MERIDEN - Federal agents from the FBI and the Internal Revenue Service Criminal Division raided the offices of the Carabetta Management Co. at 200 Pratt St. early Wednesday morning as part of an ongoing federal investigation.
All employees except upper management were sent home, witnesses said, and agents were seen loading boxes of documents and computers into a van parked at the rear of the building. Agents sitting in cars with license plates from Massachusetts and Rhode Island entered and left the parking lot, while others conversed quietly with members of the Carabetta family who remained on site.
Also raided were the adjacent offices of SRC Construction Co. Another company headquartered at 200 Pratt St. is Carabetta Enterprises Inc.
FBI and IRS officials would not say what prompted the search except that it was part of an ongoing federal investigation into Carabetta companies. Authorities would not confirm whether the search and seizure was related to Carabetta's involvement in billions of dollars' worth of failed federal military housing contracts.
Attorney William Baldiga, who represented Carabetta during negotiations with the military, was not aware of Wednesday's search and seizure when reached by a reporter, and quickly said he had to contact Carabetta officials. He did not return a second phone call.
In August 2008, the U.S. Department of Justice began an investigation into how Carabetta Enterprises Inc. landed $3.3 billion in military housing contracts in six states and how every one of them collapsed. The projects were with the U.S. Navy in the Pacific Northwest for more than 600 homes; with the U.S. Air Force at bases in Florida, Georgia, Arkansas and Massachusetts; and at a U.S. Army base in Missouri.
At Moody Air Force Base in Valdosta, Ga., only two of 400 new homes were built and hundreds of subcontractors claimed SRC Construction, owned by Salvatore R. "Sammy" Carabetta, was not paying them for millions of dollars in work already completed. A Georgia Superior Court judge placed the entire project into receivership until it was sold to Hunt Pinnacle.
The contractors' complaints led to calls from U.S. Sen. Saxby Chambliss, R-Ga., and from Sen. Mark Pryor, D-Ark., that the Defense Department blacklist Carabetta companies from federal contracts. Pryor sponsored a bill seeking more scrutiny of military contracts with private firms. Chambliss said in 2008 that he might call for a congressional investigation, depending on the findings of the Justice Department probe.
Military housing
In 2004, American Eagle Communities - led by Kathryn Thompson, Carabetta Enterprises Inc. and Shaw Infrastructure - entered into a 50-year deal to build, rehabilitate, own and manage housing at Air Force bases in Arkansas, Florida and Massachusetts. Shaw was not involved at Moody Air Force Base.
Operations at the six bases fell behind schedule within two years and hundreds of subcontractors filed non-payment complaints and lawsuits. Project lenders and the military put the contracts up for sale and the Hunt Pinnacle Corp. took over to finish construction on 2,617 Air Force housing units at four bases.
The Seattle-Post Intelligencer newspaper investigated American Eagle after the Navy project in the Northwest failed. With the help of a former project manager-turned-whistleblower, the newspaper reported that Thompson was in the midst of a bankruptcy and owed millions to federal and California tax authorities.
It also reported that Carabetta hired a retired Air Force general for $200,000 to secure the first contract.
Carabetta's financial problems were well known after a failed waterfront development in Asbury Park, N.J., sent the company into bankruptcy reorganization. In the 1990s, Carabetta was also found to have improperly diverted millions from federal housing projects and was suspended from government contracts for two years.
The military contracts were seen as a way for the Carabetta family to rebound from the bankruptcy and enter another realm of government contract work.
Instead, the cost overruns at the projects and numerous delays uncovered flaws in the way the government investigates private firms doing government work. After the delays and complaints from contractors, lawmakers and even a Georgia sheriff began questioning how the government missed the numerous red flags associated with Thompson and Carabetta. They also started asking where the money Carabetta had been paid wound up.
At the time, Carabetta's attorney, Baldiga, told the Record-Journal that Carabetta companies were carefully checked and provided extensive documentation. A U.S. Air Force spokesman said the military was aware of Carabetta's bankruptcy, but the company cleared a review of its past business practices.
Milford attorney Genevive Salvatore, who represented Carabetta as the company fought the receivership takeover in Georgia, said Wednesday that she had severed ties with Carabetta in 2008. She wouldn't say why.
In Florida, Norman Moody, a reporter for Florida Today, said contractors at Patrick Air Force Base had lawsuits three or four years back that sparked a look into American Eagle and Carabetta.
"When they first came here, years ago, I did an investigation ... about their dealings back then," Moody said Wednesday. "Questioned why was the Air Force going with them. There were questions here in the community."
Kay Harris, managing editor of the Valdosta Daily Times, quoted Chambliss in a 2008 article on the sale of the projects.
