Contractor to Pay Stiffed Workers $1 Million, Three Others Jailed

Attorney General Eric Schneiderman announced, "My office will aggressively pursue contractors who cheat workers and taxpayers. One general contractor will pay nearly $1 million to laborers underpaid for work on a taxpayer-funded affordable housing project in Brooklyn, while a Bronx contractor was arrested for ripping off workers at a project funded by taxpayers. The owner and two employees are accused of cheating workers out of hundreds of thousands of dollars in wages and forcing some to pay kickbacks. Prevailing wage laws seek to ensure that government contractors pay wages and benefits comparable to the local norms for a given trade, hold general contractors responsible for underpayments by their subcontractors. Both projects were subject to prevailing wage requirements.

Attorney General Eric Schneiderman announced the resolution of an investigation into the labor practices of public-works contractor Procida Construction based on its own underpayments and those by a subcontractor during the construction of two affordable housing projects in Brooklyn.

The Attorney General’s agreement requires Procida to pay back wages totaling $830,000 based on violations by the corporation’s subcontractor, which paid below the mandated prevailing wage rate at the Riverway project in Brownsville.

The company will also pay $100,000 to its own employees for work at a second project, in Crown Heights, and $50,000 in penalties to the State.

“My office will aggressively pursue contractors who exploit affordable housing projects to line their own pockets by illegally underpaying workers,” Attorney General Schneiderman said. “Subcontracting out the work on a taxpayer-funded project does not free the general contractor from the obligation to ensure that workers on site are paid their due. Procida will be held accountable for its own violations and for lax oversight of its subcontractor’s practices.”

From October 2011 through October 2012, during construction of the Riverway affordable housing project, at 230 Riverdale Avenue, Procida’s subcontractor paid more than 30 workers far below the wage required by law. The subcontractor failed to pay overtime, failed to pay the required prevailing wages, and violated other applicable labor laws. In addition, between December 2007 and April 2010, Procida itself underpaid four employees at a Crown Heights affordable housing project located at 1055 St. John’s Place.

Most workers will receive between $10,000 and $30,000, depending on the total number of hours they worked without receiving proper compensation.

The settlement contains measures to ensure labor law compliance by Procida and its subcontractors in the future, including independent monitoring of its labor practices on public work projects for two years, with unannounced on-site inspections. In addition, Procida’s contracts with any subcontractor on public or private construction projects must state that compliance with labor laws is a material term of the contract and that the subcontractor may be terminated if it does not fix labor law violations brought to its attention.

Procida must also notify the Attorney General’s Office of any accepted bids to perform work on projects subject to prevailing wage laws and must refrain from using debarred subcontractors on public or private construction jobs.

In an unrelated case, Mohammad Riaz, Mohammad Arshad and Zbigniew Likomiec were arraigned in Bronx Supreme Court for a scam that cheated workers out of hundreds of thousands of dollars in wages and forced some to pay kickbacks. Each could face up to 15 years in prison

Prosecutors say Applied Construction, Inc. underpaid workers, doling out cash off the books between November 2011, and September 2012, at a Bronx restoration site covered by prevailing wage laws.

"Affordable-housing contractors cannot ignore New York State’s labor laws,” Attorney General Eric Schneiderman said.

The takedown, the second such corruption scheme exposed this week, is the latest scandal marring projects by the city Department of Housing Preservation and Development.

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