NYS Comptroller's Audit Finds Fraudulent Construction Bids Made to SUNY Downstate Medical Center

An audit that was triggered by three anonymous letters revealed that fake bids were made for construction contracts at the State University of New York Downstate Medical Center, says New York State Comptroller Thomas P. DiNapoli.

According to the audit, Brooklyn-based Eagle Two Construction and its affiliated fake companies were paid $1.2 million by SUNY between January 1996 and October 2010. The affiliated companies, which are all located at the same address, had submitted competing bids in six separate procurements, some of which were forged, according to the findings made by DiNapoli’s auditors and investigators. Eagle Two won $92,090 in contracts. Auditors also found evidence that payments totaling $49,890 were made to Eagle Two and an affiliated company, JIT, in order to avoid change orders to existing contracts, says DiNapoli. He has suggested that the hospital recoup the funds that should have been covered under previous contracts.

The owner of Eagle Two, Roxanne Tzitzikalakis, would not grant an interview by the auditors regarding her company’s work with SUNY Downstate, says DiNapoli’s audit. Tzitzikalakis’s father, Demitrios Tzitzikalakis, who was involved in the company’s daily operations at the hospital, had been convicted of “various felonies in connection with a previous company with which he submitted falsified and inflated invoices to the New York State Dept. of Citywide Administrative Services.”

Separately, auditors also found that from February 2007 through May 2011, SUNY Downstate paid about $2 million for the implementation of a new business operations system for which only ten out of the hospital’s 200 departments are currently using.

DiNapoli has suggested that SUNY Downstate establish an environment at the hospital that supports internal controls, assess the integrity of vendors and monitor purchases “to assure they are necessary and being used to prevent waste of SUNY Downstate resources,” and cooperate with any Joint Commission on Public Ethics review.

“SUNY Downstate Medical Center has worked closely with the office of the state comptroller on its audit of Downstate's procurement practices and cooperated fully with its review,” said the hospital in a statement. “We will continue to work with [DiNapoli] to ensure compliance with state procurement regulations, monitor purchasing practices, and reinforce internal controls.”