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Top private building inspector charged with tax fraud

Randy Farrell, owner of IECI, now charged along with his siblings with tax fraud conspiracy.

NEW ORLEANS — Federal prosecutors charged the leading private construction and building inspector in the New Orleans area with conspiracy to commit tax fraud.

Randy Farrell has been in investigators’ crosshairs as the owner of IECI & Associates, a company that handles most of the third-party building inspections on behalf of the city of New Orleans and other municipalities.

Two of his employees at IECI, former Kenner Code Enforcement Director James Mohamad and former New Orleans mechanical inspector Brian Medus, were charged with fraud earlier this year.

In March, the U.S. Attorney’s Office and the Internal Revenue Service announced a nine-count indictment against Farrell’s brother, David Farrell of Metairie; their sister, Dawn Farrell Ruiz of Covington; and Randy Farrell’s former business partner, Mathew Reck of Covington.

That indictment didn’t charge Randy Farrell with a crime but implicated him in the alleged tax fraud conspiracy. But now, Randy Farrell has been charged along with his siblings.

In July, Reck pleaded guilty to tax fraud conspiracy and agreed to pay more than $1 million in restitution to the IRS.

On Wednesday, prosecutors filed a superseding bill of information to formally charge Randy Farrell, along with his brother and sister.

The change from a grand jury indictment to a bill of information suggests that Farrell and his siblings have been negotiating a plea agreement.

Randy Farrell and Reck co-owned SES and Global Technical Solutions and Ruiz and David Farrell worked for both companies. Prosecutors say the IRS raided Randy Farrell’s home and businesses in 2017, but they allege he still went on to underreport his income to avoid paying taxes.

Prosecutors laid out 96 payroll payments they describe as “off-the-books” or “under-the-table cash payments” totaling nearly $500,000, with Randy Farrell signing off on 45 of the 96 payments.

Court documents say Ruiz handled bookkeeping for the two companies and alleges she hid more than $100,000 in payments to her and her husband, who is referred to as “Person-2” in court documents.

The indictment also detailed some emails that allegedly show Reck and Randy Farrell communicating with an accountant who has since died, with Reck allegedly pushing the accountant to understate their personal income on tax returns.

Prosecutors allege Reck emailed the unnamed accountant in 2013 and told him to make sure to report as little partnership income for him and Randy Farrell as possible. When the accountant confirmed he had written off everything that “wasn’t nailed down to the floor and even some of that” to minimize their income, the indictment alleges Randy Farrell emailed Reck saying of the accountant, “He’s a freaking Houdini!”

WWL-TV has done a series of stories about the largely unregulated system of private construction safety inspections dominated by Randy Farrell’s company IECI.

In a separate criminal case in March, Jefferson Parish Sheriff’s deputies arrested Randy Farrell and one of his IECI inspectors, former New Orleans city building official Larry Chan. They were booked on charges of filing false statements into official government records, obstruction of justice and accessory to contractor fraud, for allegedly falsifying inspections at a home renovation project in Metairie.

In an interview with WWL-TV before turning themselves in March 18, Randy Farrell and Chan denied any wrongdoing in the inspection fraud case. They were then booked and released on bond.

Randy Farrell's attorney, Rick Simmons, said Wednesday evening that the charges stem from a five-year IRS investigation into the failure of family members to pay federal withholding for undocumented workers and their failure to pay certain taxes from 2012 to 2017.

"It has nothing to do with your investigation into inspection activities in the city of New Orleans," Simmons said.

Farrel pleaded guilty, according to an announcement from federal prosecutors released Friday night.

RELATED: Former city inspector says he took bribes to falsify permits and inspections

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