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AG: Engineering firm, manager face forgery counts in Sandy cases

Matthew Pappalardo, an employee with HiRise Engineering PC

Matthew Pappalardo, an employee with HiRise Engineering PC in Uniondale, appears in Nassau County Court in Mineola for arraignment on Monday, Aug. 1, 2016. Both he and the firm pleaded not guilty to felony charges stemming from an alleged scheme to cheat homeowners out of federal flood insurance money. Photo Credit: Howard Schnapp

A Uniondale engineering firm and one of its former managers face dozens of felony charges after what New York’s attorney general described Monday as a scheme that victimized homeowners who were trying to collect federal flood insurance money after superstorm Sandy damaged their homes.

Authorities unsealed an indictment in Nassau County Court charging HiRise Engineering PC and former project manager Matthew Pappalardo, 38, of Whitestone, Queens, with 25 counts of forgery after a probe that followed the devastating October 2012 storm.

Prosecutors have accused Pappalardo and employees under his direction of altering reports that professional engineers prepared after inspecting storm-damaged Nassau homes, including in Long Beach and East Rockaway, that were covered by the government-run National Flood Insurance Program.

The company then submitted the falsified reports to adjusting firms — without the approval of the original engineers — before the Federal Emergency Management Agency relied on the forged documents to calculate insurance payouts for homeowners, according to prosecutors.

The investigation began after allegations started surfacing in 2014 that companies had cheated homeowners while processing claims for the flood insurance program.

Pappalardo, who is free on $40,000 bond, also is charged with 25 felony counts of unlicensed practice of engineering.

Both he and the company put in not-guilty pleas during a Mineola court arraignment.

“We steadfastly maintain that there was never any intent to defraud any homeowner with respect to the preparation of these reports. We look forward to an opportunity to defend these allegations,” HiRise’s attorney, Kenneth C. Murphy, said after the court proceeding.

Pappalardo’s attorney, Avraham Moskowitz, said after the arraignment that his client “is completely innocent,” adding: “He did not defraud anybody. And he looks forward to being vindicated in court.”

Pappalardo would not answer questions Monday. Authorities led him into court in handcuffs after he surrendered to face the charges. He later left the courthouse area in a white BMW after posting bond.

State Attorney General Eric T. Schneiderman said in a prepared statement Monday that the alleged scam undermined “the integrity of the entire FEMA claims process” and showed a “flagrant disregard for the well-being and safety of New Yorkers.”

His office also released a report calling for specific reforms to the insurance claims process to help protect homeowners against fraud in the future.

His office said its investigation kicked off after a June 2014 tip from an attorney who represented owners of Sandy-damaged homes that engineering reports had been doctored.

Schneiderman’s office said its probe also uncovered evidence of crimes outside the jurisdiction of New York courts, and that they’ve referred findings in what they called an ongoing investigation to the U.S. Department of Justice.

Brooklyn engineer Harold Weinberg, 81, said Monday some of his home inspection reports fell victim to the scheme.

“They took the report and revised it to have the exact opposite meaning,” Weinberg said, adding he found out from an insurance company some of his reports were falsified.

“I wrote it was because of the storm,” he said of residential damage. “ . . . I didn’t know they would change the intent. It’s never happened to me before or since.”

Long Beach attorney Denis G. Kelly, who has represented homeowners in civil suits involving FEMA, said Monday his clients helped bring proof of forged reports to the courts in cases against HiRise Engineering and U.S. Forensic of Metairie, Louisiana — a company that also has denied wrongdoing.

“I don’t think Matt Pappalardo is a lone wolf,” Kelly said. “I am thrilled that the attorney general’s office has done a thorough investigation to bring change . . . I’m hoping to see more information come out about who else is involved.”

Kelly said evidence appeared to show Pappalardo used a computer to copy an engineer’s signature onto rewritten reports.

Since the start of 2010, HiRise Engineering — using several names with the same address — has made more than $90,000 in political campaign contributions, state records show.

The bulk of that money has gone to Nassau GOP candidates and committees: $37,700 to the Nassau County Republican Committee and $18,400 to Nassau County Executive Edward Mangano.

From 2011 through early 2015, Nassau County paid the company $4.7 million for various contracts, including construction management. The county also awarded a $136,000 contract renewal to the company in 2016.

In June, county officials identified the firm as the “independent” monitor of Nassau’s federally reimbursed waterways debris removal work. The main contractor for that work, VIP Splash Waterways Recovery Group Inc., is at the center of a federal investigation involving Mangano’s chief deputy, Rob Walker, and how that $12 million job was awarded.

FEMA spokesman Rafael Lemaitre said Monday he couldn’t discuss Monday’s indictment or if HiRise was under internal review.

“We certainly take any allegations of fraud as it relates to the National Flood Insurance Program very seriously,” he said. “Our experience with Sandy has shown there is much to be improved.”

Sandy victims filed about 144,000 flood insurance claims.

Within a year, some home insurance holders began complaining their residences had been severely damaged or condemned after the storm, yet they were denied full payments to rebuild because engineering reports said the damage came from erosion or structural defects, and not the storm surge.

By December 2013, residents from New York and New Jersey began filing lawsuits over flood insurance settlements. Nearly 1,700 would enter litigation with FEMA and settlements totaled more than $163 million.

Following the litigation, FEMA offered a special Sandy claims review that was open to everyone else who filed insurance claims — and more than 19,000 cases were opened. As of last week, 91 percent of the cases have been through review with a total proposed payout of nearly $140 million, according to FEMA.

With Paul LaRocco

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