The most corrupt real estate projects in American history
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1. Madison Square Garden (MSG), New York City. While a few of these projects are listed for criminal reasons, MSG is here because of its builders’ morally/culturally/architecturally corrupt acts of (1) demolishing the original Pennsylvania Station in 1963 and (2) filling the void with an arena rivaling the Astrodome in modernist hubris. Number (1) is by far the worst sin of the Garden’s fourth iteration. A monument to beaux-arts style architecture, the station was designed by McKim, Mead, & White and built in 1910 to receive trains entering Manhattan from tunnels under the Hudson River. While it was costly to maintain by the 1960s and harmed by new competition from air and car-travel, the station was near-universally loved as one of New York’s greatest architectural achievements.
At least some good came out of Pennsylvania Railroad’s complicity with Irving Felt’s scheme (in return for going along with his scheme, Felt rewarded the railroad with a free new terminal under a new MSG and a 25% stake in the arena complex): public outrage over Penn Station’s demolition directly led to the creation of New York City’s Landmarks Preservation Commission (LPC), which came in handy when, in the 1970s, the LPC scuttled a similarly corrupt developers’ scheme (in co-hoots w/ the same railroad) to construct a monstrous skyscraper astride Grand Central Terminal (sadly, the MetLife Building still managed to get built).
Ironically, the aging arena complex is itself starting to get attention from preservationists concerned with saving significant modernist buildings; MSG is significant, but for all the wrong reasons.

2. The Big Dig, Boston, Massachusetts. The Big Dig is a feat of engineering and “you can’t make this stuff up” scandal. In the 1950s, Boston built a six-lane elevated freeway (the Central Artery) through its heart, severing the North End neighborhood from the rest of Boston and displacing roughly 20,000 residents in return for speedy traffic flow. By the 1980s however, the Central Artery was an awful eyesore that was failing in its only task; traffic was at a stand-still 10 hours a day.
Enter The Big Dig, which tore out the Central Artery, replaced it with a ribbon of parks, sunk an even larger network of traffic lanes underground and underwater, streamlined a rat’s nest of utility lines, and built two bridges crossing the Charles River. Notwithstanding these accomplishments unfortunately, the project’s legacy will always be tainted for being The Big Gouge, as well.
The Big Dig was (and is) the largest, most complex, infrastructure-related project in American history, costing $14 to $22 billion (depending on if you include interest). When costs approach that height, opportunists tend to cut corners and inflate costs - especially when a confusing array of local, state, and federal agencies are supposed to keep track of dozens of private contractors.
Problems soon made themselves known after the project’s completion (which was naturally years-late and the result of billions in cost overruns). Millions of gallons of water started streaming into the tunnels - in hundreds of places; rocks and debris randomly fell through ventilation shafts onto passing cars; inspections discovered weak spots in large sections of one tunnel’s walls; ice chunks onto the Zakim Bridge’s roadbed, halting traffic; and one woman was killed when one of many faulty concrete ceiling panels crushed her passing car.
As for the contractors, there have been indictments, convictions, and even charges of manslaughter. Government agencies have recovered over $600 million thanks to the project’s rampant flaws and $450 million in compensation for the contractors’ (Bechtel Corp. & Parsons Brinckerhoff in particular) nasty tendency to overcharge or, in one case, knowingly supply the project with over 5,000 truckloads of tainted concrete.
The Rose Kennedy Greenway may be better-looking than the Central Artery, but it hardly makes up for shenanigans down below.

3. Las Vegas Strip, Nevada. Most of the action on Las Vegas’ famous main drag isn’t even in Las Vegas; it’s in the unincorporated town of Paradise, which is appropriate since Las Vegas’ history is riddled with things that were never quite “as advertised.” Ever since 1931, when Nevada legalized gambling in a scheme to attract people and revenue from “less tolerant” states, Las Vegas has thrived in spite of the reality that it has little geographic justification for its bursting existence and grown thanks to the tireless efforts of criminal organizations lurking behind “front men.”
The Strip’s history reads like a Who’s Who of Organized Crime, which first made its presence known when Los Angeles began enforcing its own anti-vice laws in 1938; gangsters quickly turned to nearby Las Vegas as their new home for (legalized) gambling and equally warm weather. Characters such as Ben “Bugsy” Siegel, Meyer Lansky, and Moe Dalitz, each busied themselves, turning money supplied from The Syndicate, a loosely-organized national organization of most crime bosses, into resorts and casinos.
Nearly (if not all) of The Strip’s early casino’s were built with “dirty money” - including The Pink Flamingo, which was finished in 1947 and was the first casino to offer a cosmopolitan, “total entertainment” experience - not just poker in a fake “Old West” gambling hall. Even though Siegel was murdered for botching The Flamingo’s grand opening and skimming money from its operations, the new casino had enormous profit potential and The Syndicate quickly bought other nearby properties, putting up similarly decadent joints.
