Vance Targets Wage Theft in Manhattan Construction

BY SYDNEY PEREIRAManhattan District Attorney Cyrus Vance, Jr., has announced charges against a Queens-based 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 who helped build some of the best known new high-rises in Manhattan — including the Steinway Tower at 111 W. 57th St. and American Copper Buildings at 626 First Ave. at E. 36th St. — were scammed out of millions in wages, according to the charges.

“Plain and simple — it’s stealing,” James Rogers, deputy commissioner of the New York State Department of Labor, said 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 in three years, according to the DA’s charges. The construction company used face-recognition technology to track workers’ hours, but allegedly lied on timesheets later submitted to Affinity. Workers were paid under “expense reimbursement” in some cases — rather than a typical paycheck — in order to evade taxes and unemployment insurance contributions, according to the charges.

“These timesheets weren’t just a here and there kind of thing,” Vance said at the 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.”

Manhattan District Attorney Cyrus Vance, Jr. (at podium), with James Rogers, deputy commissioner of the New York State Department of Labor, at a May 16 press conference announcing charges against a Queens construction company and a Michigan payroll services company for wage theft and insurance fraud in connection with $100 million in contracts for Manhattan construction projects. | Photo by Sydney Pereira

The lengthy investigation began with a tip from a carpenters union, according to Diana Florence, assistant district attorney and lead attorney in Vance’s 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,” Gary LaBarbera, president of the Building and Construction Trades Council of Greater New York, said in a written 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.”

LaBarbera later told Manhattan Express that DA’s action has put contractors on notice.

“The charges are a warning to all construction contractors that unscrupulous employers will face consequences,” he said.

He also suggested that culpability could extend beyond contractors alone.

“Developers,” LaBarbera added, “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 DA’s investigation also alleges that Parkside hid more than $42 million in payroll from the New York State Insurance Fund. Premiums for workers compensation insurance are determined by the payroll and the type of work employees do. By allegedly hiding tens of millions from NYSIF, Parkside’s employee insurance premiums were fraudulently low. The fraud scheme netted $7.8 million for Parkside and Affinity, authorities say.

The charges come as Manhattan’s streetscape and skyline are being reshaped dramatically.

“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.”

The Department of Labor’s Rogers said it is difficult to quantify just how widespread wage theft could be. The department, however, each year helps workers receive 30,000 checks for money owed them and opens 8,000 wage theft cases.

Parkside’s co-owner Francesco Pugliese was charged with insurance fraud, grand larceny, fraudulent practices, a scheme to defraud, and offering a false instrument for filing. Salvatore Pugliese, the other co-owner, was charged with insurance fraud, fraudulent practices, and offering a false instrument for filing. James Lyon, the company’s supervising foreman, Yenny Duarte, its 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,” Parkside’s attorney Scott E. Leemon said in a written statement. The company denies all wage and any other kinds of theft.

Affinity did not respond to Manhattan Express’ request for comment.

The multi-million-dollar schemes were allegedy carried out at construction ongoing at some of Manhattan’s most high-profile skyrises, including the Steinway Tower on the so-called Billionaire’s Row and the American Copper Buildings in Murray Hill — both developed by JDS Development Group.

Steinway Tower is quickly coming online as the latest dramatic change to the skyline. As of March, the soon-to-be 82-story luxury condo building passed the halfway point to its total height of 1,428 feet — the third tallest in New York and the most slender “supertall” building in the world, according to its developers.

The DA’s charges against Parkside Construction involve $100 million in contracts for concrete and masonry work at buildings — beyond the Steinway and American Copper buildings — including, as well, the DoubleTree by Hilton Hotel at 350 W. 40th St., the Hilton Garden Inn New York Times Square South at 326 W. 37th St., the Public Hotel at 215 Chrystie St. and E. Houston St., the Jarmulowsky Bank Hotel at 9 Orchard St. and Canal St., the Marriott Hotel at 215 Pearl St. and Platt St., and the Courtyard New York Downtown Marriott at 133 Greenwich St. and Thames St.

Developers for the buildings have not been implicated in the case, but 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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