>> They should report it to the New York Attorney General's office, especially with damning evidence like the insurance company being refused contact.
Does this work outside high-profile cases? A condo I lived in faced dozens of serious offenses from the builder (e.g., live electrical wires left dangling open in living areas during a construction dispute.) The lawyers filed complaints with the NY AG but were told it mostly adds to some aggregate and real action is taken when the aggregate is huge. Also, we were told that most AG attention is focused on Manhattan and not the outer-boroughs.
If they have clear evidence with contract, email with company, email with insurance, then it may be worth it to try submitting the evidence to the AG. The AG may write a letter and the company may ignore it, but if other people are in the same situation and the AG's office hears about it they may take more serious action.
Was the builder in the middle of renovating and there was some contract dispute? Legal issues are always nuanced and construction can easily have misunderstandings. With builders I'd have either a good construction attorney draft a contract or just hire a reputable builder. (Matt Risinger, for example, won't deal with custom legal contracts, so you generally will have to choose one or the other. I'd go with a reputable builder and one that doesn't want to tarnish that reputation.)