April 14, 2015
By Neal Tepel

New York, NY – A two-year investigation into alleged underpayments and kickbacks in the construction industry has resulted in the arrests of five subcontractors charged with cheating workers out of wages and benefits at four publicly-funded construction projects located throughout the city.

The alleged illegal activity at P.S. 7X, an elementary school in the Bronx; P.S. 196K in Williamsburg Brooklyn, the New York City Department of Housing Preservation and Development’s (HPD) Sugar Hill Houses in Harlem and the New York City Housing Authority’s (NYCHA) Pomonok Houses project in Fresh Meadows Queens, took place between January 2012 and November 2014.

“Employers who cheat workers out of the wages and benefits they deserve are breaking the law and will face the consequences, including criminal charges,” Attorney General Schneiderman said in a statement following the arrests. “Like all workers across America, New York City’s construction workers do not deserve to be cheated out the wages they earned from building schools for our children and affordable housing for our families. My office will continue to take aggressive action with our law enforcement partners against employers who ignore their legal obligation to pay workers proper prevailing wages on taxpayer-funded projects.”

Federal and state prevailing wage laws seek to ensure that government contractors pay wages and benefits that are comparable to the local norms for a given trade, typically well above the state and federal minimum wage, and hold general contractors responsible for underpayments by their subcontractors.

The arrests were connected to prevailing wage violations. These include underpaying workers and covering up the underpayments by allegedly submitting falsified payroll records to New York City’s School Construction Authority. Failure to Pay Prevailing Wages and Benefits and attempting to conceal the underpayments by signing false checks drawn on the company’s account indicating that employees on the job were paid properly under the law. Kick-backs were also demanded from some workers.

One case filed in Manhattan Criminal Court, charged a subcontractor for allegedly underpaying eight carpentry workers approximately $800,000 for work done at the NYC HPD’s Sugar Hill Houses in Harlem, from April 2013 through August 2014. The contractor is charged with eight counts of falsifying business records in the first degree and failure to pay wages. He faces four years in prison if convicted.

Another case, lodged in Queens Criminal Court, charges a subcontractor and his company with allegedly demanding kickbacks and underpaying workers for scaffolding work done at the NYCHA Pomonok Houses in Fresh Meadows between August and November of last year. The alleged kickbacks were required in exchange for the workers keeping their jobs.


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