Concrete-Test Company Guilty of Racketeering in New York City

February 26, 2010

A once-prominent concrete testing company and two of its leaders were convicted Wednesday of racketeering by faking results for such landmarks as the new Yankee Stadium and ground zero’s signature skyscraper.

A jury found Testwell Laboratories Inc., its president and a vice president guilty of enterprise corruption, the state’s version of racketeering.

Vice President Vincent Barone stared steadily ahead as he heard the verdict, which carries a mandatory prison term of at least a year and the possibility of up to a 25-year term. President V. Reddy Kancharla was ill and wasn’t there, with the court’s permission, his lawyer said.

The executives and the company had been convicted earlier of lesser charges — with no mandatory prison time — in a sprawling case that accused the company of falsifying concrete and steel test results for nearly 120 projects in and around New York City. They include such icons as ground zero’s Freedom Tower and such crucial pieces of infrastructure as the forthcoming Second Avenue subway line.

The tower, the subway line, the stadium and at least 23 other buildings have been declared safe after retesting, the city Buildings Department said Wednesday. But officials are still awaiting results on at least 67 more.

While no safety concerns have been found so far, the case called into question the durability of hospitals, office towers, museums and bus depots, among other buildings.

“Concrete testing plays a critical role in ensuring a building’s structural stability, and this company ignored their responsibility in order to make a profit,” city Buildings Commissioner Robert LiMandri said in a statement Wednesday.

The agency had to spend months consulting with engineers to set standards for the retests, which cost the owners $100,000 for an average high-rise. The investigation also spurred the city to start new spot checks on concrete testing at construction sites, which have produced dozens of violation notices. And the Buildings Department has started refusing to renew licenses for some concrete labs, including now-bankrupt Testwell.

The five-month-long trial marked a major piece of a spate of criminal cases stemming from the city’s recent building boom, which prosecutors say was marred by shortcuts and corruption.

Prosecutors said Testwell’s operation was riddled with fraud, from doctored results on concrete samples from construction sites to made-up steel tests that reported inspections of welds that didn’t exist.

“Testwell’s conduct was reprehensible not only for its pattern of theft and deception, but for its utter disregard for the safety of the public at large,” Manhattan District Attorney Cyrus R. Vance Jr. said in a statement Wednesday.

Defense lawyers said the charges made crimes out of honest mistakes, contract disputes and widespread practices in the industry. Ossining, N.Y.-based Testwell and the executives didn’t intend to deceive anyone, their lawyers said.

“The company was not a criminal enterprise,” said Testwell lawyer Cesar de Castro. He said he respected the verdict but was considering an appeal.

Kancharla’s lawyer, Paul Shechtman, said he was planning an appeal.

“I’ve never had a client who believed in his innocence more than Reddy Kancharla, and I’m confident we will continue to fight in the courts to prove that,” he said.

While Kancharla and Barone were convicted of numerous underlying charges in the racketeering case, including scheme to defraud and falsifying business records, they also were acquitted of many charges, he noted.

Barone’s attorney, Andrew Lankler, declined to comment.

The executives remain free on bail until their sentencing, set for April 7.

One Testwell manager, Wilfred Sanchez, was acquitted last week of enterprise corruption and all the other charges against him. His lawyer said Sanchez mainly worked as a steel inspector and had nothing to do with the allegedly falsified test results.

Two Testwell engineers have pleaded guilty to conspiracy, acknowledging they knew Testwell data on concrete formulas were bogus. They are expected to pay more than $100,000 in fines apiece but not to get jail time.

Several other officials and employees are to be tried separately on various charges.

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