NEW YORK, N.Y.—Several luxury apartment buildings and hotels recently erected in Manhattan were literally built on a foundation of stolen wages, District Attorney Cyrus Vance charged May 16.
The DA announced the indictment of concrete contractor Parkside Construction and four company officials on felony charges that they falsified timesheets to cheat more than 500 workers out of more than $1.7 million in pay. Parkside co-owners Salvatore and Francesco Pugliese, an accountant, and Michigan payroll-services company Affinity Human Resources and its owner were also charged with insurance fraud, accused of submitting falsified payroll records to the New York State Insurance Fund to evade $7.8 million in workers’ compensation premiums.
“It’s a victory for the construction workers that are being exploited,” Eddie Jorge, an organizer with the union-backed New York Community Alliance for Worker Justice, said after the announcement. “Hopefully, it’s just the beginning. There’s a lot of developers out there contributing to these practices by hiring these contractors.”
Five of the six defendants pleaded not guilty. Bail was set at $200,000 for the Puglieses and $50,000 for payroll manager Yenny Duarte, foreman Jimmy Lyons, and Mike DiMaggio, the accountant. The sixth, Affinity owner Jerry Hamling, did not appear in court.
Insurance fraud is a class B felony carrying one to 25 years in prison, Vance said at a press conference. The other charges, including grand larceny and scheme to defraud, are lesser felonies.
Parkside, Vance said, had more than $100 million worth of contracts in 2016 and 2017 to pour cement for foundations on buildings including the 82-story condominium Steinway Tower on “billionaire’s row” at 111 West 57th St., the Marriott Hotels at 215 Pearl St., and the 48-story American Copper Building at 626 First Ave., where two-bedroom apartments rent for more than $7,000 a month. Yet it paid its laborers—mostly immigrants, many undocumented—$25 an hour or less, well below union scale, and “systematically” altered their timesheets to show they’d worked fewer hours than they really had.
“This was a business model,” Vance said, and all the company’s senior officials were complicit. If workers complained, he added, they were told the mistake would be corrected the next week, or that they could quit.
One worker was cheated out of almost $50,000 over three years, city Department of Investigations Commissioner Mark G. Peters said.
“It’s stealing—plain and simple,” said James Rogers, the state Labor Department’s deputy commissioner of worker protection. “The defendants were building some of the most expensive real estate in the world. That wasn’t enough for them.”
In the other alleged scheme, Vance said, Parkside and Affinity, the “professional employment organization” it outsourced its payroll to, reported less than 20% of what it paid workers, concealing more than $42 million. Affinity and Hamling, the DA’s office said, falsely told the workers’ compensation fund that Parkside had terminated all its construction workers and outsourced their jobs to subcontractors. That, Vance said, enabled Parkside to evade $7.8 million in premiums and submit “fraudulently low” bids for jobs.
The investigation started with a tip from the District Council of Carpenters, said Assistant DA Diana Florence, head attorney on the Manhattan office’s Construction Fraud Task Force. Wage theft is a “pervasive” problem in the city, Vance said, but it is “especially common in the construction industry.”
“The indictment was 100 percent warranted,” Neal Fitzgerald, director of organizing at the Cement & Concrete Workers District Council, told LaborPress. He said was “absolutely not” the first time Parkside cheated workers out of pay.
The indictment comes at a time when the city’s building-trades unions are struggling to hold onto their share of jobs, as developers such as The Related Companies at Hudson Yards are increasingly trying to use cheaper and less protected nonunion labor on major Manhattan commercial and residential projects.
“A nonunion contractor was able to underbid a union contractor by up to 25 percent. This is how they do it,” says Fitzgerald. “It put a lot of our members out of work, because of the greed of these companies.”
He said the Parkside laborers were supposed to be paid $12 to $25 an hour. Union scale for that work, said Jorge, would typically be $35 to 40.
Union organizers first heard about the wage theft by talking to workers on the Parkside jobs, says Fitzgerald. At first, he explains, they were “very reluctant to say anything,” but the organizers, often speaking them in Spanish, were able to convince them that they were there to help them get their money. After several months, they had enough information there was fraud going on to bring it to the DA’s office.
One reason Parkside got caught, he adds, is that they were working at high-profile buildings such as 111 West 57th St., where other subcontractors have also been accused of wage theft and safety violations. In 2016, two workers there publicly announced they had quit at a building-trades union protest, citing wages as low as $15 an hour and the lack of crucial basic safety equipment at subcontractors U.S. Crane & Rigging and Tradeoff Construction Services. Both are owned by the Auringer family, which has an awesomely bad record on safety and wage theft, Jorge told LaborPress at the time.
Fitzgerald says he hopes the DA will extend the investigation to cover developers, as JDS Development Group, the Steinway Tower’s developer, “knowingly hired” Parkside. JDS owner Michael Stern prides himself on using nonunion labor.
Vance said he could not predict the course of the investigation, but that it is looking at larger entities in the industry.
Fitzgerald now hopes the workers cheated will get their back pay—and urges nonunion workers with the same problem to get in touch with unions. “If there’s anybody out there that needs help like this for wage fraud, reach out,” he says. “The unions are there to help.”