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Sep
2011
21

$21 Million Lawsuit Filed by Unions Against Fraudulent, Wage-Dodging Developers



Yesterday, leaders of the Metallic Lathers Union Local 46 and the Mason Tenders District Council of NYC, Laborers International Union of America (LIUNA) held a press conference announcing their multimillion dollar racketeering lawsuit against Lalezarian Developers, JMH Development and the principals of HRH Construction. The suit claims that these major NYC developers conspired to rip off union workers for millions of dollars in wages and benefits. If found guilty, the developers will be forced to pay out more than $21 million under the federal Racketeer Influenced Corrupt Organization (RICO) Act. According to the Metallic Lathers Union Local 46,

From 2007 through 2011 NYC builders Lalezarian Developers and JMH Development conspired with unionized construction manager HRH Construction to knowingly violate the company’s collective bargaining agreements and illegally perform millions of dollars of construction work under the guise of a phony non-union alter-ego firm named Leviathan Construction Management. The projects identified in this suit are:

• The Townsend at 350 West 37th St, built by Lalezarian Developers;

• Brooklyn Gold at 235 Gold St in Brooklyn, built by Lalezarian Developers; and

• 184 Kent Ave in Brooklyn, built by JMH Development.

As a result of this conspiracy, the developers along with HRH’s principals, cheated workers out of more than seven million in wages and benefits that should have been paid to union members and their funds under HRH’s collective bargaining agreements. If found guilty under federal racketeering law, these developers will be forced to pay triple damages which could total more than $21 million.

NYC Unions are sending a strong message with this specific lawsuit, but it is not the only case like it in New York. Many developers are constantly toeing the line when it comes to overtime and benefits. This case, however, is on a much larger scale. Joining the union leaders at the conference was council member Steve Levin who represents the area of the 184 Kent Avenue Project. Levin said,

“Developers like Lalezarian and JMH need to respect the rights of working people. I am standing with Local 46, the Mason Tenders and all NYC unions to confront this kind of illegal behavior.”

The lawsuit lays out details of the Singer family criminal enterprise. HRH had to pay the MTA $6.5 Million in 2007 for overbilling the agency while doing a major project for them. Gary Singer spent two years in jail after being found guilty in 1994 for fraud, money laundering and racketeering related to a junk bond insider trading scheme.

Local 46 discovered the alleged offenses while investigating HRH’s bankruptcy. According to the representatives for Local 46,

“The union uncovered specific documents and communications between the various developers and HRH which demonstrate the ongoing conspiracy to perform HRH’s work under the phony alter ego Leviathan, to illegally transfer money from HRH to Leviathan and to defraud union members out of millions in wages and benefits.

“It’s very clear that HRH joined with these developers to fraudulently avoid the obligations of the collective bargaining agreements it signed,” said Tom Kennedy, partner in the law firm Kennedy, Jennik and Murray, who is bringing the case on behalf of the unions. “The dummy corporation, Leviathan, is owned and controlled by the same family, the Singers, who own HRH, and Brad Singer, the CEO of HRH, even admitted this under oath. It’s a particularly shameful ploy at a time of great economic turmoil and hardship for American workers,” he added.”

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