news
November 26, 2007
Top Investigative/Integrity Monitoring Firms Join Forces: Thacher Associates Announces a Merger of Operations With Stier Anderson LLC
New York City-based Thacher Associates, LLC and New Jersey-based Stier Anderson, LLC, two of the nation's preeminent investigative and integrity monitoring firms, today announced a merger of operations to create the premier integrity monitoring firm in the country. In addition to the corporate investigative work they regularly perform for their Fortune 500 and other corporate and private clients, Thacher Associates and Stier Anderson have become the "go-to" firms for real estate developers, building owners, and construction managers seeking to protect their construction and real estate development projects from corruption and fraud.
"We are incredibly excited to have Ed Stier and his extraordinary team, led by Jerry Frech, join us," said Thomas D. (Toby) Thacher II, chief executive officer of Thacher Associates. "Ed has been at the forefront of the corporate investigative industry for many decades and is a leader in the field of construction project integrity monitorships. His long history and extraordinary experience in our industry will, without question, make our newly merged team the most experienced and capable firm in the industry."
UNPARALLELED EXPERIENCE
While also providing traditional corporate, investigative and due diligence services, Thacher Associates and Stier Anderson have specialized in developing and implementing innovative strategies designed to protect the integrity and reputation of their clients in the real estate and construction industries. These strategies focus on (i) strengthening internal controls on large-scale, complex construction projects; (ii) identifying, investigating, and addressing risks that could lead to fraud, waste, and abuse before losses can occur; and (iii) creating a reliable basis for resolving disputes fairly and expeditiously. "No two firms have done more in the last 10 years to keep racketeers, unqualified firms, and financially impaired companies off construction sites," said Thacher. "Our proactive strategies as project integrity monitors have saved owners and developers tens of millions of dollars and protected numerous reputations from being caught up in embarrassing scandals."
A short list of real estate owners and developers—in both the public and private sectors—who have tapped the two firms to serve as integrity monitors on their projects speaks volumes.
- Former New York City Mayor Rudy Giuliani appointed Thacher Associates and Stier Anderson to monitor the cleanup at Ground Zero following the 9/11 terrorist attacks. The firms' anti-fraud initiatives saved New York City tens of millions of dollars.
- The Lower Manhattan Development Corporation (LMDC) has engaged Stier Anderson as integrity monitor for the demolition of the Deutsche Bank building.
- New York's Metropolitan Transportation Authority (MTA) and the Port Authority of New York and New Jersey have engaged Thacher Associates to monitor construction of the Fulton Street Transit Center and the Santiago Calatrava-designed PATH station at the World Trade Center site, respectively. Thacher Associates was also hired by the MTA to monitor the renovation of the MTA's South Ferry Terminal Station.
- Developer Georgetown Properties and owner Barry Diller hired Thacher Associates to monitor construction of InterActive Corp.'s new headquarters in Chelsea, designed by world-renowned architect Frank Gehry.
- Developer The Durst Organization, together with Bank of America, engaged Thacher Associates to monitor construction of BOA's new office tower on 42nd Street across from Bryant Park.
- Developer Related Companies, Inc., together with Time Warner Inc., engaged Thacher Associates during construction of the Time Warner Center at Columbus Circle.
- Developer Brookfield Financial Properties, together with the Canadian Imperial Bank of Commerce, engaged Thacher Associates during construction of CIBC's headquarters at 42nd Street and Madison Avenue.
- The New York City Department of Investigations (DOI) engaged Stier Anderson to monitor construction of the new Croton Watershed Water Filtration Plant, an installation mandated by the federal government and critical to the renewal of New York City's infrastructure.
- The New York Yankees engaged Stier Anderson to monitor construction of the new Yankee Stadium in the Bronx.
THE PRINCIPALS
After serving as a city and state prosecutor, in 1985 Toby Thacher was appointed executive director of the Construction Industry Strike Force (CISF) created by New York Governor Mario Cuomo to investigate and prosecute corruption and racketeering in New York City's construction industry. Thacher and his team conducted a massive investigation of the industry and an in-depth analysis of the industry's susceptibility to corruption. The investigation resulted in the successful prosecution of scores of significant construction industry operatives, and led to publication of a landmark book, Corruption and Racketeering in the New York City Construction Industry (NYU Press 1990), which described the unique vulnerability of the construction industry to fraud and corruption and proposed new strategies to minimize that vulnerability.
In 1990, Thacher and Joseph DeLuca, then CISF chief of operations, were asked by the trustees of the New York School Construction Authority to create a program to protect a multi-billion dollar school construction program. The program they created was hailed by the media, the government, and the Kennedy School at Harvard University as a model to be replicated in both the public and private sectors. Randy Mastro, chief of staff to former Mayor Rudy Giuliani, described the initiative as follows: "Thacher's development of programs to screen out unethical and/or organized crime-connected companies…and his other initiatives to enhance integrity while advancing efficiency have all contributed greatly to our efforts to assure integrity in our governmental programs." In 1996, Thacher and DeLuca founded Thacher Associates to make available to both the public and private sectors the many investigative strategies they had developed for businesses to protect themselves from corruption.
