up to 15 years in prison. Combination in Restraint of Trade and Competition is a class E felony punishable by up to four years in prison. Falsifying Business Records in the First Degree is a class E felony which is punishable by up to four years in prison.
Defendant Information:
John Passaretti, 7.20.57
348 Elm Street
Oradell, NJ 07649
Zelig Fekete, 12.09.58
155 Acres Road
Unit 203
Monroe, NY 10950 |
