Two very different problems
Construction fraud covers home improvement contractors who take money without doing the work, overbilling and false change orders on commercial projects, and fraud on public works, such as false certified payroll or front companies used to meet minority- and women-owned business participation goals. In New York, money paid to a contractor for an improvement is often treated as trust funds for the project, and diverting it can lead to civil and criminal consequences. Public projects bring in agencies such as inspectors general, New York City's Department of Investigation, district attorneys, and the state Attorney General. The response depends on which side of the problem you are on. Owners and contractors need quite different first steps.
For owners who paid and got little
Keep the contract, change orders, invoices, payment records, photos of the work, and every text and email with the contractor. In New York City, home improvement contractors generally must be licensed by the Department of Consumer and Worker Protection, and several counties have their own licensing, so whether the contractor was licensed can matter for remedies. File a complaint with the licensing agency and, if money was taken without work, consider a police report. Check whether a mechanic's lien was filed against your property, since liens have their own procedures and deadlines for challenge. Avoid paying more to restart a stalled job until you have a clear view of what was done.
For contractors under scrutiny
If you are a contractor receiving subpoenas, an audit of payroll records, or questions about a subcontractor or supplier, treat it as a possible criminal matter from the start. Preserve project files, payroll data, emails, and accounting records, and do not revise documents after the fact. Employees and subcontractors may be interviewed separately, and their interests can differ from yours. Our first questions concern the agency involved, the contracts and funding source, and the records already requested. We also consider debarment and licensing consequences, which can affect a business as much as any criminal case.
