Case 3.New York City Office of Chief Medical ExaminerBy Elizabeth Bennett | Posted 2006-06-07 Email Print
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Using "shadow companies" with puppet CEOs and inflated or bogus invoices, a number of I.T. managers stand accused of ripping off their employers—in some instances, for tens of millions of dollars or more. The scam? It's called procurement
Case #3: New York City Office of Chief Medical Examiner
The Target: New York City Office of Chief Medical Examiner (OCME) provides forensic services to support criminal investigations and DNA testing, and manages the city's mortuary. OCME's budget is $50 million; it has 510 employees.
The Subjects: Natarajan "Raju" Venkataram, former director of the medical examiner's management information systems department, and Rosa Abreu, former director of records.
In the aftermath of the 2001 World Trade Center attacks, more than 20,000 human remains were ferried to the chief medical examiner's office in New York City.
The Midtown Manhattan building, a fading 60's-era structure with a turquoise tile facade, was transformed into an armed camp after the towers collapsed; city police, state troopers, and FBI and Secret Service agents conducted investigations and ringed the building's perimeter, admitting only those involved with managing the disaster.
Despite the abundance of law enforcement personnel, crimes went undetected at the medical examiner's office while the incinerated and crushed bodies of 2,749 men, women and children pulled from the wreckage were tagged, analyzed and, in the best-case scenario, identified, according to a criminal complaint filed against Natarajan Venkataram and Rosa Abreu in December 2005 in the U.S. District Court, Southern District of New York.
The criminal complaint accuses them of running a scheme of shadow companies and fake contract bids to embezzle funds sent by the Federal Emergency Management Agency (FEMA) soon after the Sept. 11 attacks, when the medical examiner was overwhelmed by the huge and delicate task of identifying nearly 3,000 victims. The two defendants have been charged with theft from a program receiving federal funds, according to court documents. If convicted, the two face up to 10 years in prison, according to a December 2005 press release issued by the New York City Department of Investigation, a city agency that investigates cases of fraud, corruption and unethical conduct by New York City employees, contractors and others who receive city money.
Venkataram's and Abreu's lawyers, Gerald Shargel and Lee Ginsberg, respectively, say their clients are not guilty. Both defendants have pleaded not guilty in court.
From 2000 to 2005, according to the complaint, Venkataram, director of the medical examiner's management information systems department, and Abreu, director of records (and Venkataram's primary assistant), took at least $8 million of municipal and federal dollars via phony companies and improper relationships with vendors.
That Venkataram and Abreu might have bilked the city and federal governments when so many around them were suffering was particularly galling to Tom Brondolo, the former deputy of the medical examiner's office, and Venkataram and Abreu's manager. "When Raju and Rosa created this scheme to defraud the city, they violated more than the public trust," says Brondolo, who now runs Brondolo Associates, a New York-based disaster management consultancy. "They violated a truly sacred trust and commitment that everyone in the office made to do what was needed during 9/11." OCME declined to comment on the case.
Stephan Zander, deputy inspector general with the New York City Department of Investigation, said in the complaint that OCME, at the direction of Venkataram, awarded technology contracts to a number of companies—some that provided services to the department, some that did not. These companies then colluded with "shell" entities created and controlled by Venkataram and Abreu, the complaint alleges.
Three companies that had contracts with the medical examiner's office—Comprehensive Computer Resources (CCR), HS Group and Infotech—issued checks totaling more than $575,000 to a company called A&D Marketing, according to the complaint. Venkataram's home address, according to the complaint, is listed as the headquarters for A&D.
Venkataram, who worked at the medical examiner's office for 13 years before his December 2005 arrest, was responsible for procuring hardware and software and supervising outside consultants at the medical examiner's office, according to the complaint. He is alleged to have been a close associate of the head of CCR, an Internet consulting, Web development and training firm. The CCR employee was not named in the complaint and is said in the court document to be serving as a confidential informant in the case. The two met at a training course led by CCR prior to 2001, the complaint alleges. CCR was alleged to have been awarded contracts by OCME in the aftermath of the Sept. 11 attacks, including an $11.4 million project funded with federal emergency dollars. Approximately $5.5 million of the contract payment was allegedly transferred from CCR to bank accounts in India at Venkataram's direction by way of blank CCR checks signed by the unnamed CCR employee, the complaint states. The complaint also says that Venkataram transferred $400,000 from CCR to A&D and another $86,000 to another shell company.
