Wage war: DA says Construction company stole $1.7M in workers’ pay through fraud scheme

Manhattan District Attorney Cy Vance announced fraud and wage-theft charges on May 16 against a construction company working on several high-profile building projects.
Photo by Sydney Pereira

BY SYDNEY PEREIRA

Manhattan District Attorney Cy Vance has announced charges against a construction company for stealing $1.7 million in wages and defrauding the state’s insurance fund by millions of dollars.

More than 500 construction workers building some of the most notable new high-rises in Manhattan — including two Downtown Marriott hotels — were scammed out of millions in wages, according to the indictment.

“Plain and simple — it’s stealing,” said James Rogers, Deputy Commissioner of the state’s Department of Labor, at a press conference on May 16. “It’s stealing just like any other kind of stealing, and people that do it ought to face the consequences.”

Parkside Construction worked with Michigan-based payroll processing company Affinity Human Resources to alter timesheets so drastically that one construction worker lost more than $50,000 over three years. The construction company used face-recognition technology to track workers’ hours, but lied on timesheets later submitted to Affinity. Workers were even paid under “expense reimbursement” in some cases — rather than a typical paycheck — in order to evade taxes and unemployment insurance contributions.

“These timesheets weren’t just a here-and-there kind of thing,” Vance said atthe press conference. “This was the business model for these defendants. These alterations were purposeful, calculated, and consistent. And by doctoring their employees timesheets, the defendants were able to steal more than $1.7 million from more than 500 workers — workers who are principally immigrants, often undocumented.”

The lengthy investigation began with a tip from a carpenters’ union, according to Diana Florence, assistant district attorney and lead attorney of the Construction Fraud Task Force. The non-union workers were often making $25-per-hour doing some of the most dangerous construction work in the city, according to authorities. Most were from Ecuador or Mexico.

“The Building Trades thanks Manhattan District Attorney Cy Vance for fighting against the egregious actions committed by these irresponsible contractors and looking out for hardworking New Yorkers,” said Gary LaBarbera, President of the Building and Construction Trades Council of Greater New York, in a statement. “Unfortunately, wage theft and insurance fraud are all too common — especially among nonunion contractors. Worker exploitation and abuse should never be tolerated and we applaud the District Attorney’s commitment to ending wage theft and keeping unscrupulous employers accountable.”

The DA’s investigation also alleges that Parkside hid more than $42 million in payroll from the New York State Insurance Fund. The insurance premium for workers’ compensation insurance is determined by the payroll and type of work employees do. By allegedly hiding tens of millions from NYSIF, Parkside’s employees’ insurance premiums were fraudulently low. The fraud scheme totalled $7.8 million for Parkside and Affinity, according to Vance

LaBarbera said these charges should be a wake-up call to other exploitative contractors.

“The charges are a warning to all construction contractors that unscrupulous employers will face consequences,” he said, but added the culpability could extend beyond contractors. “Developers should be aware of what’s happening on their sites and accept responsibility for everything that happens on them. Ultimately, we hope to see greater accountability and support all efforts to combat wage theft in the construction industry.”

The wage theft and insurance fraud charges are a part of a much larger, more widespread pattern of a rapidly changing skyline in Manhattan.

Rogers of the DOL said it is difficult to quantify just how widespread wage theft could be, but the department opens 8,000 wage-theft cases each year.

“Nowadays,” Vance said, “you look up, and everywhere there are buildings going up and coming down, and our famous skyline continues to shapeshift with great speed.”

Manhattan’s shapeshifting skyline can have grave consequences for workers, he added. Along with New York’s historic building boom Vance said, “wage theft unfortunately remains one of the most pervasive and insidious issues facing tens of thousands of everyday New Yorkers.”

Parkside’s co-owner Francesco Pugliese was charged with insurance fraud, grand larceny, penalties for fraudulent practices, scheme to defraud, and offering a false instrument for filing. Salvatore Pugliese, the other co-owner, was charged with insurance fraud, penalties for fraudulent practices and offering a false instrument for filing. James Lyon, supervising foreman, Yenny Duarte, payroll manager, Michael DiMaggio, an outside accountant, and Jerry Hamling, Affinity’s owner, were also charged.

“We have known about this investigation for over a year and look forward to showing the DA’s office and investigators why they are wrong in filing these charges against Parkside and the other individuals that were indicted,” said Parkside’s attorney Scott E. Leemon in a written statement. The company denies all wage or other kinds of theft.

The alleged multi-million-dollar fraud schemes involved construction ongoing at LAM Group’s Marriott Hotels at 215 Pearl St. and Hidrock Properties’ Courtyard New York Downtown Marriott at 133 Greenwich St. The hotel at 215 Pearl St. is currently under construction and expected to be 39 stories.

Parkside Construction had more than $100 million in contracts with builders and developers for concrete and masonry work at the two Marriott sites and six other buildings, including Steinway Tower (111 W. 57th St.); American Copper Building (626 First Avenue); Hilton Garden Inn New York Times Square South (326 W. 37th St.); DoubleTree by Hilton Hotel (350 W. 40th St.); Public Hotel (215 Chrystie St.); and Jarmulowsky Bank Hotel (9 Orchard St.).

Developers for the buildings are not mentioned in the current indictment, but when asked at the press conference, Vance said the charges against the construction and payroll companies were just the beginning.

“What I can say is that this investigation is the beginning of a larger one, and I won’t predict where we’re going to go, because that would be inappropriate,” Vance said. “But we are looking at all players in the business.”

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