Monpat Declaration



7.13.2005: Monpat Construction Inc.

CITY OF NEW YORK

OFFICE OF THE MAYOR

OFFICE OF CONTRACT SERVICES

______________________________________________________________________

DECISION OF THE CITY CHIEF PROCUREMENT OFFICER

______________________________________________________________________

Application for Declaration of Rehabilitation

from

Monpat Construction Inc.

By letter dated June 24, 2005, Monpat Construction Corporation. (“Monpat”) applied to the City Chief Procurement Officer (“CCPO”) for a Declaration of Rehabilitation pursuant to §2-08(p) of the Procurement Policy Board rules.

Monpat is a minority owned general contracting firm located in 157-21 Horace Harding Expressway in Flushing, Queens. It is incorporated in the State of New York and has a date of incorporation of November, 1993. Mihir Patel is the president (“Mihir”) of Monpat and his brother, Miten Patel, is vice president (“Miten”). Mihir and Miten are the current sole owners of Monpat. When Monpat was founded, its principals consisted of Mihir, Miten, Michael Monarios and Vicky Kontakos. Vicky Kontakos and Michael Monarios left the company in 1997. At the time of the wrongdoing discussed below, Mihir and Mitten were the sole owners and principals of Monpat.

Falsifying Business Records Charges

According to the supporting deposition filed on October 19, 2000, by Detective Daniel Walsh of the New York County DA’s Squad, from May 1, 1998 to September 30, 1999, Mihir and Miten submitted checks to a subcontractor that appeared to be for services rendered on a School Construction Authority (“SCA”) project, however, a portion of those funds was actually paid back to them in the form of cash and was not reported as income. Monpat’s principals failed to record such business transactions and therefore avoided tax liability for the monies transferred in the business transaction. Detective Walsh stated that the arrest was made after a review of court-authorized eavesdropping on Monpat.

On October 19, 2000, Mihir and Miten each plead guilty to one count of violating 175.05 (1) of the NYS Penal law, falsifying business records in the Second Degree, a Class A Misdemeanor (“Guilty Pleas”). As part of their sentence, they were each fined $1,000.00 and together paid an additional $40,000.00 in restitution to the District Attorney’s Office. They were also required to amend their tax returns and pay all additional taxes due. The court did not order any probation for the Patels and they satisfied all the conditions of their plea immediately.

SCA Suspension

Based on the Guilty Pleas, the SCA, by letter dated November 21, 2000, suspended Monpat from bidding on or receiving any further work from the SCA and removed them from the SCA’s prequalification list for a five year period from the date of the convictions The suspension terminates on October 20, 2005.

Non-Responsibility Determinations

By letter dated February 8, 2001, the Agency Chief Contracting Officer (“ACCO”) for the New York City Department of Parks and Recreation (“Parks”) determined that Monpat was a non-responsible bidder on three separate contracts – The Restoration of Kissena Lake; General Reconstruction and Completion Work at Various Parks Locations Citywide; and Reconstruction of Pavements, Handball Courts, Landscaped Areas and General Site Work in Various Locations in the Borough of Manhattan (Parks Nos. Q024-200M, CNYG-901M, and MG-201M respectively). The ACCO determined that Monpat failed to disclose the investigation that led to the Guilty Pleas in its VENDEX submissions dated October 16, 2000. Furthermore, the ACCO also stated that she had difficulty believing that Monpat had no knowledge that there was an investigation or any charges pending against Mihir or Miten when they submitted their VENDEX forms on October 16, 2000, which was coincidentally three days prior to the Guilty Pleas. Monpat did not appeal this determination.

By letter dated April 13, 2001, the ACCO for the Department of Design and Construction (“DDC”) determined that Monpat was a non-responsible bidder for a contract to provide General Construction Work for Shea Stadium (DDC Contract No. JOC2000G-II) based on the SCA suspension on November 21, 2000 and Monpat’s failure to disclose in its VENDEX submissions the Guilty Pleas and the investigation that lead to them. Monpat did not appeal this determination.

