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March 25, 2013

DiNapoli: State Contractor Underpaid Workers More Than $82,000; CUNY Failed to Monitor Vendor

A vendor with blanket approval to sell audio visual equipment to public entities admitted underpaying its employees at least $82,000 by ignoring prevailing wage laws, according to an audit released today by State Comptroller Thomas P. DiNapoli.

Communications Audio Visual (CAV) – an equipment reseller which contracts with the City University of New York’s Brooklyn College and Hunter College – had missing and potentially fraudulent payroll records and failed to obtain workers’ compensation insurance for up to 11 employees in a likely violation of state law, the audit found. The company is identified as an authorized reseller under several centralized contracts with the state Office of General Services (OGS), which allows it to contract with other public entities.

“CAV disregarded state law and pocketed more than $82,000 in state funds that were rightfully earned by its employees,” DiNapoli said. “This is unconscionable for any contractor. This scam went undetected because the colleges failed to properly monitor this vendor. I have brought our audit to the attention of OGS so they can monitor this vendor.”

Gaps and inconsistencies in CAV’s payroll records led DiNapoli’s auditors to discover a minimum of $82,000 in underpayments. Auditors also found that CAV obtained workers’ compensation insurance for just three of its 14 employees. Intentionally understating or concealing employee wages is punishable by a fine and/or criminal conviction.

DiNapoli forwarded his audit to the state Labor Department and Workers’ Compensation Board for further investigation.

“Workers in New York State are required to be insured by their employer to cover medical and other expenses if they are injured or become ill as a direct result of their job,” DiNapoli said. “My office will aggressively pursue businesses that do not protect their most valued asset, their employees.”

DiNapoli’s auditors also found that the colleges skirted state procurement requirements by allowing CAV to provide $196,062 in equipment and installation services outside the terms and conditions of existing contracts or procurement requirements. This gave CAV an unfair advantage over its competitors and may not have garnered the best price for New York taxpayers.

DiNapoli recommended the colleges:

  • Establish a process to monitor and evaluate vendor contract compliance;
  • Ensure that all contractors and subcontractors with public works contracts submit certified payroll records, as required by law; and
  • Ensure all contractors and subcontractors provide workers’ compensation insurance to all employees.

Both colleges responded that they will increase their efforts to determine vendor compliance.

For a copy of the report visit: http://www.osc.state.ny.us/audits/allaudits/bseaudits/bse20110046.html


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