TODAY'S PAPER

A.G.: Nassau business owners plead guilty to fraud, laundering scheme

New York State Attorney General Letitia James on Tuesday announced the guilty pleas of two Nassau business owners in a $3 million fraud and money laundering scheme. Credit: Charles Eckert

Two Nassau County business owners, including the proprietor of one of New York State's largest scaffolding companies, pleaded guilty to engaging in a $3 million loan fraud and money-laundering scheme, State Attorney General Letitia James announced Tuesday.

The six co-defendants, three individuals and their respective companies, pleaded guilty Aug. 7 in Suffolk County Criminal Court to engaging...

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Two Nassau County business owners, including the proprietor of one of New York State's largest scaffolding companies, pleaded guilty to engaging in a $3 million  loan fraud and money-laundering scheme, State Attorney General Letitia James announced Tuesday.

The six co-defendants, three individuals and their respective companies, pleaded guilty Aug. 7 in Suffolk County Criminal Court to engaging in a scheme from October 2013 to April 2015 to defraud the state out of millions in tax dollars and laundered the proceeds through multiple businesses.

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“We are all committed to uncovering and prosecuting businesses that have defrauded the state and numerous financial institutions out of millions,” James said. “These fraudsters must now … pay back stolen funds and cease their illegal operations."

The defendants included Kenneth Martinez, 51, of Lawrence, who pleaded guilty to second-degree money laundering. His company, Metropolitan Enterprises Inc. of Brooklyn, pleaded guilty to second-degree grand larceny. Martinez was sentenced Monday to three to nine years in prison on a related tax case in Albany. He is scheduled to be sentenced Oct. 17 to a concurrent term on the Suffolk loan fraud case, officials said.

"He is a wonderful person who was trying to keep his business afloat and made some mistakes along the way," said Samuel Gregory, Martinez's Brooklyn-based defense attorney.

Shai Sellam, 45, of Woodmere, and his company, New Route Consulting Inc. of Lawrence, both pleaded guilty to third-degree money laundering. He faces a sentence of two to six years in prison when sentenced Aug. 12, 2020. 

Salam's defense attorney, Joel Weiss of Uniondale, said his client has agreed to make restitution over the course of the next year in exchange for an expected sentence of probation.

"Mr. Salam found himself in this situation emanating from him trying to save his business and conduct it honorably," Weiss said. "However, he made mistakes along the way."

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Hayim Jacob Barkol, 39, of Brooklyn, pleaded guilty to first-degree scheme to defraud. His company, Lifting Up Management LLC of Brooklyn, pleaded guilty to second-degree money laundering. Barkol is expected to be sentenced to five years probation when he is sentenced Oct. 17. Barkol's attorney was not available for comment.

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As part of their guilty pleas, the defendants and their corporations were ordered to pay a combined $1.5 million in restitution to the state.

The joint investigation, which included the Port Authority of New York and New Jersey, the State Department of Taxation and Finance and the City School Construction Authority, was dubbed “Operation Skyfall" and targeted fraudulent practices in the scaffolding industry.

Metropolitan Enterprises, which has since gone out of business, was one of the largest scaffolding and hoisting contractors in the state, acting as a subcontractor for work done on the George Washington Bridge and the World Trade Center Transportation Hub.

Prosecutors said the defendants submitted fake invoices and phantom deposit checks purporting to sell scaffolding and hoisting equipment from one of Barkol’s entities to Metropolitan. In reality, the equipment either did not exist or was already owned by Metropolitan, officials said.

To conceal the scheme, prosecutors said the defendants laundered the funds through multiple corporate accounts. Money was then moved between Metropolitan’s accounts and used to pay debts, to cover negative balances and to pay current and outstanding payroll and union dues.