Construction Company Indicted for Wage Theft, Insurance Fraud in New York

July 26, 2018

CRV Precast Construction LLC (CRV) and six of its employees have been indicted for misclassifying workers as lesser-skilled, underpaying them and falsifying information about payroll and employees, including a worker who was killed at a company job site.

The defendants are charged in a New York State Supreme Court indictment with insurance fraud in the second and third degrees, grand larceny in the third degree and scheme to defraud in the first degree, among other charges.

“Time and again, we’ve seen how wage theft is symptomatic of an overall disregard for workers’ well-being on work sites where companies regularly defraud their employees. We have also seen them playing fast and loose with their workers’ lives and safety,” said Manhattan District Attorney Cyrus R. Vance Jr. in a press release issued by his office. “As alleged in this case, the defendants devalued their workers’ livelihoods, underpaying them and insuring them for lower-risk work while simultaneously sending them to carry out complicated construction projects. Misclassifying workers as lesser-skilled is a common way that employers steal from their employees.”

The indictment follows a joint investigation led by the Manhattan District Attorney’s Office’s Construction Fraud Task Force and the New York City Department of Investigation (DOI), with additional assistance by the New York State Insurance Fund (NYSIF). The charges contained in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

“These defendants stole from their workers on city construction projects, failing to pay the legally required prevailing wage and underpaying more than $400,000 in insurance premiums, according to the charges,” DOI Commissioner Mark G. Peters said in the release. “In trying to skirt these laws for their own benefit, the defendants’ alleged conduct has instead landed them in handcuffs and facing prosecution.”

Wage Theft Scheme

Under federal prevailing wage law, contractors and subcontractors on federally funded construction projects are required to pay the prevailing rate of wage and benefits to workers. The classification of these workers and the wage paid must correspond to the actual work performed so that workers are not purposely misclassified and underpaid.

In 2016, CRV was hired as a subcontractor on a federally-funded project involving the renovation of Draper Hall, a former medical dormitory, which was being remodeled as an affordable housing complex for seniors. CRV was contracted to erect a steel framework, which requires ironworkers, and install precast concrete planks, which requires ironworkers or concrete laborers, depending on the specific task.

According to the indictment and documents filed in court, CRV and multiple individuals who operated the company misclassified workers in order to pay them less than the prevailing wage rate.

By misclassifying workers on certified payroll reports as lesser-skilled concrete laborers instead of ironworkers, the defendants were able to underpay and steal approximately $40,000 from at least four workers. When workers complained about the lower wages, they were informed that they could quit.

Insurance Fraud Scheme

The defendants also filed false payroll information with NYSIF in order to lower CRV’s workers’ compensation insurance premiums. By underreporting the company’s expected aggregate payroll for 2015-2016, CRV underpaid NYSIF approximately $380,000 for the insurance coverage it received.

In addition, by misclassifying ironworkers as concrete laborers, who are insured by NYSIF at a lower risk factor, CRV fraudulently lowered the company’s premium for the insurance year 2016-2017. In total, CRV underpaid NYSIF by approximately $410,000 by underreporting payroll and misclassifying workers.

In one instance, the defendants provided NYSIF with false information about an ironworker, Elizandro Ramos, who died at a CRV job site in Queens, N.Y. In a payroll summary, the victim was falsely listed as a concrete laborer, even though he was performing iron work for CRV at the time of his death.

Construction Fraud Task Force

In 2015, the Manhattan District Attorney’s Office formed the Construction Fraud Task Force with partners in law enforcement, including DOI, the Metropolitan Transportation Authority (MTA) Inspector General’s Office, and the Port Authority of New York and New Jersey (PANYNJ) Office of the Inspector General, to investigate and pursue criminal cases against individuals and companies who endanger the safety of others and undermine the integrity of the construction industry.

Following a series of successful trial convictions related to the death of worker Carlos Moncayo, District Attorney Vance created the Construction Safety Community Project to train workers to recognize workplace safety hazards and signs of fraud and proactively report them to law enforcement. To date, the Construction Fraud Task Force has conducted more than 60 presentations across the city for more than 2,200 construction workers.

Source: Manhattan District Attorney’s Office

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