Construction unions file racketeering suit against two developers, contractor

September 21, 2011 08:52AM

Two New York City construction unions filed a racketeering suit in federal court in White Plains, N.Y., alleging that Manhattan-based JMH Development and Long Island-based Lalezarian Developers colluded with HRH Construction to cheat workers out of $7 million in wages and benefits over the past four years, Crain’s reported.

According to the suit, filed by Metallic Lathers Union Local 46 and Mason Tenders District Council, the developers directed payments that should have gone to HRH Construction, once one of the city’s largest union contractors, to a dummy organization established by the three parties. The dummy company, Leviathan Construction, paid nonunion workers $12 an hour without benefits, instead of the union rate of $55 with benefits.

HRH was already fighting fraud allegations in connection with Leviathan. Separately, HRH reportedly overbilled construction costs for MTA projects, and was ordered to pay the agency $6.5 million before filing for bankruptcy in 2009.

JMH Development, one of the developers named in the suit, has developed several projects across the city including the rental building at 184 Kent Street. [Crain’s]