Settlement Is First Time Attorney General’s Office Has Enforced Prevailing Wage Laws Through The New York False Claims Act
Schneiderman: We Will Not Allow Developers Or Contractors To Profit Off The Backs Of Hard-Working New Yorkers
Attorney General Eric T. Schneiderman today announced a $255,000 settlement resolving whistleblower allegations that a New York City-based general contractor, a property developer, and their principals failed to enforce the prevailing wage requirements of their public works project. The settlement was reached with A. Aleem Construction Inc., the general contractor (“Aleem”), its owner Mervyn Frank, and West 131st Street Development Corp., the developer (“West 131”), and West 131’s principals, Alan Levine and Ralph McKoy. As part of the settlement, Aleem and West 131 will pay a total of $255,000 in penalties and restitution. The restitution will be used to fulfill unpaid wages and overtime for up to 28 carpenters and laborers cheated on Aleem and West 131’s project. The Laborers’ Eastern Region Organizing Fund (“LEROF”), as the relator that alerted the Attorney General to this fraud, will receive a portion of the overall payments made by Aleem and West 131.
The settlement reached in this case marks the first time that the prevailing wage laws have been enforced through the New York False Claims Act.
“We will not allow developers or contractors to profit off the backs of hard-working New Yorkers,” said Attorney General Schneiderman. “The law is clear: government contractors must pay their workers the prevailing wage. We will continue to aggressively pursue those who rip off taxpayers and fail to compensate workers the wages they are owed.”
The New York False Claims Act, an important tool for fighting fraud against the government, allows whistleblowers who have knowledge of fraud (known as “relators”) against New York State or local governments to file a complaint and to receive a portion of the money recovered. In this case, the construction contract required workers to be paid the prevailing wage. Prevailing wage laws seek to ensure that government contractors pay wages and benefits comparable to the local norms for a given trade, typically well above minimum wage rates.
The Attorney General alleges that Aleem and its owner and West 131 and its principals violated the New York False Claims Act by making claims for payment while acting in reckless disregard of their contractual obligations to ensure compliance with the prevailing wage laws. An investigation by the Attorney General’s Office found that, despite their legal and contractual obligations to do so, these entities and individuals failed to ensure that the workers on the project were paid the required prevailing wages and, in fact, that at least some of the workers on the project were not paid as required by law.
The Attorney General’s investigation relates to Aleem and West 131’s participation in the Neighborhood Entrepreneurs Program of the New York City Department of Housing Preservation and Development (HPD), in which private developers renovated and resold deteriorated City-owned buildings. The project was funded in part with federal monies and, as a consequence, federal prevailing wage laws applied.
As part of the settlement agreement, the Attorney General secured commitments from Aleem and West 131 to submit to extensive compliance, remediation, and training requirements. The Attorney General’s Labor Bureau will actively monitor their adherence to these requirements.
The settlement stems from a joint enforcement effort with the United States Department of Labor (“USDOL”) in which the two agencies worked collaboratively to protect the rights of workers in New York. The USDOL previously obtained a settlement of $189,000 from Aleem and its owner based on prevailing wage underpayments, and this payment will be credited toward the amount owed under today’s settlement.
“Contractors commit to paying workers the required wages and fringe benefits when they bid on federally funded construction contracts with taxpayer funds,” said Regional Administrator Mark Watson, Jr., U.S. Department of Labor, Wage and Hour Division. “Failure to pay prevailing wages deprives workers the wages they have earned, and gives an unfair advantage over employers who obey the law.”
James W. Versocki of Archer, Byington, Glennon & Levine LLP represents the Laborers Eastern Region Organizing Fund of the Laborers International Union of North America (“LIUNA”), the relator in this matter. The Attorney General thanks the Laborers Eastern Region Organizing Fund for alerting his office to these serious violations of the law and for assisting the OAG in its investigation.
Robert Bonanza, Business Manager of the 17,000 Member Mason Tenders District Council Of Greater New York, LIUNA said, “With the announcement of this first ever prevailing wage case settlement under the New York False Claims Act, Attorney General Schneiderman has shown that wage theft can be combatted through partnerships with whistleblowers, such as the Laborers Eastern Region Organizing Fund. On a daily basis we see the effects of wage theft on workers and their families, and once again the Attorney General has shown his commitment to protecting working people.”
LEROF will utilize its share of the proceeds from the case to continue its mission of worker advocacy and outreach.
The Attorney General thanks the New York City Department of Housing Preservation and Development and the New York City Law Department’s Affirmative Litigation Division for their assistance in this investigation.
The investigation leading to the settlements announced today was conducted by the Taxpayer Protection Bureau, which Attorney General Schneiderman established in 2011 to combat the fraud and abuse of taxpayer dollars, and by the Attorney General’s Labor Bureau.
