Saturday, May 19, 2012

General Contractor Accused of Stealing $1.2 million from Citadel Investment Group – Yes Stealing is Wrong But . . .

It’s Got to be Less Wrong When the Stealing is From a Hedge Fund

Capitalism has evolved in this country from capitalism that used to invest in businesses, grow industries and create industrial employment to capitalism that is used to make money from finance.  This involves leveraged buyouts of companies and looting them, creating complex financial instruments that produces huge fees for the financial institutions that make them up and huge losses for those that buy them and paying huge compensation to men and women who do little more than lord it over everyone else with their conspicuous consumption.

So it is with mixed feelings when one reads that a construction company that builds palaces for the wealthy has been accused of stealing $1.2 million from the Citadel Group, a Hedge Fund whose contributions to the American economy has been, well, unknown to say it as nicely as possible.

Uli Seit for The New York Times
Alex Getelman helped pay for his
 home in Old Brookville, N.Y., 
by inflating the cost of work for
 Citadel, prosecutors charged.
Alex Getelman was still in his 20s when he turned his nascent company into what he called “New York City’s fastest-growing general contracting and construction management firm.” He had a list of blue-chip clients, a plush office on 57th Street and a luxurious home on Long Island’s North Shore.

But in order to help pay for his castlelike stone house on 3.3 acres in Old Brookville, prosecutors charged, Mr. Getelman systematically inflated the cost of work for one of the largest hedge funds in the world, Citadel Investment Group

Between 2008 and 2011, Mr. Getelman stole $1.2 million from Citadel as his company, Aragon, built offices for the hedge fund in the skyscraper at 601 Lexington Avenue, the former Citicorp Center, according to the complaint filed on Tuesday by the Manhattan district attorney, Cyrus R. Vance Jr. The contractor also failed to declare the extra income and pay $286,000 in taxes, the complaint said.

Yes, stealing is wrong, and if Mr. Getelman did indeed rip off Citadel for $1.2 million he should go to jail and have to pay the money back.  But The Dismal Political Economist must make a confession here.  While he deplores criminality he does admit that if someone has to be the victim of theft, one could not pick a more deserving target than a hedge fund.

Citadel, which declined to comment, has been the comeback kid of the hedge-fund world. After the company stumbled badly in 2008, its founder, Kenneth C. Griffin, earned a 20 percent return for his investors last year and a $700 million paycheck.

Apparently ripping of rich companies by construction companies is a standard practice in New York.

The charges against Mr. Getelman are the latest case in a long-running investigation into the interior construction industry by the district attorney’s rackets bureau and the special investigations unit of the State Police.

Over the past two years, investigators have seized company records, interviewed nearly 100 subcontractors — including P. J. Mechanical Corporation — and subpoenaed property owners like Goldman Sachs, Bank of America and L&L Holding Company. But progress has been slow.

thus explaining once again why Robin Hood stole from the rich.  It’s easy, and how much money can you make stealing from the poor anyway.  But there may be more to this story than that.  A reasonable question to ask is why contractors are stealing from financial firms.  The answer may be perception.  A contractor builds things and when these people look back at how hard they have worked, how physically demanding the job is and that they have actually built something, they must wonder at how people at Citadel and Goldman make so much money doing essentially nothing for the economy.  This attitude may well translate into actions that make otherwise law abiding contractors feel it is okay to steal from those companies.

And no, that does not excuse the lawlessness, it just explains it.  Just a thought


  1. And an excellent explanation it is! Great note on that Fool Vitter, too!

  2. He not only stole from the jobs he built he stole from his employees.He wanted men to work saturdays for straight time while he billed clients for over time. He would the pocket the rest of the money he got from men woking over time for straight time.

  3. alex was a very nice guy he treated his employees very good. he was a tough guy when he had to be but hey if he wasnt tough would he be where he is today i would have been tough too.

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