As a federal and New Jersey state prosecutor, Ed Stier investigated hundreds of organized crime, corruption, and fraud cases before opening his own law firm in 1982 to provide investigative services, and to practice what he calls "business integrity law." His firm's first major assignment in the private sector involved General Public Utilities (GPU), the owner of the Three Mile Island (TMI) nuclear power plant, which hired him to repair its reputation following the 1979 nuclear reactor incident at TMI. Stier investigated the clean-up following the disaster, and prepared detailed reports on behalf of GPU that assured the Nuclear Regulatory Commission (NRC), the media, and the public that GPU was committed to meeting all required safety standards.
Stier's investigative reports proved to be so thorough and reliable that the NRC relied on them to resolve hundreds of allegations against GPU and its contractors. As a result, the NRC allowed GPU to reopen TMI's undamaged reactor, the public regained confidence in its own safety, and GPU was able to stave off bankruptcy. Stier's success in the engagement led to numerous other engagements at nuclear plants around the country and to Stier's appointment to so-called "tiger teams" within the federal Department of Energy to investigate misconduct at nuclear weapons sites.
In an historic first, in 1987 Stier was appointed by a U.S. District Court to reform Teamsters Local 560, then seen by the Federal Bureau of Investigation as the most corrupt union local in the U.S. Led by Tony Provenzano, who is believed to have been responsible for the disappearance of Jimmy Hoffa, Local 560 was the subject of the first "Racketeer Influenced and Corrupt Organization Act (RICO)" suit brought by the U.S. Department of Justice to take over a corrupt union. After 12 years with Stier as its trustee, in 1999 Local 560 was declared free of organized crime influence and released from the trusteeship.
THE INTEGRITY MONITORING PROCESS
Major construction projects in the New York market often require thousands of workers, thousands of tools and pieces of equipment, and tens of millions of dollars in materials and supplies. When time is of the essence and construction overruns and/or delays could cost millions of dollars, developers, owners, and contractors are often vulnerable to unethical parties who seek to inflate costs, hide millions of dollars in fraudulent overcharges, steer contracts and subcontracts to inappropriate parties, and otherwise jeopardize the viability and reputations of those construction projects.
When an owner hires Thacher Associates to monitor a project, the firm offers an eleven-step program designed to protect the areas most often targeted by unscrupulous contractors and suppliers. Companies seeking contracts on the project are rigorously screened for character, reputation, and capacity to perform. After unethical, incompetent, and/or financially unstable firms are screened out, Thacher Associates' construction experts, forensic auditors, forensic engineers, and investigators establish a presence on-site, analyze invoices for fraud, monitor compliance with internal controls, and investigate corrupt practices, all to prevent and/or detect fraud before it has the chance to cause lasting damage to the owner's bottom line and reputation. As Thacher points out, "it's easier to avoid fraud than to prosecute it after the fact, and more profitable to minimize loss than to attempt to recover damages."
CHANGING THE CULTURE OF CORRUPTION
Critical to Thacher Associates' approach is the conviction that clients must internalize the importance of fraud prevention in order for integrity initiatives to be successfully implemented. Thacher believes that a profit-driven business has to see the bottom-line benefit of hiring an independent agent to monitor its operations. A corporate culture is only going to change when reform is driven from the inside, and only when it is given incentives to act with integrity and the practical, no-nonsense tools to implement integrity compliance programs.
"We always think and operate in the real-life cultures of our clients. You have to understand how to work within the culture of a company in order to design effective, practical barriers to corruption for the company. Our successes in preventing or rooting out fraud and corruption are only truly rewarding to both us and to our clients when our clients are left with cost effective and totally practical methodologies that prevent future victimization," says Thacher.
Stier notes that "the benefits of our model are tangible, and by joining forces with Thacher Associates my colleagues and I are joining a firm that has been doing it better than anyone else. The merger of our two firms will create a new kind of firm in which people with academic training and high levels of experience in law, accounting, forensic investigations, engineering, and analytic methodologies are carefully integrated into a single team to provide integrity-related services to our clients. If, for example, our auditors find a questionable transaction, our investigators can dig deeper into the facts, our analysts can add broad research capabilities to identify the who's and why's, and our lawyers can assure that the evidence is solid enough to enable our client to act upon it―and it is all done seamlessly. Making the transition from a law practice specializing in corporate integrity law to Thacher Associates is a natural step for me and my staff, and will provide us with a range of high quality resources to better serve our clients. I am truly excited by our future as part of the greatly expanded Thacher team."
