World Trade Center Fraud Convictions Overturned

MANHATTAN (CN) — Blocks away from the new World Trade Center, a New York-based federal judge overturned the fraud convictions of the steel contractor who helped rebuild it in a ruling affecting a program meant to boost minority- and women-owned businesses.

Larry Davis, the 66-year-old president of DCM Erectors, has spent more than three years fighting an indictment accusing him of scoring nearly $1 billion under false pretenses that he would meet the Port Authority’s goals for its MWBE program.

Short for minority- and women-owned business enterprises, the initiative had been meant to encourage women and people of color to spearhead construction projects in an industry long dominated by white men.

Almost exactly one year ago, a federal jury found Davis guilty of wire fraud and conspiracy, but U.S. District Judge Loretta Preska ruled on Thursday that there was not enough evidence to support their verdict.

“Notwithstanding the length of trial and the voluminous documentary record, the evidence was not sufficient for a rational jury to find that the alleged misrepresentations went to an essential element of the contract or that they exposed the Port Authority to potential or actual economic harm,” Preska found in a 100-page ruling.

Attorney Sam Talkin, who represented Davis, called the ruling a “just result.”

“We are also very happy for Larry Davis and hope he can now continue with his contributions to New York City and the United States by lending his unique skills to the skyscraper and steel construction industry as he did during his over thirty year career prior to this case,” he said in a statement.

“The court’s decision recites exactly what we have been steadfastly claiming for over seven years: No crime was committed and that Larry Davis and DCM did nothing more than build large buildings and structures under adverse financial and political conditions with unparalleled expertise and quality of result,” Talkin added.

Davis had been under investigation since 1999.

Since that time, Davis completed work on his $256 million contract for the 104-story Freedom Tower and his $330 million contract for the Transportation Hub.

Prosecutors alleged that Davis misled the Port Authority about his contractors to score the deals.

DCM claimed to subcontract with Solera Construction, owned by the Ecuadorean-born Johnny Garcia, and GLS Enterprises, run by Gale D’Aloia, but prosecutors alleged that other companies actually performed the work.

But Preska found that falling short of goals for minority- and women-owned businesses are not crimes in themselves.

The Port Authority’s general manager for civil rights Ida Perich testified at trial that these goals were “aspirational.”

“Instead, the most grave consequence or harm posed to the Port Authority by a contractor’s MWBE noncompliance is that such activity ‘jeopardizes the integrity of the program,’” Preska wrote.

“A wire fraud conviction must rest on more than this,” she added.

While Preska allowed prosecutors to pursue a new trial, the U.S. Attorney’s Office for the Southern District of New York did not reveal its intentions.

“We’re reviewing the opinion and evaluating our options,” spokesman Nick Biase said.

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