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Concrete Contractors Avoid Jail After Multimillion-Dollar Wage Fraud

NEW YORK, N.Y.—In May 2018, Manhattan District Attorney Cyrus Vance Jr. announced the indictment of Parkside Construction, a concrete contractor that had worked on several extremely expensive Manhattan apartment buildings and hotels, on felony charges of grand larceny and business fraud. Vance told reporters that the company, which was accused of cheating more than 500 workers out of $1.7 million in pay and evading $7.8 million in workers’ compensation premiums, represented a business model that was “pervasive” in the construction industry.

But late last month, Parkside co-owners Salvatore and Francesco Pugliese quietly cut a plea bargain. In a deal announced Feb. 24, the brothers pleaded guilty to insurance fraud, a Class C felony, for providing false payroll information to the New York State Insurance Fund, “intentionally underreporting” the company’s payroll from 2014 to 2017 in order to pay less for workers’ compensation coverage.

The two received a conditional discharge with orders to pay $1.4 million in restitution to the insurance fund — but no jail time or restitution to the workers required.

“It’s a slap on the wrist. It’s absolutely unbelievable that Cy Vance and the Manhattan DA let these guys go with no jail time,” District Council of Carpenters executive director Eddie McWilliams told LaborPress.

The message the deal sends, he added, is that “it’s OK to steal workers’ wages and use that as a business model.”

“This is why we continue having the issues that we have,” says Eddie Jorge, an organizer with the New York Community Alliance for Workers Justice. “They fuckin’ cheat the workers and continue to pay the fines. It’s a cost of doing business.”

The office has multiple active wage theft investigations, and remains committed to all of the work of the Construction Fraud Task Force, including wage theft, corruption in public works, illegality in the use of public funding and tax codes, and construction safety,” a spokesperson for the Manhattan DA’s office told LaborPress. The Task Force’s work, she added, “does not depend on having any one specific attorney in charge.”

“What happened in the Parkside case was the opposite of justice for workers,” says Diana Florence, former head of the Construction Fraud Task Force. She supervised the case until 2019, when, she says, it was “summarily taken out of my hands.”

Class C felonies — which include grand larceny of $50,000 to $1 million, vehicular manslaughter while driving extremely drunk, and possession of 1/8 to ½ ounce of heroin — generally carry a sentence of one to seven years, but jail time is not mandatory.

“If a kid stole an iPhone, they’d have no problem making it a felony and sending him to jail,” Florence says.

She also says that most of the $1.4 million in restitution is a “paper judgment,” that there is no plan for the Pugliese brothers to pay more than $200,000.

The judgment gives the New York State Insurance Fund a lien that they can use to have a court order Parkside to pay. The fund wouldn’t be the first creditor to sue the company. In March 2020, a state Supreme Court judge issued a default judgment against Parkside after it failed to respond to a breach-of-contract suit by JDS Development, developer of the 84-story luxury tower at 111 West 57th St. JDS alleged that Parkside hadn’t completed work it had been already paid for, and that the company had also failed to pay subcontractors.

The 2018 indictment charged Parkside with cheating workers by systematically altering their timesheets to undercount the hours they’d worked, and having its payroll company conceal more than $2 million in wages by either reporting less than 20% of what it paid workers to the state insurance fund or falsely claiming that it did not employ any workers directly.

Practices like that, building-trades unions regularly complain, enable employers who cheat workers to undercut union contractors’ bids on jobs. No one can bid that much lower because they got a spectacular discount on structural steel, they say.

“There’s all kinds of money to be made once you start stealing wages,” says McWilliams. “It puts a law-abiding contractor in an impossible position.”

Dishonest contractors, he adds, are often “very much with organized crime.”

In October 2018, the city Business Integrity Commission, which oversees commercial garbage collection, cited Salvatore Pugliese’s organized-crime connections in denying Parkside’s application for a business license to remove construction and demolition debris. It said the company had not only failed to notify the commission that it had been indicted, but Francesco Pugliese had concealed his brother’s role in the business.

Salvatore Pugliese, it said, had been indicted in 1999 on federal charges of conspiracy to commit armed robbery and use of a firearm to commit robbery. Federal prosecutors then described him as an associate of an organized-crime group, the notoriously violent Giannini crew in Queens. In 2000, he pleaded guilty to harboring a fugitive and was sentenced to two years in prison.

“It’s going to keep happening until these contractors get put in jail,” says Jorge. “We thought they were going to make an example out of Parkside.”

 

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