Two operators of St. Louis-based apartment complex development companies and their chief accountant have been indicted on charges of conspiring to defraud the City of St. Louis Minority Business Enterprise (MBE) and Women-Owned Business Enterprise (WBE) program. The scheme allegedly enabled the defendants to obtain millions of dollars worth of tax incentives from the city.
Sidarth “Sid” Chakraverty, Victor Alston, and Shijing “Poppy” Cao were indicted on September 18 in U.S. District Court in St. Louis. The indictment, unsealed on Friday, includes one count of conspiracy to commit wire fraud and 11 counts of wire fraud.
Chakraverty and Alston operate Big Sur Construction LLC, a construction management and development company, as well as LuxLiving LLC, which oversees the development, leasing, and management of apartment complexes built by Big Sur. The companies were involved in two significant St. Louis projects: the Chelsea multifamily apartment development in the Pershing-DeBaliviere neighborhood and the SoHo multifamily apartment development in the Soulard neighborhood. Cao served as the chief accountant for these companies.
The City of St. Louis’ MBE and WBE programs aim to reduce barriers for historically disadvantaged women and minority groups in construction projects. These programs offer benefits such as sales tax exemptions on construction materials and property tax abatements for completed projects. The St. Louis Development Corporation (SLDC) oversees compliance with the city’s MBE and WBE goals for redevelopment projects and makes tax incentive recommendations to the Mayor and Board of Aldermen.
The Chelsea Project
The Chelsea project, which began in 2019 and concluded in 2021, received a 10-year tax abatement. The city set participation goals of 25% for MBEs and 5% for WBEs. Big Sur Construction, certified as a Subcontinent Asian American MBE, used its certification to report the majority of MBE participation. A WBE cleaning subcontractor was legitimately paid $21,504 for services, but the indictment alleges the defendants falsely claimed an additional $272,393 in materials and labor had been provided by that WBE. The fraud was allegedly carried out through sham “joint checks” issued by Big Sur Construction to both the WBE subcontractor and non-WBE suppliers. Defendants reportedly discussed, via email, which non-WBE companies would accept these joint checks. The indictment states that Big Sur submitted false “Utilization Reports” and other documents to the SLDC, inflating the WBE’s participation to $298,897. Additionally, Big Sur submitted a false “Good Faith Narrative,” claiming it made a legitimate effort to meet the WBE participation goal. In reality, the indictment claims 93% of the claimed WBE participation was fraudulent.
The SoHo Project
For the SoHo project, the city approved a 10-year tax abatement with participation goals of 21% for African American MBEs, 11% for WBEs, and 0.5% for Native American MBEs. The same WBE subcontractor from the Chelsea project was paid $60,780 for its legitimate work, but the defendants are accused of falsely attributing $1.15 million in materials and labor from non-WBE companies to this subcontractor. Additionally, Chakraverty allegedly offered $10,000 to the owner of an African American MBE to falsely claim non-MBE work as its own. When this owner refused, another African American MBE owner accepted a 5% markup fee to claim $2.17 million in materials and labor provided by non-MBE companies. This included $1 million in appliances purchased from Home Depot. Chakraverty also struck a deal with a Native American MBE owner to receive a 6% markup for falsely attributing construction materials and labor from a non-Native American company to the Native American MBE. The indictment states that false reports about these transactions were submitted to the SLDC, along with sham checks and purchase orders.
After SLDC staff became suspicious of Big Sur’s reporting, Chakraverty, Alston, and Cao allegedly tried to pressure the WBE cleaning company to verify the inflated payments. When unsuccessful, they reportedly sought another WBE to act as a front company.
The indictment claims the fraudulent conduct related to the Chelsea project resulted in at least $551,022 in sales tax exemptions and $1.75 million in property tax abatements. Big Sur received over $1 million in sales tax exemptions for the SoHo project but did not receive the expected property tax abatement, valued at approximately $7 million, due to SLDC’s concerns about the legitimacy of WBE claims.
The charges in the indictment are accusations, and all defendants are presumed innocent until proven guilty in court. The conspiracy charge carries penalties of up to 20 years in prison and a $250,000 fine, while each wire fraud count carries the same penalties.
The FBI investigated the case, and Assistant U.S. Attorney Hal Goldsmith is prosecuting.
