Thursday, July 31, 2008

Contractor Sues District Council For $100M

Here it is for your reading pleasure; members have been emailing me requesting that I post the On Par lawsuit. Click here for PDF file.

On Par Contracting has filed a $100 million dollar lawsuit against the NYC District Council of Carpenters on April 2, 2008 alleging among other things that the District Council has allowed its officers to utilize a corrupt scheme whereby preferential treatment was given to certain companies in exchange for secret payoffs and knowingly permitted its officers to participate in a conspiracy to manipulate and corrupt the job referral system.

Officials of Building Firm Accused of Cheating Workers and City


Two officials of a construction company that did work for the city were charged on Wednesday with cheating workers out of more than half a million dollars and inflating payroll figures to bilk money from the city.

The officials, Yuly Aronson, owner of the May Construction Company, and Anthony Branca, the company’s accountant, ran their scheme from April 2005 through November 2006 during work on two dozen city buildings and courthouses, according to Attorney General Andrew M. Cuomo.

They were charged in Manhattan Criminal Court with falsifying payroll filings to receive roughly $2 million from the Department of Citywide Administrative Services for employee wages and withholdings, of which Mr. Aronson, 46, and Mr. Branca, 50, ended up pocketing about $550,000 that was supposed to go toward the salaries of 84 workers, the attorney general said.

In some cases, Mr. Aronson, of Norwalk, Conn., and Mr. Branca of Bedford Hills, N.Y., submitted forms to the city reporting that they had paid their workers $42 and $70 per hour. But the workers had received only $28 per hour, according to the city’s Department of Investigation, which worked on the case.

The case underscores the efforts of Mr. Cuomo’s office and the State Department of Labor to rein in unfair wage practices. Last week, the attorney general’s office helped negotiate a settlement that secured $1.2 million in back pay for 284 construction workers who worked on projects in the Bronx and did not get the overtime they had earned.

“Contractors on public works projects should be warned: Obey the law and pay the prevailing wage, or face the consequences,” Mr. Cuomo said in a statement.

Mr. Aronson and Mr. Branca face several charges including grand larceny. If convicted, they could spend up to 15 years in prison.

Lawyers for Mr. Aronson and Mr. Branca did not return calls seeking comment. They were freed on $25,000 bail each on Wednesday afternoon.

Under New York City law, construction contractors working on public projects must pay workers a prevailing wage set by the city. The prevailing wage varies depending on the job and ranges from $28.05 to $70.62 per hour.

May Construction lured many of its employees with an advertisement in the Polish-language newspaper Nowy Dziennik, according to the attorney general’s office. Most of the company’s workers were secured through those advertisements and were each paid the minimum of the prevailing wage, even though the jobs they were doing required they be paid higher wages, the attorney general’s office said.

The construction projects included work on Staten Island Borough Hall; providing central air conditioning to parts of Staten Island Criminal Court; renovating parking lots for the Queens Borough Hall; removing carpet and installing floor tiles at 60 Centre Street, a State Supreme Court building in Manhattan; and installing doors at 100 Centre Street, the courthouse where Mr. Aronson and Mr. Branca were arraigned.

The city began investigating May Construction after the Department of Citywide Administrative Services noticed a discrepancy in paperwork filed by the company.

This is not the first time May Construction has been scrutinized. In November 2006, the Urban Group Ltd., a carpentry subcontractor, filed a lawsuit against the company and the Department of Citywide Administrative Services, alleging it was owed $611,805.91 for work it had done.

Last October, Mr. Aronson sued Mr. Branca, alleging he had defrauded and embezzled money and property from him, according to court records. The case is still pending.

Wednesday, July 30, 2008

Cost of Building in New York Is Nearly Triple That of Chicago or Atlanta, Report Finds

By PETER KIEFER, Staff Reporter of the Sun

Constructing a square foot of office space in New York City costs almost three times as much as it would cost in Chicago, Atlanta, and other American cities, according to a report being released today.

