Former Navillus execs convicted of embezzling more than $1M in worker benefits

Dive Brief:

• A federal jury last week returned guilty verdicts in opposition to former executives at Navillus Contracting, a single of New York City’s biggest construction corporations, for their part in a plan to stay away from making expected contributions to employees.
• Pursuing a three-7 days trial right before United States District Decide Pamela K. Chen, Donal O’Sullivan, founder, operator and former president of Navillus Tile (which did company as Navillus Contracting) Padraig Naughton, Navillus’s previous financial controller and Helen O’Sullivan, a previous payroll administrator and Donal’s sister, have been convicted on 11 counts charging wire fraud, mail fraud, embezzlement from worker gains cash, submission of bogus remittance studies to union positive aspects cash and conspiracy to commit these crimes. The defendants, who remaining the business after their indictments in 2020, face up to 20 years in prison, in accordance to a push release from the U.S. Attorney’s Office.
• Beneath collective bargaining agreements (CBAs) with many labor unions, Navillus was essential to employ union customers and lead to added benefits accounts, including overall health, pension and holiday vacation money, for perform performed at its internet sites. To prevent making these payments, the defendants allegedly placed some of the company’s employees on the payroll of a consulting enterprise it established that was not matter to the CBAs. They then took techniques to conceal the plan from auditors.

Dive Perception:

Navillus has accomplished important initiatives in the New York City place, which include 1 World Trade Heart. The organization, known for its concrete and tile function, entered into CBAs with several unions, which includes:

• Bricklayers and Allied Craft Employees Nearby No. 1
• New York Town District Council of Carpenters
• Cement Masons Union
• Tips, Cleaners and Caulkers
• Intercontinental Brotherhood of Teamsters Neighborhood 282

As part of the agreement, the contractor was to periodically file reports with added benefits cash to detail how a lot of hrs every single employee was on the job.

On the other hand, Navillus’ former executives undertook a complex plan to keep away from producing a lot more than $1 million in advantages payments, according to the U.S. Attorney’s Place of work. Involving 2011 and 2017, prosecutors said the consulting business proven by Navillus’s previous executives issued weekly checks to staff members for work they executed on its building employment. Then the consulting firm “issued fake invoices to Navillus to make it appear that the payroll cash were payments for ‘masonry’ and ‘consulting’ work that the consulting company had carried out for Navillus,” according to court files.

Prosecutors said people invoices have been created to cover up the arrangement.

“As located by the jury, the defendants intentionally devised a fraudulent plan to avoid making needed contributions to union rewards resources on behalf of Navillus’s personnel, in order to deprive the staff of positive aspects they experienced attained and deserved,” said Breon Peace, United States attorney for the Jap District of New York in the push launch.

Previous problems

In 2017, Navillus Tile filed for bankruptcy soon after managing into challenges over union payment challenges. It claimed the filing was the end result of a judge buying it to pay out $76 million into union funds, according to The Real Offer. At the time, the outlet documented that Navillus had allegedly set up two non-union businesses to stay clear of these payments. In 2018, a federal court choose signed off on a program for the business to exit personal bankruptcy after reaching a settlement with the unions.

Other contractors have also lately confronted challenges around gain payments to staff. In a lawsuit submitted earlier this thirty day period, three staff members of Glenn O. Hawbaker accused the Pennsylvania road builder of violating the Staff Retirement Earnings Security Act. Alternatively of inserting the prevailing wage workers’ retirement money into the 401(k) account of all those who gained it, Hawbaker used the cash to fork out for all worker, government and operator retirement savings, lawyer Mike Donavan wrote in the lawsuit.

This resulted in prevailing wage employees getting shorter-altered in their income-sharing and retirement saving accounts.

In April, Pennsylvania Attorney Standard Josh Shapiro charged Hawbaker with stealing $20 million from employees in the most significant wage theft circumstance on report. 

Immediately after a a few-year investigation, Hawbaker was charged with four counts of theft relating to violations of the Pennsylvania Prevailing Wage Act and the federal Davis-Bacon Act. Investigators reviewed Hawbaker’s accounting information and located that, involving 2015 and 2018, the contractor stole virtually $20.7 million of prevailing wage workers’ fringe advantage cash.