By letter dated May 10, 2001, the ACCO for Parks determined that Monpat was a non-responsible bidder for the reconstruction of the Soccer Field in the Red Hook Recreation Area project (Parks No. B126-101M), based on the SCA suspension on November 21, 2000 and Monpat’s failure to disclose in its VENDEX submissions the Guilty Pleas and the investigation that lead to them. Monpat did not appeal this determination.

By letter dated May 15, 2001, the ACCO for Parks determined that Monpat was a non-responsible bidder for the reconstruction of a portion of JHS (OXPORT) Playground Located at Flushing Avenue between North Oxford Street and North Portland Avenue (Parks No. B126-101M), based on the SCA suspension on November 21, 2000 and Monpat’s failure to disclose in its VENDEX submissions the Guilty Pleas and the investigation that lead to them. Monpat did not appeal this determination.

On or about February of 2002, Parks awarded five contracts to Monpat – Reconstruction of the Tennis Courts in Frederick Johnson Park; Reconstruction of Play Equipment, Safety Surfacing, Handball Courts, and General Sitework in Queens; Reconstruction of Pavements, Fencing, Landscaped Areas and General Sitework in Manhattan; and Reconstruction of Play Equipment, Safety Surfacing, Handball Courts and General Sitework in Manhattan (Parks Nos. M159-101MA1, QG-402M, QG-302M, MG-901M, MG-701M respectively) - based on Mihir’s representation that the arrests and convictions were a mistake on Mihir’s and Miten’s parts due to deficiencies in Monpat’s accounting and financial controls.

By letter dated July 30, 2002, however, Parks ACCO determined that Mihir’s representations were not accurate and declared Monpat a non-responsible company and rescinded the five contract awards. The ACCO based her determination on information from the Manhattan District Attorney Office’s investigation, such as wiretaps and a review of business records, which indicated that Mihir and Miten “were involved in a scheme to evade taxes.”

By letter dated August 7, 2002, Monpat appealed the ACCO’s determination to the Commissioner of Parks arguing that it was improper for the ACCO to rescind the contract after they were actually awarded and that the ACCO was in possession of this information the whole time and that the information was not “new.” Monpat also argued that at no time did Mihir or Mitten ever misrepresent the facts and circumstances surrounding the arrests and convictions.

On August 23, 2002, Parks’ General Counsel, upheld the determination stating that even though the ACCO could have been more timely in making her determination, the basis for the determination was sound. On August 28, 2002, Monpat appealed to the CCPO stating the same arguments it made to the Parks General Counsel.

On March 23, 2003, the CCPO upheld the determination. Monpat did not pursue any further actions.

Corrective Actions

Since Parks’ last non-responsibility determination, Monpat has worked as a contractor on several public contracts for both New York City agencies and other government agencies, including Parks, the City of Norwalk, Connecticut; the Tuckahoe School District in Eastchester, New York. Further, change orders and time extensions were issued to Monpat on existing Parks contracts.

In terms of its performance, since 1996, Monpat has had 24 performance evaluations for work it has done for Parks and the Department of Design and Construction, all of which were rated as satisfactory or better.

All of Monpat’s cautions and non-responsibility determinations arose from Miten’s and Mihir’s guilty pleas and their failure to disclose both the guilty pleas and the investigation on Monpat’s VENDEX forms. Monpat understands its legal obligation to fully disclose all issues on its VENDEX forms and has updated its VENDEX forms to include the non-responsibility determinations. Monpat is not under a legal obligation to report any information regarding the investigation, as it occurred over five years ago. Monpat now recognizes the importance of full disclosure on its current and future VENDEX submissions, and has agreed to routinely review its VENDEX to ensure accuracy.

Monpat has instituted safeguards and procedures in order to prevent the situation that gave rise to the Guilty Please from occurring in the future. They have retained an outside CPA firm, Armao, Costa & Ricciardi, P.C. to examine their accounting procedures six times a year. The firm has also made recommendations for strengthening Monpat’s internal controls, including the purchase of a computer accounting system, which will create an effective tool for organizing business transactions and will more easily enable both Monpat and its CPA Firm to ensure that proper accounting measures are used in Monpat’s day-to-day fiscal operations. Furthermore, by computerizing its accounting system, Monpat makes it easier for the CPA firm and the City, if it so chooses, to examine Monpat’s financial activity which enhances transparency and accountability on Monpat’s part. These corrective actions result in greater and easier oversight of the company's transactions.