The medical examiner's office is normally responsible for the forensic investigation of homicides, suicides and unusual deaths in New York City. After the World Trade Center attacks, the agency, which operates under the city's Department of Health and Mental Hygiene, was responsible for tracking, identifying and releasing the human remains recovered at ground zero. Immediately after 9/11, the agency had to quickly create a tracking system—with the help of technology vendors—to ensure that all remains were properly cataloged, analyzed, X-rayed and stored where they could be found, according to Brondolo. It also had to find a way to make available to investigators all of the data it had collected.
Shortly following Sept. 11, the medical examiner's office awarded CCR an initial $1.3 million contract on an emergency basis to provide hardware and software support for OCME's World Trade Center-related activities and the laboratory systems used to keep track of DNA samples of victims, Brondolo says.
In January, February and August 2002 and April 2003, CCR's contract was increased for unanticipated work requirements and ongoing maintenance, according to a contract and contract addendums that Baseline obtained through a Freedom of Information Act request. (The contract would eventually total $11.4 million.)
Those requirements included integrating 20 disparate systems that contained information ranging from DNA samples and analyses, to victims' personal profiles, to photographs of personal effects, according to a copy of the original CCR contract from January 2002. CCR created a Web-based portal so that workers at the medical examiner's office, the New York Police Department and other investigative groups could gain access to the disparate systems from a single Web page, according to a contract addendum filed with the Comptroller's office in May 2003.
In addition, CCR was asked to implement a laboratory information management system to help identify the remains and a document management system for DNA case files, the addendums state. Brondolo says he recalls that CCR completed the information systems it was contracted to build.
FEMA, a division of the U.S. Department of Homeland Security, reimbursed the entire $11.4 million contract to OCME, according to the criminal complaint. But New York City's Department of Information Technology and Telecommunications alleges in the complaint that the work CCR did "could have been performed for a fraction of the $11.4 million and would have been performed substantially better by other companies operating in the marketplace." Baseline attempted to contact CCR, but the company's Web site had been taken down and a call to the number listed for CCR in the phone directory found the number to be disconnected.
Because of the unusually strained circumstances in the months and years after Sept. 11, Venkataram and Abreu were able to bypass some procurement controls by awarding contracts under emergency conditions. That meant the usual procedures and approvals were not required, according to Marla Simpson, director of the Mayor's Office of Contracts, which oversees the city's procurement policy and process.
"Many city agencies required the purchase of goods and services on an emergency basis after Sept. 11," says Steve Stein Cushman, chief of the contracts and real estate division at the city's Law Department, also called the Corporation Counsel, which ensures that the terms of contracts valued at more than $100,000 are legal and appropriate. For roughly three months following the disaster, Cushman says city agencies were given "blanket approval" for the emergency procurement of goods, services and construction necessary to respond to the emergency. "That meant they could select a vendor and procure such goods, services or construction without individual approval for each purchase from the Law Department or the City Comptroller's office. In addition, the Mayor's Office of Contract Services does not approve emergency contracts," Cushman explains.
But Venkataram allegedly managed to circumvent procedures even when it wasn't an emergency, according to the complaint. In order to create the appearance of competitive bidding in awarding some contracts, Venkataram allegedly asked the head of CCR to use other companies the informant controlled to bid on work at the medical examiner's office. For example, the agency paid $166,000 to HS Group and Infotech, which bid on and won contracts with the medical examiner. Baseline could not track down contact information for either company, both of which are alleged to have been operated by the informant and performed no services, according to the complaint. However, at Venkataram's direction, the companies issued checks to A&D Marketing and Trade A2Z, another alleged shell company operated by Venkataram and Abreu. The complaint states that Rosa Abreu admitted to Zander in an August 2005 interview that A&D, Trade A2Z and a third company, Infodata, were shell companies.
Venkataram and Abreu were eventually apprehended by New York City police after an unnamed employee in the medical examiner's office alerted the Department of Investigation's Zander to possible procurement irregularities involving the two, according to the complaint.
Resolution: In December 2005, Venkataram and Abreu were arrested on fraud charges and have pleaded not guilty. Venkataram is incarcerated at the Metropolitan Detention Center in Brooklyn. Abreu was released on $500,000 bail in December; her lawyer declined to say where she is living. A trial date has not yet been scheduled.
New York City Office of Chief Medical Examiner Base Case
Headquarters: 520 First Ave., New York, NY 10016
Phone: (212) 447-2030
Business: Investigates deaths of those who die as a result of violence, suicide or under suspicious circumstances.
Chief Executive Officer: Charles S. Hirsch, M.D.
Financials: Annual budget of $50 million.
Incident: The medical examiner's former management information systems director and director of records allegedly absconded with federal dollars through phony companies.