Border wall contractor is facing lawsuit
Ex-workers allege illegal hiring
A Galveston-based contractor working on the border wall championed by former President Donald Trump is accused in a federal whistleblower lawsuit of illegally hiring Mexican nationals to guard wall construction sites in California.
A federal judge in San Diego recently unsealed a complaint filed by two former contract employees of Sullivan Land Services Co., or SLS, a construction company founded and operated by brothers Todd, John and William “Billy” Sullivan.
The complaint alleges that SLS hired “unvetted workers” for job sites at the border and allowed a subcontractor to construct an illegal dirt road to ferry armed Mexican nationals across the border to provide security, all with the approval of an Army Corps of Engineers supervisor.
High-level employees of SLS as well as Ultimate Concrete of El Paso, its subcontractor on the project, allegedly made false statements about hiring Mexican workers and overcharging for construction costs.
The U.S. Justice Department investigated the falseclaims allegations and notified the court in December that it would not intervene, allowing the case to proceed in federal court without the department’s involvement.
Through a spokeswoman, Liz Rogers, the Sullivans declined to be interviewed for this story.
“This case is based on inaccurate and untrue allegations; therefore, we are not surprised that the government reached the same conclusion,” Rogers said in a statement. “We vehemently disagree with the claims made in this lawsuit and will defend ourselves through the legal system.”
Representatives of Ultimate Concrete could not be reached for comment.
The allegations place the Sullivans in the type of spotlight they have largely avoided, despite being successful businessmen and civic leaders in Galveston.
SLS began when the brothers were students at Ball High School in Galveston. It has evolved into a lucrative consortium of business interests — from port dredging and homebuilding to debris removal for natural disasters, including Hurricane Harvey in 2017.
Along the way, the Sullivans have built a reputation for high-quality work and won major state and federal contracts, including $1.8 billion for constructing segments of border wall in Texas, New Mexico and California.
The brothers have contributed to the campaigns of key politicians in Texas including Land Commissioner George P. Bush and U.S. Sen. John Cornyn, both Republicans.
“I just see them as standup people in our community,” said Ted O’rourke, a Galveston businessman who serves on the Port of Galveston’s board with Todd Sullivan. “I can’t say one way or the other if (the border wall complaint) has merit, but it’s just hard for me to believe that they would knowingly do anything inappropriate in the business world.”
Deep Galveston ties
The brothers are the sixth generation of Galveston Sullivans. Todd is 45; twins John and Billy are 41.
Their grandfather, John R.A. Sullivan, was a cattle rancher in the early 20th century. He worked in the dairy industry and as a cowboy, leasing pastures and starting his own herd. He eventually shipped cattle to Florida and the Caribbean.
His son Gerald took over the family business after graduating from Texas A&M University in the 1960s.
Friends say Gerald set the template for his sons by investing in a wide range of businesses, from real estate development to port operations.
“They were taught to work hard from the very beginning, and so they actually got their business start when they were teenagers in the landscaping and yard business,” said James Yarbrough, a former Galveston mayor and county judge who has known the family for decades.
After the brothers graduated from college — all three attended Texas A&M — they began to flex their business muscles. They founded Sullivan Land Services Co. in 1995 and converted their commercial landscaping business, Sullivan Environmental Services, into a real estate company, Sullivan Interests.
The Sullivans’ real estate arm purchased lots in Houston that eventually were developed into luxury homes. They also built townhouses in College Station.
Their purchase of 93 acres on the West End of Galveston in the early 2000s stirred up controversy.
The land that would become the Evia subdivision — a luxury development with 388 homes, three freshwater lakes and a nature preserve — was folded into a 2,000-acre tax increment reinvestment zone in 2003. The zone was structured by the city of Galveston to provide public financing for capital improvements in and around Scholes International Airport.
The project came under fire after the Sullivans sought up to $8 million in reimbursements from the city for what they termed “public improvements,” such as lakes and parking areas ostensibly open to the public.
“(In Evia) we’re not only taking over the maintenance, we’re paying for the streets,” then-galveston City Council Member Jackie Cole said during a council meeting in 2006. Developers, she noted, generally built streets and sewers and turned them over to the city for maintenance.
Although the city ultimately provided a reduced amount, $6 million, to reimburse the Sullivans for public improvements, the city assumed $5 million of the company’s debt to pay for infrastructure within the Evia subdivision. As of December 2019, the city still owed the Sullivans $1.5 million.