Monpat has entered into a Responsibility Agreement (“Responsibility Agreement”) with the City, for the period commencing June 24 and ending at the end of the first City contract that Monpat is awarded. However, the period shall not be less than two years or longer than four. According to the Responsibility Agreement, Monpat’s accounting firm must now furnish audit reports on a quarterly basis to DOI and MOCS. The audit reports will be prepared in accordance with Generally Accepted Accounting Principles (“GAAP”), will contain information concerning Monpat’s financial and internal controls, and will detail Monpat payments, transfers and/or other financial transactions with subcontractors, consultants, and suppliers.

Furthermore, in the event that certain negative events occur, including, but not limited to, failing to disclose relevant financial information in the quarterly audit reports to DOI and MOCS, and failing to disclose any suspicion of criminal activity by Monpat or any of its principals, subcontractors, etc., Monpat has agreed to have a monitor put in place, the choice of which would be at DOI’s sole discretion, who would design and implement reasonable changes in Monpat’s practices, organization, accounting/bookkeeping methods, and staffing. If necessary, the monitor would report directly to DOI and would audit, examine, and oversee the changes to insure their effectiveness. These audits would include investigations of Monpat’s payroll reports and payment requisitions submitted to the City to ensure that they are complete, accurate, and truthful.

Finally, as part of the Responsibility Agreement with the City, Monpat will put in place a code of ethics that Monpat must distribute and hold binding on all of its employees. The code requires Monpat to apply fair and ethical business practices, and puts emphasis on Monpat’s duty to never intentionally falsify business records.

Declaration

I have determined that Monpat Construction Inc. has adequately addressed the issues that gave rise to the non-responsibility findings by the Department of Parks and Recreation (“Parks”) and the Department of Design and Construction (“DDC”) based on the following reasons:

1. Mihir and Miten Patel plead guilty to the charges brought against them, and they promptly satisfied all conditions ordered by the court;

2. Monpat has signed a Responsibility Agreement with the City under which it would institute and adhere to the following:

a. Direct and authorize Armao, Costa & Ricciardi, P.C., and/or any other accounting firm retained by Monpat to provide quarterly audit reports to DOI and MOCS;

b. In the event that certain conditions expressed in the agreement occur, the City has the right to direct that Monpat retain, at its sole expense, a monitor, selected by the City, to perform an independent audit and review of Monpat’s performance under its agreement with the City;

c. Draft and implement a Code of Business Ethics/Employee Handbook that would be binding on the company and its employees, which must be first approved by the City;

3. Monpat has introduced and applied new protections and procedures to prevent such actions that resulted in the Patel pleas by hiring an outside CPA firm, Armao, Costa, & Ricciardi, P.C., to examine their accounting procedures;

4. Monpat has worked as a contractor on several public contracts for entities other than the City and has also received change orders and time extensions from Parks since its last non-responsibility determination;

5. Monpat’s performance evaluations since 1996 for work it had performed on Parks and DDC projects were rated as satisfactory or better;

6. Monpat has updated its VENDEX forms to properly disclose the misdemeanor convictions of Mihir and Miten Patel and agrees to periodically review its submission to ensure that the information reported is both current and accurate.

7. Monpat certified under penalty of perjury in its June 24, 2005 application for rehabilitation that no other issues have arisen that would adversely affect it responsibility

Therefore, on the condition that its Responsibility Agreement is implemented, I declare that Monpat Construction Inc. is rehabilitated pursuant to PPB Rule § 2-08(p). Pursuant to the New York City Administrative Code, this Declaration of Rehabilitation will be reflected in the VENDEX database.

Decision by:

________________________________ Dated:_______________

Marla G. Simpson

Director, Mayor’s Office of Contract Services

City Chief Procurement Officer

................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download