Just as spending for nonresidential construction has surpassed $1 trillion annually across the country, the costs associated with construction in New York City — materials, labor, and city permitting delays — have made it far and away the most expensive city to build in in America, a report being released today by the New York Building Congress and New York Building Foundation says.

"That is a huge differential," the president of the Real Estate Board of New York, Steven Spinola, said yesterday when told of the report's city-to-city cost differentials. The report estimates that a square foot of office space for a high-rise in New York can exceed $400 a square foot, not including marketing, land costs, or the developer's profits.

The total project costs, including soft costs, can average $150 a square foot in Chicago and $120 a square foot in Atlanta.

The report's findings come at a pivotal moment for New York's construction industry. A series of fatal crane accidents in recent months resulted in the resignation of the buildings commissioner, Patricia Lancaster, and a number of criminal investigations. The City Council is considering legislation that would overhaul the training and inspection policies related to cranes and construction sites in the city.

The added safety measures come as a number of billion-dollar development projects in New York City have faced delays and budget shortfalls. Many of those projects have been scaled back or abandoned altogether due in part to the rising costs of construction and difficulties associated with gaining government approvals. This week Mayor Bloomberg announced a series of changes aimed at easing the risks assumed by contractors bidding on public/private projects.

"This year has already produced news that government is pulling back on long-anticipated and initially funded projects — such as the expansion of the Jacob K. Javits Convention Center and creation of a Fulton Street Transit Center. These events point to the collective need to get a real handle on building costs, especially given the multitude of major transit and development projects currently on the drawing board — including the Second Avenue Subway, Atlantic and Hudson Yards and the World Trade Center build out," the president of the Building Congress, Richard Anderson, said in a statement.

In New York City costs have risen 32% between 2004 and 2007 and are expected to increase 1% each month till at least 2010, according to the report, which says nonresidential construction spending has increased 46.5% since 2004 nationwide.

The report said that in New York City "land costs have accelerated beyond all of the other cost factors" but the report also cites local regulations and government policies, workforce shortages, more extensive union rules, and stringent environmental standards, as well.

"Many factors unique to New York affect its costs. Proximity to subways, the depth of rock, a dense urban fabric, confined sites, the presence of previous and adjacent structures, and the size and risk associated with large scale projects present complexities that layer on costs," the report says.

Mr. Bloomberg's proposals, which mirror the recommendations suggested in the report, include the city compensating contractors whose public works projects are delayed by city mistakes, and trying to estimate more accurately the cost of projects before they are given budget approval.

Mr. Spinola said Mr. Bloomberg's proposals and those mentioned in the report would be a welcome relief to his members.

"It clearly is necessary. When contractors bid for New York jobs they add a percentage to it because they know it is going to take them longer to get the permits and that it will be more complicated, so they build that into the cost. If there can be confidence that payments can be made, and there will be no inappropriate second-guessing, I think you will see the prices come down," he said.

Monday, July 28, 2008



Wednesday, July 23, 2008

Local 157 Nomination Meeting

As expected UBC VP and Trusteeship supervisor Frank Spencer refused to answer any questions from the membership regarding the Trusteeship of Local 157 at the July 21st nomination meeting.

Spencer started the meeting explaining to the members the nomination process and asked if their was any questions. I rose made my way to the podium and said "since the trusteeship started you have refused to answer questions put forth to you by the membership of Local 157, will you here and now for the record answer members questions", his reply was NO.

Below are six questions posted on this blog by the membership of Local 157 and sent to VP Spencer on March 4th, which he has refused to answer...

1. General President McCarron's letter to local 157 members dated December 3 cites section 10H of the constitution that granted full supervisory authority. Specifically where in section 10H does it state that the General President has the "authority to remove elected officers" of a local? This would seem to bypass Section 52, which guaranties the right to a fair and impartial trial.

