Preet Bharara, the United States Attorney for the Southern District of New York, Rose Gill Hearn, the Commissioner of the New York City Department of Investigation (“DOI"), Robert Panella, the Special Agent-in-Charge of the New York Field Office of the U.S. Department of Labor's Office of Inspector General, Office of Labor Racketeering and Fraud Investigations ("DOL-OIG"), and Vanessa Jones-Allen, the Assistant Special Agent-in-Charge of the New York Area Office of Criminal Enforcement for the United States Environmental Protection Agency ("EPA") announced the filing of a four-count criminal Complaint charging JOVER NARANJO, the owner and president of Enviro & Demo Masters, Inc. (“Enviro"), and his father, LUPERIO NARANJO, SR., a foreman for Enviro, for allegedly perpetrating a scheme to underpay employees in violation of the federal prevailing wage law. NARANJO and NARANJO, SR. were arrested this morning in Queens, New York, and are expected to be presented in Manhattan federal court before U.S. Magistrate Judge Ronald L. Ellis later today.
Manhattan U.S. Attorney Preet Bharara said: “Federal contracts come with certain legal obligations, and in this case, one of them was to pay the prevailing wage - a legal requirement this father and son allegedly violated. Protecting workers and ensuring that federal funds are not abused by dishonest contractors is a priority of this office."
DOI Commissioner Rose Gill Hearn said: “These defendants worked overtime to spin a web of lies around their employees and the City taxpayers, according to the criminal complaint. Their charged conduct is not the way to do business in New York City. DOI was pleased to join its federal partners to expose and stop the fraud and protect workers."
DOL-OIG Special Agent-in-Charge Robert Panella said: “Today’s charges are the result of our commitment to investigate those who would allegedly falsify payroll records to avoid paying their workers the required prevailing wage. The Office of Inspector General will continue to work closely with its law enforcement partners to this end."
EPA Assistant Special Agent-in-Charge Vanessa Jones-Allen said: “Through the course of this investigation, we were able to uncover an illegal scheme and stop a business owner who cut workers’ pay and benefits to make a profit. While EPA federal agents focus on investigating allegations of environmental crimes, we also readily provide support and expertise to our state and federal colleagues in developing cases that protect Americans from criminal activity that threatens their lives or livelihoods."
According to the Complaint unsealed earlier today in Manhattan federal court:
In August 2009, NARANJO was awarded a sub-contract by the general contractor on a New York City project to demolish buildings in Upper Manhattan (the “Contract") that was federally-funded. From August 2009 through February 2010, he and NARANJO, SR. participated in a scheme to submit fraudulent certified payrolls to the New York City Department of Housing Preservation and Development (“HPD") in connection with the Contract.
The fraudulent certified payrolls indicated that Enviro was paying its employees the federal prevailing wage, as required by federal law, but in reality, they were being paid far less. Although the lowest applicable federal prevailing wage for Enviro employees working on the Contract was $20.74 per hour for demolition laborers, NARANJO and NARANJO, SR. paid their demolition workers as little as $13 per hour. In the six-month period charged in the Complaint, the total amount of salary underpaid by NARANJO and NARANJO, SR. to Enviro employees working on the Contract was in excess of $650,000.
NARANJO and NARANJO, SR. took a number of steps to conceal their fraud. For example, they told their employees to lie about their identities, work schedules, and pay rates if they were questioned by investigators. When an employee truthfully told investigators that the employee was paid below the prevailing wage, NARANJO and NARANJO, SR. fired the employee and the employee’s relative.
On certain occasions when the defendants did pay their employees the prevailing wage, it was part of a kickback arrangement. The defendants paid the prevailing wage by check to document their supposed compliance with the law, but then required employees to return the portion of the check that was above and beyond the employees’ illegally low wage.
NARANJO, 36, and NARANJO, SR., 65, both of Queens, New York, are each charged with one count of mail fraud, conspiracy to commit mail fraud, witness tampering, and conspiracy to commit witness tampering. Each faces a maximum total sentence of 65 years in prison if convicted.
Mr. Bharara praised the investigative work of DOL-OIG, DOI, and the EPA.
The case is being handled by the Office’s Public Corruption Unit. Assistant United States Attorney Alvin Bragg is in charge of the prosecution.
The charges contained in the Complaint are merely accusations and the defendants are presumed innocent unless and until proven guilty.
Source: U.S. Department of Justice, Office of the United States Attorneys
