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Former Contractor Indicted in Alleged Bid-Rigging Conspiracy at New York Hospital

John Commins, for HealthLeaders Media, April 1, 2010

A federal grand jury in Manhattan has indicted a former re-insulation contractor for allegedly participating in a bid-rigging scheme at New York Presbyterian Hospital, the Department of Justice announced.

The indictment also alleges that former contractor David Porath and co-conspirator Andrzej Gosek filed false tax returns for their participation in a conspiracy. The three-count indictment, filed under seal on Feb. 18, was unsealed Wednesday in the U.S. District Court in Manhattan.

According to the indictment, between 2000 and March 2005, NYPH awarded several re-insulation contracts to Porath's company. The indictment alleges that Porath and his co-conspirators created the false appearance that NYPH was awarding contracts based on competitive bids by submitting fraudulently high bids by competitors, which allowed Porath's company to appear to be the low bidder.

The indictment charges that Porath and Gosek, the owner of a Langhorne, PA, company that provides asbestos abatement services, conspired to defraud the Internal Revenue Service. Between October 2000 and February 2005, Porath allegedly gave Gosek checks made out to companies in Brooklyn, NY, purportedly for work done at NYPH by those companies as sub-contractors to Porath's company. In fact, the companies had not performed the work, according to the Department of Justice.

The Brooklyn companies cashed the checks and Gosek delivered the cash back to Porath, who reportedly took false deductions on his company's and his personal federal tax returns. Porath is also charged with filing a false federal tax return on or about Feb. 17, 2005, according to the government.

The bid-rigging violation carries a maximum 10-year prison sentence and a $1 million fine. The tax fraud conspiracy violation carries a maximum penalty of five years in prison and a $250,000 fine.

The charges are the result of an ongoing federal investigation of bid rigging, fraud, bribery, and tax-related offenses relating to contracts administered by the Facilities Operations Department and the Engineering Department at NYPH and the Engineering Department at Mount Sinai Medical Center. So far, eight people and three companies have pleaded guilty to charges arising from the investigation.

NYPH did not immediately respond to a request for comment on the charges.


John Commins is a senior editor with HealthLeaders Media.

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