"The Air Force should have been more proactive to fix this problem before it got to this point," Chambliss said. "In my opinion, this issue is ripe for an Inspector General investigation to figure out what went wrong, why the contractor was awarded a $3.3 billion contract for privatized housing, covering five states, work on all of which has been halted."
TALK ABOUT IT in our forumsReporters Dan Ivers and Tiffany Diorio contributed to this report.
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GoneToSanDiego posted at 10:02 am on Sat, Jun 18, 2011.
The four founding Carabetta Brothers built the house where I grew up 50 years ago, on Elmwood Drive, a dirt road in (then named) "Birchwood Estates".
How sad this once successful family business, owned by seemingly honest people, grew into its current state. Seems a combination of wealth, greed and government corruption led to these shameful consequences.
goodbyemeriden posted at 11:07 am on Thu, Jun 16, 2011.
This took place a little while ago but this is the stuff Carabetta pulls and this is one of many reasons they need to be investigated.
Mysterious Memo Surfaces
September 21, 2006
By JEFFREY B. COHEN, DANIEL E. GOREN And JON LENDER, Courant Staff Writers
A memorandum that appears to lay out a comprehensive agreement between the Hartford Housing Authority and Meriden developer Salvatore Carabetta surfaced Wednesday, raising new questions about relationships at the heart of a lawsuit alleging bid-rigging and corruption.
The document, dated July 31, 2002, appears to give Carabetta and his partnership, SOC Group Inc., a strong hand in an effort to modernize public housing in Hartford's North End. It assigns his company responsibility for drafting a plan, raising money, choosing architects and pushing forward several projects aimed at replacing the city's aging housing developments.
But the memorandum, the existence of which has been rumored since ousted Executive Director Lancelot Gordon Jr. filed a federal suit last week to get his job back, was characterized Wednesday by many key players as something of a mystery.
Officials say they've never seen an original copy.
No one seems to know who wrote it.
And the official whose signature appears on at least one circulating version of the document said he never signed anything.
"I don't know where the damn thing came from," John D. Wardlaw, Gordon's predecessor as executive director, said Wednesday.
Wardlaw said he was stunned when authority officials confronted him about the document.
"I told them point blank ... that this document is bogus, I'm not involved in it, I wasn't aware of it, and they acknowledged that, and I walked out," Wardlaw said. "Come on, not only is it not something I could sign, it is something I wouldn't sign."
Carabetta, whose signature also appears on the memorandum, could not be reached. Repeated calls to him Wednesday and during the past week have not been returned.
The relationship between Carabetta and the authority is a key element of a federal lawsuit filed last week by Gordon, the ousted executive director. Gordon, 58, was fired after less than a year by the authority's board of commissioners over allegations that he failed to follow the authority's procurement policy in connection with nearly $11,000 in financial transactions.
But Gordon claims in the lawsuit that he was fired because he was trying to uncover entrenched corruption at the agency.
Among several allegations, Gordon claimed in the lawsuit that authority board member Angel Arce invited him to a July 2004 meeting with Carabetta at the Olympia Diner in Newington, and tried to persuade him to help steer the $300 million redevelopment project at Westbrook Village and Bowles Park to Carabetta.
Arce has denied that the Olympia Diner meeting ever took place, or that he tried to push for Carabetta. Arce declined to comment Wednesday on the controversy surrounding the memorandum.
goodbyemeriden posted at 10:25 am on Thu, Jun 16, 2011.
Couldn't of happened to a better Company. They have no idea how to run a business. I suppose now all the divorced females will be complaining they are not getting enough alimony from there ex husbands.
Former Meriden Resident posted at 6:59 am on Thu, Jun 16, 2011.
Having grown up in Meriden I believe it is tragic what the Carabetta's have done to the city of Meriden. It was the beginning of the end for Meriden when they started building their housing units capitalizing on federal dollars to line thier pockets. It would be wonderful to see Meriden restored to the great city it once was
Proud_American posted at 4:16 pm on Wed, Jun 15, 2011.
Another situation that has been long over do. When are people going to learn that sooner then later it is all gonna come to an end. Someone call Home Depot, the citizens of Meriden are gonna need one hell of a broom to sweep up the mess when all these investigations are over. Meriden better not miss out on the golden opportunity to rebuild once it is all over!
JustACitizenOfMeriden posted at 2:28 pm on Wed, Jun 15, 2011.
Nice reputation Meriden has these days. Perhaps the FBI should set up shop to handle all these invesitagations in what seems to becoming a corrupt City. Makes me wonder how far up the ladder all these problems are already known of and eyes are closed to it all. If Meriden continues with additional investigation, finding some corruption, we should consider a mascot of those three monkeys, hear no evil, see no evil, speak no evil