2. Where in section 10H does it give the General President the authority to appoint officers to fill the vacated positions in a local? Section 10M gives the General President the right to appoint interim officers in NEWLY, CONSOLIDATED and MERGED Locals, which does not apply to local 157.

3. Why is Section 32D being bypassed, which gives the recording Secretary of the Local the right and duty to call a meeting to order and in the absence of a President and Vice President those Present shall elect a "President Pro Tem"

4.Why is the District Council involved in the supervision by appointing business reps, business manager and involved with the locals finances and books? This right, under supervision is the Internationals not the District Council.

5. Why is the District Council paying the bills when the only thing the LMRDA limits is the ability of the Councils or International to move money out of the Local to either one of them? It does not require the International to freeze the local’s accounts and stop them from paying their own bills.

6. What is the reason for the continued supervision? If Hanley and Kennedy resigned on November 21 and the District Council fired Dilacio and no accusation of financial impropriety or other fraud was found isn't the problem solved?

Tuesday, July 22, 2008

Construction Workers in Bronx Split $1.23 Million in Back Pay


Two hundred and eighty-four construction workers in the Bronx will receive a total of $1.23 million in back pay as part of a settlement over unpaid overtime, Attorney General Andrew M. Cuomo announced on Monday.

Mr. Cuomo said the construction workers had not received time and a half for the overtime they had worked while renovating a dozen apartment buildings on the Grand Concourse, Gerard Avenue and elsewhere in the Bronx. He said the workers had received straight pay, regardless of how many hours they worked above 40 each week.

Mr. Cuomo’s office reached a settlement with two companies, J. Siebold Construction and Finkelstein-Morgan, which owns and manages real estate, without bringing a lawsuit against them.

“New York’s construction workers are the backbone of this city’s economy, but these companies sought to stiff almost 300 Bronx construction workers out of the overtime pay they earned and deserve,” Mr. Cuomo said.

“Today’s settlement will turn over $1.2 million to these workers and also send a serious message to employers across the state: Time-and-a-half pay for work over 40 hours a week is the law in New York State, and if an employer ignores that law, we will take action.”

The settlement is part of efforts by the attorney general and the State Labor Department to crack down on wage theft, which includes forcing employees to work off the clock, erasing hours they have worked and not paying time and a half for overtime.

The agreement calls for J. Siebold to pay $1.07 million in back wages and $160,000 in interest and penalties, while Finkelstein-Morgan serves as the guarantor of the payments. The violations occurred from October 2002 to August 2006, according to the attorney general’s office.
Under the settlement, the attorney general’s office will monitor the companies’ time and payroll practices to ensure their compliance until 2010.

Also under the settlement, the two companies are banned from retaliating in any way against employees who cooperated or were perceived as cooperating in the investigation.
Dennis A. Lalli, a lawyer for J. Siebold and Finkelstein-Morgan, said, “We cooperated fully with the agency, and I think the parties are in agreement that the final settlement was fair to all involved.”

Steven Finkelstein, a partner in Finkelstein-Morgan, said that his company owned the buildings and that J. Siebold was doing the renovations. Mr. Finkelstein said that because Mr. Cuomo came after both companies, “I had to be part of the settlement.” Of J. Siebold, he said, “They’re as embarrassed about this as we are.”

Friday, July 11, 2008

Report Urges Nonunion Labor Use

By PETER KIEFER, Staff Reporter of the Sun

The use of nonunion labor for the construction of "affordable" housing could serve as a remedy to the skyrocketing construction costs that are slowing development in New York City, the Manhattan Institute says.

In a 40-page report examining the reasons for soaring construction costs, which have been rising 10% annually, the think tank says efforts by construction unions to impose a "prevailing wage" at affordable housing construction sites result in "further costs by requiring developers to prove that they are in compliance with the law."

The president of the Building Trades Employers' Association, Louis Colletti, called the report's recommendation of nonunion labor "absurd."

"If you want to continue to build substandard housing in terms of quality and safety, then continue to use nonunion companies," he said.

