Two East Elmhurst men were arrested on Wednesday, Sept. 21, and charged with fraud in connection with homeless shelter contracts with New York City worth $12 million, according to federal prosecutors.
Liaquat Cheema, 62, and Ali Cheema, 31, were named in a complaint unsealed in Manhattan federal court charging them with wire fraud conspiracy, aggravated identity theft and money laundering conspiracy for their role in a scheme to defraud the city in connection with public contracts to perform general contracting work at city-run shelters.
“The defendants entered into public contracts so that they could provide vital maintenance to homeless shelters to aid New York City’s most vulnerable residents; however, instead of honoring these contracts, the defendants allegedly concocted multiple schemes to steal public funds,” U.S. Attorney Damian Williams said. “Today’s arrests signal this office’s continued commitment to combating any and all fraud and money laundering schemes.”
The two East Elmhurst men operated the AFL Construction Co. in Corona, which was contracted with the city between 2014 and 2018 to perform general maintenance, landscaping, roofing and snow removal at numerous shelter sites. The defendants allegedly submitted fraudulent invoices and other documentation in support of requests for payment on the contracts, which falsely claimed that certain workers had performed work on certain projects and falsely inflated amounts paid by the defendants for materials purportedly used on the projects.
To date, AFL has been paid at least $8 million for work purportedly done pursuant to the contracts.
Additionally, during the same period, the defendants and their co-conspirators used several bank accounts to receive the proceeds of the fraudulent scheme and conducted financial transactions to conceal the illegal source of the funds. The transactions included transfers of illicit proceeds into the defendant’s personal and business bank accounts via fraudulent checks to purported workers fraudulently listed in the documentation submitted to the city in support of payment on the contracts but never delivered those checks to the purported workers; instead, the defendants deposited the checks in their own personal and business bank accounts.
“The charged scheme was vast and involved over-billing for material, false claims to prompt the issuance of paychecks to purported workers and the diversion of those paychecks to defendants, and the submission of false certifications that enabled defendants to wrongfully obtain Medicaid benefits,” NYC Department of Investigation Commissioner Jocelyn Strauber said. “As alleged, these defendants, contractors who work on New York City homeless shelters, used their contractor status to fraudulently siphon funds from the city.”
If convicted, the two defendants are charged with one count of wire fraud conspiracy, which carries a maximum potential sentence of 20 years in prison and they are both charged with one count of wire fraud conspiracy, which carries a maximum potential sentence of 20 years.
Two additional East Elmhurst residents, 46-year-old Khizar Hayat and Shouket Chudhary, 64, are each charged with one count of money laundering conspiracy, which carries a maximum sentence of 20 years in prison.
