Construction execs allegedly stole business IDs to win millions in contracts

ALBANY & SCHENECTADY COUNTIES — Two former Albany-area construction executives stole the identities of two minority-owned businesses to win millions of dollars in state construction contracts, the state Inspector General’s Office said Tuesday.

Michael Martin, 47, of Latham, faces charges in both Albany and Schenectady counties, while D. Scott Henzel, 52, of Albany, is charged in Albany County.

Martin is the former president and owner of the now-defunct Eastern Building & Restoration Inc., a general contractor headquartered in Albany. Henzel served as Eastern’s controller, the Inspector General’s Office said.

The men are accused of stealing the identities of two minority owned businesses and using those identities to win contracts and also failing to pay 50 employees $400,000 in pay.

Martin is accused in Schenectady County of stealing more than $150,000 from one of the minority-owned businesses through a fake lease agreement and stealing more than $200,000 from the Allegheny Casualty insurance company by filing a false insurance claim on behalf of that minority-owned business, the Inspector General’s Office said.

“These two construction executives abused minority-owned businesses and took shameful advantage of a laudable program meant to level the playing field for many small and disadvantaged companies hoping to compete,” said Inspector General Catherine Leahy Scott. “The integrity of the programs encouraging the use of women and minority-owned businesses in New York is critical to the government contracting process, and I will use all the resources at my disposal and work closely with my law enforcement partners to pursue anyone who tries to defraud it.”

Martin spent more than $1 million that he allegedly obtained through the scheme to fund a lavish lifestyle, officials allege, including purchasing high-end Harley Davidson motorcycles, snowmobiles, trailers, jet skis, and off-road vehicles, using corporate credit cards. He also used the fraudulently gotten cash to make payments toward a $170,000 RV, and more than $150,000 in other personal expenditures, prosecutors allege.

Martin paid for similar purchases for his girlfriend and used corporate funds to take lavish trips to the Dominican Republic, Paradise Island in the Bahamas, the Chatham Bars Inn, and the Whiteface Lodge, officials allege.

The fraud centered on the theft of the identity of Lorice Enterprises Inc. and Precision Environmental Solutions Inc., both minority-owned businesses, officials said.

Martin and Henzel first offered to partner with the companies to show them successful operating and bidding tactics, officials said. But the men then took over both companies, managing their day-to-day operations, including bidding, banking and financial decisions, officials allege.

In doing so, they illegally obtained millions of dollars worth of projects for Eastern that required a portion of funds be awarded to minority contractors, officials said.

Once the men brought the businesses under Eastern, those businesses ceased being minority-owned, officials said.

The men allegedly continued the scheme from April 2012 to September 2015, the Inspector General said.

They also allegedly failed to pay state withholding and unemployment insurance taxes on behalf of the minority businesses, resulting in thousands of dollars of penalties and interest being assessed against those businesses and their owners, officials said.

The underpayment allegations stem from Martin failing to properly pay into pensions as part of their prevailing wage requirement, officials said.

The Schenectady County allegations came after Martin moved Precision to Scotia from Albany in 2014, and after Eastern went out of business, officials said.

Martin then stole more than $150,000 from Precision through a fake rental agreement, officials allege, and he took another $200,000 from Allegany through a fake insurance claim.

The indictments are the result of a years-long investigation conducted by the Inspector General’s Office, the Attorney General’s Criminal Enforcement and Financial Crimes Bureau, and the State Department of Labor. State police and Scotia police were also involved, officials said. Scotia Police Chief Peter Frisoni said Tuesday his department first received a complaint about the allegations in the village in December 2015 and the department worked with the state police and attorney general on their end.

Both men face multiple felony charges, including offering a false instrument for filing and identity theft. Martin also faces grand larceny and insurance fraud charges.

Martin was arraigned in both counties and ordered held on $300,000 cash bail. Henzel was arraigned and released on $10,000 bail.