Pay $76M, crook
Biz hit for ‘alter ego’ that cut hardhat pay
A CONSTRUCTION company accused of creating a bogus business to avoid union wages and benefit payments has to cough up $76 million to the workers it cheated.
In a decision with potentially far-reaching consequences for city developers, Manhattan Federal Court Judge Colleen McMahon found that Navillus Contracting fraudulently invented an alterego company to get around collectively-bargained agreements with several major city construction unions.
The Midtown-based company also had one of its legitimate offshoot businesses act as a Navillus stand-in on a job it wanted to do nonunion, the ruling found.
The collusion involved real estate giant Related, one of the city’s most prolific developers. It knowingly engaged with one of the alter-ego companies on its Upper East Side luxury development on 92nd St., McMahon’s ruling said.
In her scathing, 95-page ruling delivered late Thursday after a three-year court battle, McMahon said that Navillus’ founder, Donal O’Sullivan, had “perjured himself” more than once. She noted that another company principal was “obviously lying” in some testimony.
The $76 million award was a massive hit for Navillus.
It was also a strong warning to other New York companies looking to cheat their way out of union contracts, said attorney Tom Kennedy, who represented the coalition of unions that sued Navillus in 2014.
“The scale of the verdict is, we think, the largest of its type in the U.S. and it will grow at 9% interest until its paid off,” Kennedy said.
“People will now recognize that they are betting their entire company and can lose it if they are caught cheating with one of these double-breasted alter-ego operations,” he said.
The financial pain has to be carried by Navillus, which was the main generator of the alter-ego scam, but developer Related — which is doing the city’s Hudson Yards project — also played a role, the attorney noted.
“It looks they were involved up to their eyeballs in this,” he said.
Navillus issued a statement saying the company has always been a “staunch” labor supporter and contributor to union pension funds.
“We are very disappointed by the court’s verdict, a decision that is inconsistent with longstanding legal principles applicable to alleged alter ego cases such as this,” the contractor said.
“We are currently reviewing all of our options including appealing to a higher court to reverse this erroneous decision.”
The $76 million in back wages and contributions to health, pension and general welfare funds will be split between the Metal Lathers Local 46, Cement and Concrete Workers District Council, Cement Masons Local 780, the District Council of Carpenters and Teamsters Local 282.
They came together in 2014 to sue Navillus, which had signed collective-bargaining agreements with all of them for a variety of jobs on construction sites.