Las Vegas’ love affair with Organized Crime only began to ebb when Nevada starting requiring background checks for owners of projects hoping to acquire a gaming license; the 1967 passage of Nevada’s Corporate Gaming Act, was even more important. For the first time, projects could be owned (and directly financed by) corporations. The Syndicate’s money was finally not the (near) exclusive financing game in town; Wall Street had much deeper pockets - which weren’t lined by tainted money either.
Even The Strip’s famous nickname (and early growth) is thanks to a corrupt lawman. Guy McAfee ironically commanded the Los Angeles Police Department’s Vice Squad before fleeing the state and his beloved SunsetStrip when his second life heading extensive gambling and prostitution interests was exposed. Arriving in Las Vegas, McAfee bought a two-bit gambling hall call Pair-O-Dice on Highway 91, renamed it the “91 Club” and later built the Golden Nugget.
Notwithstanding Las Vegas’ transformation from Mob Central to Sin City to corporate entertainment haven, The Strip’s sordid lineage remains in many of today’s most popular venues (not to mention City Center, The Strip’s newest project). Take the Desert Inn for example: Built by mobster Moe Dalitz (w/ financing from (formerly) mob-affiliated American National Insurance Company); sold to Howard Hughes; later owned by MGM Grand, Inc. & Starwood Hotels & Resorts Woldwide; bought by Steve Wynn and recently rebuilt as Wynn Las Vegas.

4. Los Angeles Aqueduct, Southern California. In 1913, water started gushing over 200 miles from Owens Valley - in California’s hinterland mid-section - to the City of Los Angeles’ thirsty residents. Not merely a feat of engineering, the massive infrastructure project was also instrumental in sparking Los Angeles’ explosive growth in the ensuing decades. And yet, thanks to Chinatown and a few good books, most people only think about the aqueduct’s central role in the California Water Wars - a time of swindlers, two-timing politicians, and dynamite - not the fact that it still provides Los Angeles with nearly half of its water.
Around 1900, Los Angeles’ growth was stymied by a decline in readily available water. Mayor Frederick Eaton and William Mulholland, head of the city’s Bureau of Water Works & Supply (yes, thatMulholland), viewed Owens Valley as a natural tonic for the impending shortage, since it was fed by runoff from the Sierra Nevada and was situated such that a gravity-fed aqueduct could easily send water south. The problem: locals needed the water for their own agricultural use and the federal Bureau of Reclamation was already planning to construct an irrigation system to allow as much.
To prevent this from happening, the city engaged in a number of shenanigans. Eaton personally bought land in the valley, intending to sell it at a large profit to Los Angeles once Congress passed a law allowing municipalities to own land beyond their boundaries - Eaton denied that he profited from the land sale, but if so, it was not for lack of trying. Eaton also gleaned inside information from his friend J.B. Lippincott, the federal official in charge of the Bureau of Reclamation - Eaton’s inside access not only supplied detailed knowledge about water surveys conducted in the valley, but also gave him the necessary tools to convince the Roosevelt Administration to scuttle the planned irrigation system. Eaton expressed his thanks by secretly giving his helpful friend a sizable salary from the City of Los Angeles.
While Eaton was flipping his Rolodex, Fred Eden (a former mayor of Los Angeles) managed to convince valley landowners to divest themselves of water rights to him while he worked under Lippincott at the Bureau. Eden then quit, took a job in Mulholland’s office, and shared the Bureau’s documents detailing the valley’s water conditions - these documents were invaluable for designing the aqueduct and a subsequently built series of dams, reservoirs, and even an extension to the original aqueduct.
Mulholland was also busy trying to convince Owens Valley landowners that Los Angeles only wanted water for residential use; in fact, it fully intended to divert a portion of the aqueduct’s flow for agricultural use in the San Fernando Valley, just north of Los Angeles (and in the aqueduct’s intended path). The planned water diversion greatly increased that valley’s land value, which was good news for a coterie of Eaton’s wealthy supporters, who were prescient enough to buy before anyone knew that Owens Valley water would also irrigate the San Fernando Valley.
Among the investors of San Fernando Valley was the Los Angeles Times’ first publisher, Harrison Gray Otis, an intimate ally of Eaton, who naturally championed the aqueduct in newsprint. His efforts paid off when the city’s residents voted to approve to float a series of bonds to pay for the aqueduct’s construction.
Even after the first aqueduct was completed, shady business abounded; Los Angeles continued buying (by hook or by crook) land and water rights in Owens Valley to support its continued growth and alleviate the effects of shortages caused by a few dry years. Eventually, the city accumulated over 300,000 acres of land. Owens Valley residents, angered by unfairly-low sums paid for their land as well as Los Angeles’ tendency to divert water at the near-total expense of their valley’s economic (and increasingly environmental) health, went so far as to dynamite the aqueduct and stop its flow southward. The power dynamics being what they were, the subversive acts only helped to the extent that the warring factions renewed negotiations for a little while.
