Commercial Bribery On A Construction Site: Does Crime Pay?November 2019 | By: Randy J. Heller, Esq.| GDB 2019 Fall Newsletter
Can you plead guilty to falsifying business records in a commercial bribery scheme involving construction work and still hope to salvage your claim for millions of dollars against the owner you ripped off? You might, under the right set of facts.
Adelhardt Construction Corp. (“ACC”) had a long-time relationship with Citibank, having done work for the bank, without incident, for approximately 60 years. In 2012, however, Citibank hired one John Cassisi who proceeded to “systematically” withhold payment from ACC for services which had already been performed and invoiced. He demanded that ACC perform work on his personal residence before ACC would be paid. ACC did not report Cassisi to Citibank or to the authorities.
Cassisi was eventually caught and, in 2015, he pleaded guilty to commercial bribery and went to prison. ACC and its CEO pleaded guilty to falsifying business records (creating fake purchase orders) and agreed to make restitution to Citibank in the sum of $442,000, which the DA allowed to be deducted from amounts otherwise due to ACC for past work. But what about the other $4+ million dollars ACC was owed by Citibank? Would ACC have to forfeit that as well?
Citibank refused to pay, arguing that ACC’s criminal conduct disentitled it to any further payment. They relied on a seminal case from 1960 holding that “a party to an illegal contract cannot ask a court of law to help…carry out [an] illegal object.” That court went on: “No court should be required to serve as paymaster of the wages of crime.”
But ACC argued that there was no direct connection between the illegal transaction and the obligation sued upon. It argued that Citibank was using the illegality defense not as a shield for the public good, but rather as a sword for its personal gain. ACC argued that it was “extorted” and should not have been expected to call the police on its 60-year client—particularly at a time it was owed millions of dollars.
Ultimately, the court held that Citibank failed to establish that ACC’s conduct was “gravely immoral” so as to completely bar damages. ACC did not bribe anyone to procure the contracts in the first place. It worked with Citibank long before Cassisi came on the scene. And Citibank could scarcely claim the high moral ground when it was its own employee (Cassisi) who was wrapped up in it all.
In the end, Citibank’s motion to dismiss the ACC action was denied, and ACC was permitted to pursue its $4+ million contract balance—after making appropriate restitution. Some might say it got off lucky.
Ideally, you will never have to cite this case as precedent in your own lawsuit.