Businesses expand
Over the years, the Sullivans have added to their portfolio. After buying a terminal at the Port of Galveston in 2005, Todd Sullivan established Texas International Terminals, a liquid and dry bulk multimodal facility along the Galveston Ship Channel capable of serving rail, deep draft vessels, barges and trucks. He also joined the Wharves Board of Trustees, which oversees port operations.
Two years ago, it was reported that Sullivan intended to build a crude processing facility at his terminal to make 50,000 barrels per day of low-sulfur fuels, a project that would require deepening the ship channel to accommodate the deeper-draft vessels that would ship the product.
Elizabeth Beeton, a trustee on the wharves board, questioned whether Sullivan had a conflict of interest.
“How can we proceed with this if you have a board member advocating for it, who is also the main beneficiary?” Beeton asked during a 2018 board meeting.
Sullivan responded that he was advocating for local industry and was worried that the Port of Galveston would get left behind without the dredging project. He agreed to recuse himself from future discussions on the project.
The Army Corps of Engineers later dredged the ship channel. The Port of Galveston paid up to one-third of the $3.3 million cost.
More recently, the brothers have become major players in disaster recovery.
It began when Alabamabased DRC Emergency Services subcontracted with Sullivan Land Services to remove debris from cruise ship terminals at the Port of Galveston after Hurricane Ike in 2008.
SLS went on to build homes in Haiti after a 2010 earthquake and won a contract to help rebuild New York City after Superstorm Sandy in 2012. Four years later, the Sullivans acquired DRC Emergency Services.
Since the acquisition, DRC has won millions of dollars in contracts to perform debris cleanup after storms and hurricanes in Louisiana, Florida and Texas, including Houston and Harris County after Hurricane Harvey.
Sullivan Land Services won a $375 million contract from the Federal Emergency Management Agency to build homes in Puerto Rico after Hurricane Maria, and it successfully lobbied officials in New York in March and April for a $20.8 million nobid emergency contract to build a field hospital in Brooklyn for COVID-19 patients.
Dewight Dopslauf, a purchasing agent for Harris County, said DRC is one of “the most qualified” debris removal companies in the country.
“There’s only a handful of decent (disaster recovery) companies out there that have actually done the work,” he said. “And they’ve worked with us several times, throughout different disasters. They have the ability to … bring in more assets when we needed them.”
Companies that compete for state business frequently give money to Texas politicians involved in contracting decisions, which is allowed under state law.
The Austin-american Statesman reported in 2018 that Sullivan Land Services was one of 12 companies that had donated to Bush, the Texas land commissioner. The three brothers also contributed $16,875 to Bush from 2013 through 2017. The company has won four Harvey-related contracts from the Texas General Land Office totaling $23.6 million.
Since 2017, federal campaign finance reports show, the three Sullivan brothers have donated $84,741 to Republican candidates, including more than $22,000 to Cornyn and nearly $20,000 to Gop-backed political committees.
Forbes estimated in 2019 that the Sullivans had collected $1 billion in revenue from government contracts in recent years.
Misconduct alleged
The whistleblower complaint against Sullivan Land Services and Ultimate Concrete of El Paso was filed in the Southern District of California in February 2020 and focuses on the summer of 2019.
As a prime contractor on a border wall project near Imperial Beach, Calif., SLS was responsible for hiring subcontractors for design, construction and security under a $144 million federal contract. According to the complaint, Ultimate Concrete used taxpayer dollars to illegally hire armed Mexicans to provide security for the project.
The suit asserts that the scheme was uncovered by a former deputy sheriff in San Diego County and an EX-FBI special agent who worked for security companies hired by SLS.
The complaint says the two whistleblowers were rebuked by an SLS project manager after reporting on the illegal security practices, as well as on a gunfight that broke out on the U.S. side of the border between Mexican security guards and Mexican nationals attempting to steal from wall construction sites.
One of the whistleblowers alleges in the complaint that Chris Lankford, federal division president for SLS, and Jesse Guzman, president of Ultimate Concrete, acknowledged they were aware of the Mexican guards working for them.
The whistleblowers said at least one unidentified Army Corps of Engineers supervisor, who later stepped down, also was aware of the operation.
The day after the gunfight, one of the whistleblowers contacted the FBI. Several months later, in October 2019, the SLS project manager informed one whistleblower that he had been fired and should no longer communicate with the other whistleblower, according to the complaint. Ten days later, the other whistleblower met with Lankford, who fired him.
Both whistleblowers are seeking damages and civil penalties.
The Imperial Beach wall replacement was completed in 2019. The Sullivans’ work on the border wall continues in Texas, California and New Mexico. The work is scheduled to be completed this year.