Federal authorities with the Department of Housing and Urban Development seized records and confiscated cellphones from a prominent Plano-based general contractor this week.
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Cadence McShane Construction Co. Executive Vice President Srinath Pai Kasturi confirmed to the Austin Business Journal that officers from HUD entered the company’s offices in Austin, Plano and San Antonio to obtain records related to a previous project. That project is subject to litigation following a complaint from a former Cadence McShane employee.
Authorities left the Cadence McShane offices with several boxes and the cellphones.
Cadence McShane is reportedly involved in a whistleblower suit after employees Randall Molnar and Andrea Hughes alleged the company overcharged the U.S. government for construction of a multifamily project in Converse, the San Antonio Business Journal reported.
The firm allegedly exceeded the $7M profit threshold mandated for the job, as HUD limits a contractor’s profit on low-income housing projects to 10%. Cadence McShane employees alleged the company recorded a 17% profit and said they refused to submit fraudulent change orders as instructed.
The contractor is also suing San Antonio’s public housing authority, Opportunity Home, to block access to internal project records. Cadence McShane also alleged that Opportunity Home is seeking to claim nearly all of the project’s $7M in profits.
Molnar is no longer employed by the firm, according to the SABJ.
Cadence McShane didn’t immediately respond to Bisnow’s request for comment on the raid of its offices and the Opportunity Home lawsuit.
HUD also didn’t respond to a request for comment.
Kasturi told the ABJ that the Department of Justice said it wouldn’t pursue the “substantive allegations” against Cadence McShane. The DOJ didn't immediately respond to Bisnow’s request for comment.
“We feel very strongly the whole matter is without merit but we have to go through the process,” Kasturi said of the ongoing litigation. “We take pride in our long-standing relationship with the U.S. Department of Housing and Urban Development, built through years of close collaboration.”
He said the firm has a track record of delivering HUD-financed affordable housing projects and it remains committed to that work.
In North Texas, Cadence McShane built the 327-unit Flynn at Live Oak multifamily project in the Lower Greenville area of Dallas and worked on the 130K SF Anthology of Highland Park senior living facility near downtown.
CORRECTION, SEPT. 1, 2:10 P.M. CT: This story has been updated to clarify the nature of Cadence McShane’s lawsuit against Opportunity Home.
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