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

Dive Brief:

• A federal jury previous 7 days returned guilty verdicts versus previous executives at Navillus Contracting, a person of New York City’s major building firms, for their position in a scheme to prevent generating essential contributions to staff.
• Adhering to a a few-week trial before United States District Judge Pamela K. Chen, Donal O’Sullivan, founder, proprietor and previous president of Navillus Tile (which did company as Navillus Contracting) Padraig Naughton, Navillus’s previous monetary controller and Helen O’Sullivan, a former payroll administrator and Donal’s sister, were convicted on 11 counts charging wire fraud, mail fraud, embezzlement from employee added benefits money, submission of bogus remittance stories to union advantages funds and conspiracy to commit those crimes. The defendants, who still left the firm following their indictments in 2020, face up to 20 many years in jail, according to a push release from the U.S. Attorney’s Office.
• Under collective bargaining agreements (CBAs) with many labor unions, Navillus was demanded to utilize union members and contribute to benefits accounts, such as wellbeing, pension and holiday money, for operate carried out at its websites. To avoid building these payments, the defendants allegedly placed some of the firm’s personnel on the payroll of a consulting firm it produced that was not subject matter to the CBAs. They then took ways to conceal the plan from auditors.

Dive Insight:

Navillus has accomplished key projects in the New York Town spot, including A person World Trade Center. The corporation, known for its concrete and tile work, entered into CBAs with many unions, like:

• Bricklayers and Allied Craft Employees Local No. 1
• New York Metropolis District Council of Carpenters
• Cement Masons Union
• Tips, Cleaners and Caulkers
• Global Brotherhood of Teamsters Local 282

As part of the arrangement, the contractor was to periodically file experiences with rewards money to element how many hrs each employee was on the job.

However, Navillus’ former executives undertook a advanced scheme to avoid making much more than $1 million in rewards payments, according to the U.S. Attorney’s Place of work. Between 2011 and 2017, prosecutors stated the consulting corporation established by Navillus’s previous executives issued weekly checks to employees for operate they carried out on its construction jobs. Then the consulting agency “issued wrong invoices to Navillus to make it look that the payroll resources ended up payments for ‘masonry’ and ‘consulting’ work that the consulting organization experienced done for Navillus,” according to courtroom paperwork.

Prosecutors claimed those invoices were produced to include up the arrangement.

“As observed by the jury, the defendants deliberately devised a fraudulent plan to avoid generating necessary contributions to union positive aspects money on behalf of Navillus’s personnel, in get to deprive the staff of positive aspects they had attained and deserved,” said Breon Peace, United States lawyer for the Jap District of New York in the press release.

Earlier difficulties

In 2017, Navillus Tile submitted for bankruptcy immediately after functioning into challenges more than union payment troubles. It claimed the filing was the end result of a decide purchasing it to shell out $76 million into union cash, in accordance to The Genuine Offer. At the time, the outlet noted that Navillus experienced allegedly established up two non-union firms to steer clear of these payments. In 2018, a federal court decide signed off on a system for the organization to exit personal bankruptcy after reaching a settlement with the unions.

Other contractors have also recently faced concerns more than benefit payments to employees. In a lawsuit filed earlier this month, three workers of Glenn O. Hawbaker accused the Pennsylvania street builder of violating the Staff Retirement Money Safety Act. Instead of inserting the prevailing wage workers’ retirement cash into the 401(k) account of people who attained it, Hawbaker employed the cash to spend for all employee, government and owner retirement savings, legal professional Mike Donavan wrote in the lawsuit.

This resulted in prevailing wage employees being limited-transformed in their gain-sharing and retirement conserving accounts.

In April, Pennsylvania Lawyer Normal Josh Shapiro billed Hawbaker with stealing $20 million from personnel in the most significant wage theft case on record. 

Immediately after a 3-calendar year investigation, Hawbaker was billed 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 documents and found that, concerning 2015 and 2018, the contractor stole just about $20.7 million of prevailing wage workers’ fringe benefit revenue.