Quake-Repair Contractor Admits Pay Kickbacks

The president of a company hired by the city of Simi Valley to do repair work after the 1994 Northridge earthquake has agreed to plead guilty to forcing workers to kick back part of their salaries, authorities said Monday.

Krikor Diramerian, 54, has signed a plea agreement admitting he required employees of T.D. Engineering of Northridge to repay $113,777 between June 1995 and June 1996, according to the U.S. attorney’s office.

The workers were hired to repair retaining walls damaged by the earthquake. Since part of the project was funded by the federal government through the Federal Emergency Management Agency, Diramerian was required to pay what is known as a prevailing wage.

Records indicate that 20 bricklayers and other laborers were hired for the job. For some, the pay was as much as $800 a week. But as part of the kickback scheme, according to authorities, Diramerian told the workers to repay up to 40% of their checks to the company, or about $320 a week.

In the plea agreement, filed last week in federal court in Los Angeles, Diramerian admitted to a single charge of conspiracy. The deal now must be presented to a judge for approval, which could happen later this week.

Diramerian is the second company executive to plead guilty in the case. T.D. Engineering Vice President Edmond Thomas pleaded guilty to conspiracy in November and was sentenced to 60 days in jail, 1,000 hours of community service, making restitution and three years’ probation.

Diramerian is expected to face similar penalties but could also be sentenced to prison time, authorities said.

“Diramerian was the architect of the scheme and he attempted to obstruct justice,” said Assistant U.S. Atty. Jeffrey Rawitz, who negotiated the agreement.

The federal prosecutor noted that most similar cases are handled administratively by the federal Labor Department’s wage and hours division.

Rawitz said there were several aggravating circumstances in this case, including the amount of money involved and the fact that Diramerian told his employees not to cooperate in the federal investigation.

According to the plea agreement, Diramerian “instructed [the foreman] to tell T.D. employees that the defendant would repay the kickback moneys to the employees if they did not” cooperate with federal authorities.

During the time the company was doing the work, it was submitting statements to the city of Simi Valley claiming that prevailing wages had been paid to company employees.

But, according to the plea, employees were given their paychecks with small Post-it notes attached indicating what portion of their paychecks they needed to give back to the company.

“These T.D. employees were required to return the Post-it notes to either defendant or co-conspirator Thomas at the time the kickbacks were paid,” according to the plea.

The company has so far repaid $85,000, and both Thomas and Diramerian have agreed to repay the balance. That will likely come from bond money the company posted before starting the project, Rawitz said.

Rawitz said some of the laborers, a number of whom were local residents, have already received reimbursement checks.