The Los Angeles Aqueduct’s low point was reached when over 450 people were killed by the collapse of a dam built to ensure a supply of water in drought conditions. Absent an extortion attempt, the disaster would not have happened. Eaton owned the land on which Mulholland wanted to build the St. Francis Dam. But Mulholland balked when Eaton tried to sell the land for an absurdly inflated sum of roughly $1 million. Mulholland eventually settled on an alternative site near Santa Clarita, which proved disastrous when the under-built dam was heightened without corresponding reinforcements and worse, placed on top of a fault line and extremely unstable geological formation.
The war isn’t over yet, though today, battles are generally fought in court over Owens Valley’s environmental condition. Like the Korean War, the California Water War has had its share of cease fires; unfortunately, these aren’t much better than stop-gap measures slowing - but not stopping - the march to an all out war that will explode when the American Southwest finally runs dry.

5. United States Capitol Building, Washington, D.C. Surprised? To be fair, much of Washington, D.C. (as well Independence Hall, Faneuil Hall, and much of colonial civic architecture for that matter) is tainted by the same thing: slave labor. But the United States Capitol Building “earned” its place on this list because the means of its construction was the most contradictory with the ideals represented by the end result.
After Congress legislated Washington, D.C. into existence with Residence Act of 1790, someone had to build it. But skilled laborers were everywhere but near the future capital; only slaves - typically unskilled - were of some local abundance, since the capital’s swampy river location was in farm country and distant from cities where most skilled craftsmen worked (e.g., masons, plasterers, brick-makers, brick-layers, carpenters). Making life even more difficult for the three-man commission guiding the capital’s construction was Congress’ desire to move into its new chambers by 1800.
Doctor William Thornton’s design was the last (and only late) submission in the Capitol Building design competition, but since it was also superior to the other entries, it was declared the winner in 1793; this gave the commission only 7 years to complete the new building, and it was soon apparent that slave laborers were a practical necessity (thanks to money problems and British torches that gutted the place in the War of 1812, the first iteration of the Capitol wasn’t completed until 1826).
From 1793 to 1800, when the first sections of the Capitol were built, slaves were involved in all phases of construction, most commonly in carpentry. In 1794 for instance, the commission employed 50 slaves to work at the quarry, on surveying crews, and in the city. Payroll records show that ultimately, there were 385 payments made to slave owners who “rented” their slaves to the commission (renting slaves was common practice). Initially, slave owners received $60 per year for each slave, or ten dollars less than the going rate for unskilled white labor. As the deadline loomed, the rate was bumped to $70 - and some slaves were even awarded freedom upon the completion of their work on the Capitol.
Nearly all historians agree that slave labor was also employed during the Capitol Building’s construction between 1800 and 1862 (when slavery was finally outlawed in Washington, D.C.); but that period’s payroll records go no further than referring (perhaps euphemistically) to “laborers.”
Whereas the Capitol was conceived as the pinnacle of all physical manifestations of American ideals - intended as the enduring symbol of freedom and individual equality - it now stands as a perpetual reminder of America’s early embrace of a corrupt bargain. It is by no means the only building tainted by slavery, but it is certainly the most ironic.

6. Old New York County Courthouse (Tweed Courthouse), New York City. William “Boss” Tweed ran the most powerful political machine in American history, reigning supreme over 19th-century New York City, operating through hundreds of “public servant” stooges, and responsible for embezzlements totaling between $50 and $200 million (in 19th century sums). Boss Tweed was never mayor, but he didn’t need to be; if he wanted something done at City Hall, his allies at Tammany Hall made sure it happened. The old New York County Courthouse(pictured above, just left of City Hall and now home to the Dept. of Education) was not the only fleece perpetrated by Tweed, but it was certainly the most brazen (disastrously so, as it turned out).
In an exceedingly simple scheme, Tweed defrauded the government of millions of dollars throughout the twenty-year period of construction for the courthouse designed by John Kellum and Leopold Eidlitz. Beginning in 1861, workers simply overcharged for their labors, cashed their paychecks (which a stooge within the government happily approved), and distributed the excess amount to “interested parties” - Tweed naturally received the largest amount.
Ultimately, the courthouse cost upwards of $13 million (or twice the amount paid for the entire Alaska territory in 1867). One carpenter was paid over $360,000 for one month’s labor (roughly $4.9 million, today) and Andrew Garvey “earned” over $130,000 for a mere tw0 days of apparently excellent plastering.
The money fest didn’t last. Tweed’s shenanigans were disclosed to the New York Times (which Tweed first tried to buy and then tried to silence with a $5 million bribe) by a one-time political ally, the city sheriff. Even though he died before it was finished in 1881, Tweed at least got to experience the grandeur of the still-incomplete courthouse when it hosted his court trial. Think this type of corruption is a thing of the past? It is not.
