AG Announces 50-Count Indictment Over Forgery in Wake of Hurricane Sandy

Attorney General Eric T. Schneiderman announced Monday the unsealing of a 50-count indictment charging Matthew Pappalardo and his former employer, HiRise Engineering, P.C., with allegedly altering engineering reports prepared in connection with the assessment of structural damage of residential properties resulting from Hurricane Sandy in 2012.

Pappalardo, 38, and HiRise Engineering are charged with 25 counts of second degree forgery, a class D felony; Pappalardo is also charged with 25 counts of unauthorized practice of engineering, a class E felony. In addition, Schneiderman also announced today the release of a report identifying several fundamental flaws in the National Flood Insurance Program (NFIP), which includes recommendations to increase transparency and accountability.

“Fraudulently altering engineering reports undermines the integrity of the entire FEMA claims process, which homeowners and families rely upon in a time of crisis,” Schneiderman said. “Today’s charges reveal a flagrant disregard for the well-being and safety of New Yorkers, and my office will not tolerate it.”

In June 2014, lawyers for owners of residential properties in New York that had incurred damage as a result of Superstorm Sandy reported alleged fraudulent alterations in engineering reports to the Attorney General’s office. In December 2014, the Criminal Enforcement and Financial Crimes Bureau commenced a criminal investigation into the suspected unlicensed practice of professional engineering and forgery of engineering reports by engineering firms operating in Nassau County and elsewhere in New York.

According to statements made by prosecutors at arraignment, after Hurrican Sandy in October 2012, HiRise, a Uniondale-based engineering firm, was contracted to perform structural engineering assessments for properties covered under the National Flood Insurance Program. HiRise, in turn, retained numerous licensed professional engineers to perform house inspections and prepare engineering reports.

According to prosecutors, the original reports authored by the on-the-ground, subcontracted professional engineers were allegedly altered by employees of HiRise, under the direction of project manager Pappalardo. Pappalardo and the other HiRise employees who made the alterations to the original reports did not personally inspect the damaged buildings and were not licensed to practice engineering in New York State.

The altered reports were then allegedly submitted by HiRise, and ultimately provided to the adjusting firms, without the consent or approval of the underlying professional engineers. Federal flood claim administrators and adjusting firms then relied on these reports as part of their evaluation of coverage under the NFIP.
In addition to the crimes charged in Nassau County, the Attorney General’s investigation into the damage assessment process after Sandy has also uncovered evidence of other crimes which fall outside the scope of New York State’s jurisdiction. As a result, the attorney general has referred these findings to the United States Department of Justice.

A lawyer for HiRise told the New York Times: “We are disappointed that the attorney general’s office has determined to bring these charges. Nevertheless, as we have from the beginning, we steadfastly maintain that there was never any intent to defraud any homeowner with respect to the preparation of these reports, and we look forward now to an opportunity to defend these allegations.”