The president of the New York Building Congress, Richard Anderson, said that because of the limited construction budgets for affordable housing, the use of nonunion labor is often the only feasible solution.

Still, he added, "This is a valid area of investigation, but I would not support this recommendation."

A global construction boom, soaring costs of land, labor, steel, and concrete, among other materials, and an increasingly Byzantine city permit process have made construction in New York City more expensive than in other American metropolitan areas, the report says. Constructing a square foot of office space in New York costs $400, it says, more than double the cost in Chicago and Atlanta, where it is $189 and $154, respectively.

The construction cost per square foot increased to $428 a square foot in 2008 from $360 in 2006 for a typical residential building.

"It's not just one thing, it is everything," the author of the report and a consultant in urban and regional economics, Rosemary Scanlon, said.

A more streamlined permitting process, continued rezoning, a reduction in the liability of developers, and more tax abatements could help reduce the costs, she said.

Mr. Anderson said the recently implemented safety regulations imposed by the Department of Buildings has affected his members. "Even greater attention to safety means the cost will go up even more. We are not complaining, but just pointing out the realities and the cost implications of the added safety requirements," he said.

Asked whether the use of nonunion labor could affect the quality of the construction, Ms. Scanlon said the developers and contractors she spoke with "never implied that nonunion work was shoddy."

A spokeswoman for the city's Economic Development Corp., Janel Patterson, said: "The city is engaged in a study looking at the escalating costs of construction, and analyzing a broad set of potential cost drivers. We are working now to develop actionable strategies moving forward."

Thursday, July 10, 2008

Two Get 5 Years For Defrauding Carpenters Union

NEW YORK—The owners of a drywall contracting business have each been sentenced to five years in federal prison for conspiring to defraud the Carpenters Union benefit funds of millions of dollars by using non-union labor, paying union carpenters off-the-books and bribing shop stewards and an employee of the benefit funds to assist in the fraud.

Patrick Noel McCaul and James Dermot McGonnel were indicted in December 2006 and pleaded guilty on Nov. 20, 2007.

Prosecutors said the pair owned Tri-Built Construction Inc., a drywall contractor that operated in New York City and Long Island. Between 1993 and 2004, Tri-Built, holding itself out as a union contractor, was hired for numerous construction projects in New York City, including public projects financed by the Dormitory Authority of the State of New York – such as a large construction project at Kings County Hospital in Brooklyn.

During that time, Tri-Built was a party to a collective bargaining agreement with the District Council of New York City and Vicinity of the United Brotherhood of Carpenters and Joiners. Under the collective bargaining agreement, Tri-Built was obligated to use union labor and pay union wages and benefits to all carpenters employed on TriBuilt’s jobsites. In addition, as contractors on state projects, Tri-Built was obligated to pay its employees a state-mandated prevailing wage.

McCaul and McConnel admitted that from 1993 through May 2004, they conspired to defraud the Carpenters Union and its benefit funds by paying workers cash, at non-union rates, without any benefits or tax withholdings. They also employed non-union carpenters in violation of their agreement with the union. These practices enabled McCaul and McGonnell to underbid jobs, knowing that Tri-Built never intended to comply with its collective bargaining and prevailing wage obligations. To avoid detection of their fraud, the defendants bribed Carpenters Union shop stewards to submit false reports, under-reporting the true number of carpenters and hours worked on several Tri-Built jobsites.

McCaul and McGonnell also paid a then-employee of the Carpenters Union benefit funds to destroy internal union records that might reveal the fraud if an audit of Tri-Built were conducted by the union. They diverted at least $6.5 million from the union benefit funds through their fraudulent conduct.

In addition to their five year prison terms, they were each sentenced to two years of supervised release. As part of their sentence, McCaul and McGonnell were ordered to forfeit $1.3 million, which will be paid to the Carpenters Union benefit funds. They have already forfeited $200,000, pursuant to their agreement with the Government to forfeit the total sum of $1.5 million.

Wednesday, July 9, 2008