Dishonorable Mentions
American Railroads, United States. Take your pick. With the notable exception of James J. Hill’s Great Northern Railway, which proved to doubters that profitability was indeed possible without (much) government assistance, nearly every other 19th-Century railroad was the offspring of unscrupulous capitalists (e.g., Jay Gould & Cornelius Vanderbilt) and double-dealing public officials (e.g., Sen. Mark Hanna & Rep. Oakes Ames). The Credit Mobilier scandal of 1872 is a perfect example of railroads (here, the Union Pacific) ingratiating themselves with federal officials and members of Congress.
Systematic bribery of public officials (typically in the form of stock, cash, luxury goods, or loans made without an expectation of repayment); intimidation of uncooperative landowners in the path of preferred routes; manipulation of the stock and commodities markets; embezzlement of massive amounts of public dollars paid for railroad construction; etc. - thees were all tactics employed to obtain rights-of-way, government funding, or legislatively-imposed monopolies.
Miami - 1920s, Florida. South Florida’s early 20th-Century land boom is remembered for the bust that it naturally preceded. Like any real estate boom, area land values were ridiculously inflated. Rather than being valued on the basis of the area’s economic outlook, strategic location, or educated populace, land values were merely propelled by a continuing stream of speculative investors who were lured south by Miami’s boosters.
Carl G. Fisher was undoubtedly the best booster, going so far as to put up a billboard in Time Square proclaiming, “It’s June in Miami.” He was compensated for his tireless promotions, thanks to his substantial land holdings, which out-of-state investors happily scooped up sight unseen. Of course, the inescapable reality that Miami’s real estate market was solely premised on new investors - essentially a Ponzi scheme run by locals that targeted greedy (and uninformed) speculators from across the country - made it bound to fail.
And thanks to schirmishes with railroads, an untimely capsize of a ship in Biscayne Bay, and The Hurricane (storms weren’t named until later), everything collapsed in 1926. Even the best marketer would have a tough time glossing over an increasing cost of living, hundreds of deaths, and extensive destruction of property.
Cross Bronx Expressway & Brooklyn-Queens Expressway, Brooklyn, New York City. Notwithstanding Robert Moses’ recent rehabilitation (of sorts), there are few people who can reasonably claim that these two expressways were positive aspects of his legacy. Multiple neighborhoods were bulldozed and tens of thousands of people (one author estimates 250,000 people, others think it was more) were displaced to make way for Moses’ visions of speedy traffic.
Countless other “urban renewal” or “slum clearance” schemes were executed in mid-20th Century American cities. Freeway corridors that linked commercial centers downtown with outlying suburbs were the worst offenders (both because they sat where homes once stood and divided surviving neighborhoods), but massive office complexes and parking garages were nearly as destructive.
Inevitably, poor, immigrant, and thanks to “white flight,” African-American, neighborhoods were targeted. Geographically, they were in the way and politically, powerless in the face of determined public officials like Moses or wealthier constitutencies. The result? In the Bronx, Tremont was bisected; in Brooklyn, Red Hook was cut in two and isolated from the rest of the borough. And like the Central Artery in Boston, the expressways only temporarily alleviated traffic conjection, adding insult to injury.
Images courtesy of (1) Wikipedia, (2) rose_fitzgerald_kennedy_greenway, (3) nevadatourism, (4) aquafornia, (5) cornelluniversitylibrary, (6) vidiot.
[...] the original post here: The most corrupt real estate projects in American history Share and [...]
Wow, incredible work. Thanks for the list! What about a “top corrupt projects” list for the rest of the world? There’s got to be some stories revolving around Shanghai’s Pudong Development or (obviously) Dubai.
On a side note, and maybe most New Yorkers already know this, but do you know the story behind that ridiculous “Verizon” tower near the foot of the Manhattan side of the Brooklyn Bridge? That thing is terrible.
Oh, man, Kevin. Doing a top-10 (rather than a top-100 or top-500) for the entire world would be daunting. China alone is laden with candidates, thanks to the Three Gorges Dam project, Olympics development projects, and explosive economic growth w/o corresponding property rights protections. Come to think of it, any country with a history of authoritarian regimes would have a selection of possibilities. I didn’t know the back story to the Verizon tower - but I have always detested it. Thanks for reading!
[...] Borough of Queens across the river. Southern view-historical buildings are mostly located here. …The most corrupt real estate projects in American history… in the 1970s, the LPC scuttled a similarly corrupt developers’ scheme (in co-hoots w/ the same [...]
[...] without money (some brokers lent people up to 2/3 the investment price). As I’ve noted previously, Florida was perhaps the most bloated real-estate market, founded almost entirely upon [...]