The president of New York City construction company faces federal charges over accusations he cheated union funds out of $1 million.
Donald O’Sullivan, his sister Helen O’Sullivan and Padraig Naughton — all executives of Navillus Contracting — were arrested on July 30, the US Attorney’s Office for the Eastern District of New York said in a statement.
An 11-count federal indictment says the three individuals engaged in a scheme to avoid paying $1 million in required union benefit fund contributions. A federal indictment outlines a multi-faceted scheme authorities said the trio carried out that helped them avoid paying $1 million in required union benefit fund contributions.
They were charged with wire fraud, mail fraud, embezzlement from employee benefit funds, submission of false remittance reports to union benefit funds and conspiracy to commit those crimes.
The defendants were arrested and then arraigned before United States Magistrate Judge Robert M. Levy. Donald O’Sullivan was released on a $500,000 bond; Helen O’Sullivan and Naughton were each released on $250,000 bonds.
Navillus is a signatory to multiple collective bargaining agreements with labor organizations – including the Bricklayers and Allied Craft Workers Local No. 1, the New York City District Council of Carpenters, the Cement Masons Union, the Pointers, Cleaners and Caulkers, and the International Brotherhood of Teamsters Local 282 – that required the company to employ union workers on its projects and to make contributions to various union benefits including pension, annuity and welfare funds on their behalf, the US Attorney’s statement said. To ensure that the benefits funds received the contributions that it had agreed to pay, Navillus was required to periodically file remittance reports with the benefits funds that detailed the number of hours worked by each worker.
As alleged in the indictment, the defendants engaged in a payroll scheme from approximately 2011 to 2017 to avoid making those contributions by using a consulting firm to pay certain Navillus workers for work done on Navillus construction jobs. However, neither Navillus nor the consulting firm made contributions to the benefits funds on behalf of those workers. To disguise the scheme, the defendants directed the consulting firm to issue fraudulent invoices to conceal the fact that funds paid by Navillus to the consulting firm were, in fact, for wages paid to Navillus workers. As a result, the defendants caused Navillus to avoid making over $1 million in required contributions to union benefits funds.
“As alleged, these senior construction company executives were the architects of a payroll scheme designed to evade obligatory contributions to union benefits funds that their workers depend upon,” acting United States Attorney Seth DuCharme said in the statement. “This office, together with its federal and local law enforcement partners, will continue to investigate and hold accountable employers whose corrupt actions jeopardize their employees’ economic well-being.”
“As alleged, the defendants deprived union workers of benefits to which they were entitled, falsifying records and creatively circumventing their fiscal responsibilities,” said FBI assistant director-in-charge William F. Sweeney. “This type of crime depletes the benefits union employees have a right to access. Today’s arrests highlight this illegal scheme and reassert our dedication to rooting out crimes of this nature.”.
Donald O’Sullivan, who lives in Douglaston, Queens, is the company’s president, founder and owner. He built Navillus into one of the largest construction firms in the city — with projects that included the 9/11 Memorial — but ran into recent trouble, The Real Deal has reported.
The company filed for bankruptcy protection in 2017 after a $75 million judgment against it stemming from a dispute with five unions, the published report says. It left bankruptcy the following year with a $25 million one-time payment to the unions.