At an upscale Pearl District apartment project, a union blows the whistle on wage theft

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By DON McINTOSH, Associate Editor

The U.S. Labor Department is investigating prevailing wage violations at four Portland-area construction projects that received loan guarantees from the U.S. Department of Housing and Urban Development (HUD). That government help came with conditions: The apartments must be affordable for moderate-income families or the elderly or handicapped, and construction workers must be paid local prevailing wage rates as determined by government surveys.

But an investigation by Painters District Council 5 found that a painting subcontractor at the Parker Apartments construction project paid workers as little as half the amount they were entitled to. Workers who complained about the violation were let go.

Undercover probe
The story begins in March, when Painters union organizer Roman Ramos asked out-of-work union member Marcos Jimenez to go undercover as a painter at the Parker Apartments – a six-story 177-unit apartment building under construction in the Pearl District – and report back any illegal practices he found.

The Parker is named after the toddler son of Bob Ball, a prominent developer who ran for Portland mayor in 2008. To build it, Ball teamed up with Eugene developers Don Woolley and Tom Connor, and with a HUD loan guarantee, they obtained a $35.7 million loan from CBRE, the world’s largest commercial real estate services firm.

Painters District Council 5 has been investigating HUD-sponsored construction projects in the Pacific Northwest, starting in Seattle, says organizing director Jeff Kelley. The goal is to clean up the industry, making it harder for companies to win contracts by cheating workers out of wages.

“Every project we’ve looked at in Washington and Oregon has had issues,” Kelley said. And the biggest issue has been violations of the prevailing wage law, known as Davis-Bacon.

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2 swindled workers of Minnesota prevailing wage, charges say

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By Marino Eccher
meccher@pioneerpress.com

Hennepin County prosecutors say two owners of an electrical contracting company cheated their employees out of agreed-upon wages. Thomas Robert Clifton, 50, of Lake Elmo, and Earl Keith Standafter, 57, of Burnsville, each face one count of felony theft by swindle. Hennepin County Attorney Mike Freeman announced the charges Monday.

Prosecutors say the two men, owners of C&S Electric, won a 2010 bid for renovation work at Normandale College in which they agreed to pay their employees the prevailing wage — the pay rate required for state-funded construction projects.

The rate at the time for the 16 company electricians on the project was $58.50 per hour.

During the project, the two defendants signed documents showing they were in compliance with that requirement, according to the criminal charges. But afterward, a complaint was filed with the Minnesota Department of Labor and Industry.

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Hillsboro businessman convicted of tax evasion

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By Brent Weisberg
Published: September 30, 2014, 8:05 am

PORTLAND, Ore. (KOIN 6) – A 53-year-old man was ordered by a federal judge to pay the Internal Revenue Service (IRS) close to $500,000 and spend a year and a half in federal prison after pleading guilty to federal tax evasion.

Stephen Gregory Nagy was the former president of Hillsboro-based S&S Drywall Assemblies. According to the United States Attorney’s Office, Nagy’s company produced drywall services from January 2005 through September 2011.

The IRS assessed the company $481,519 in federal employment taxes, penalties and interest for between June 2009 and September 2010. Nagy met with the IRS and committed to a plan to pay the past due payroll taxes for his company, but investigators said he decided not to comply with the payment play and engaged “in a variety of interrelated fraudulent schemes to evade the payment of the delinquent payroll taxes.”

Investigators learned that he started conducting extensive business transactions in order to hide funds from the IRS. He obtained cash by illegally hiring undocumented workers to work on prevailing wage jobs, paying them a small portion of the prevailing hourly rate and demanding that they kick back the largest part of their wages to him in cash, court documents state. Nagy failed to report the case to the IRS.

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City dinged on state audit for work with federal grant

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By Cecilia Garza,  Bainbridge Island Review Staff Writer 

Oct 9, 2014 at 1:23PM

According to a recent review by the Washington State Auditor’s Office, the city of Bainbridge Island is not meeting wage requirements set by one of its federal grant programs.

For the most part, the city complied with state laws and its own policies, the report said.

The audit, however, found that Bainbridge did not quite meet the requirements set by a federal grant for highway planning and construction.

The city’s practices “were inadequate to ensure compliance with federal Davis-Bacon Act (prevailing wage) requirements,” the report said.

The Davis-Bacon Act relates to contractors and subcontractors performing federally-funded projects. It requires that laborers employed under the contract be paid no less than the local prevailing wage and fringe benefits that is paid for similar projects in the area.

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Ordinance sets higher wages for city projects: San Mateo officials adopt rules for public works while encouraging private developers to adopt similar policies

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October 13, 2014, 05:00 AM – By Samantha Weigel – Daily Journal

As the cost of living rises along the Peninsula, those who work on San Mateo city public works projects will be guaranteed prevailing wages after the City Council approved an ordinance codifying existing policy and to adhere to state regulations.

To receive state funding, California’s newly enacted Labor Code section 1782 requires charter cites, such as San Mateo, to pay workers at least the state’s prevailing wage on public works projects, City Attorney Shawn Mason said.

The ordinance was approved last week but Councilman David Lim said the City Council has long strived to pay its employees prevailing wages and encourage private developers to do so as well.

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A.G. Schneiderman Announces Conviction Of Electrical Contractors For Not Paying Prevailing Wages On Electrical Work Projects

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NEW YORK — Attorney General Eric T. Schneiderman today announced the conviction and sentencing of Ronald Bartiromo, Raymond D’Auria and R3 Electrical Inc. for failing to pay legally required wages to their workers on two public works projects throughout New York City.  Ronald Bartiromo and R3 Electrical pled guilty to the felony crimes of violation of prevailing wage requirements of the New York State Labor Law and grand larceny in the second degree.  D’Auria pled guilty to the misdemeanor crime of violation of prevailing wage requirements of the New York State Labor Law.  As a condition of the pleas, Bartiromo and R3 Electrical agreed to pay $273,943.66 in restitution to underpaid workers and are prohibited from working on public works projects for five years.  Bartiromo was also sentenced to 5 years’ probation.

“Mr. Bartiromo, Mr. D’Auria and R3 Electrical, Inc. are being held accountable for stealing wages from workers who did electrical work on several public works projects throughout New York City,” Attorney General Schneiderman said. “My office will continue to take strong action, including filing criminal charges, against employers who violate New York’s labor laws, steal taxpayer dollars and violate the public trust.”

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Collecticut: $6.5M in Back Wages Recovered Over Past Year in CT, but Much Work Remains

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Over the past year, the Connecticut Department of Labor’s Wage and Workplace Standards Division recovered $6.5 million in back pay for workers.  While the organization has stepped up its efforts since the recession, the amount collected represents only a percentage of the wage theft that occurs in the Constitution State, according to the Stamford Advocate:

A significant portion of the complaints – nearly 2,800 of them, accounting for $3 million – were from workers reporting that they were not paid at all. Another $1.2 million was distributed to workers who were not paid minimum wage or overtime as required by law. And more than $2 million was distributed to construction workers who were paid less than the state’s prevailing wage for government projects.

The Wage & Workplace Standards Division gets about 4,000 complaints a year, said the director, Gary Pechie. Most are from workers in the construction industry, service industries such as hotels and restaurants, and the transportation industry employing taxi, limo and tractor-trailer drivers, Pechie said.

“I don’t think people understand how tremendously workplaces have changed since the recession,” Pechie said. “There’s a lot of shenanigans going on.”

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Court Officially Affirms New CA Prevailing Wage Law

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Supporters Hail Victory for Bipartisanship, Economy and California Taxpayers

San Diego – Last Friday, after hearing arguments from both sides in the lawsuit aimed at blocking California’s new Prevailing Wage Law (SB7), San Diego Superior Court Judge Joel R. Wohlfeil affirmed his August 28th ruling upholding SB7. SB7 is a bipartisan law enacted in 2013 that encourages more of California’s Charter Cities to pay Prevailing Wage on locally-funded construction projects.

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Cranston builder pleads guilty to filing false claims to collect federal stimulus funds

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PROVIDENCE, R.I. – The owner of Alhambra Building Company, in Warwick, pleaded guilty Wednesday to filing false claims and documents to collect more than $500,000 in federal stimulus funds, the U.S. Attorney’s Office said.

The company, led by Donald F. Ihlefeld, 71,  of  Cranston,  was working on a renovation project to turn a former West Warwick textile mill into a walk-in health center when Ihlefeld falsely represented he paid employees local prevailing wages for their work, the U.S. Attorney’s Office said.

The Cotton Shed Project, as it was known,  was funded by the American Recovery and Reinvestment Act of 2009 through grants provided by the U.S. Department of Health and Human Services, Health Resources and Services Administration.

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Contractor Gets Probation in Prevailing Wage Case

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Indianapolis construction contractor David Roark was sentenced Wednesday in Marion County Court to two years of probation after he was accused of violating the state’s common wage law.

The owner of D. Roark Drywall LLC agreed in June to plead guilty to Class D felony theft to avoid more extensive charges for underpaying drywall installers for their work on the Barton Towers project in downtown Indianapolis.

Roark was taken into custody in February 2013 on two counts of forgery, one count of theft, and five misdemeanor counts of common construction wage violation.

As part of a plea agreement, Roark is also required to complete 200 hours of community service work and make $24,311 in restitution to two employees.

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