Navillus CEO, sister arrested in $1M scheme to cheat unions

After emerging from bankruptcy and paying a massive settlement to construction unions, Navillus Contracting faces criminal charges that its president and his sister bilked more than $1 million from various construction unions.

Navillus treasurer Helen O’Sullivan (Image via Navillus)

Donal O’Sullivan and his sister Helen O’Sullivan, the company’s treasurer, were arrested Thursday for allegedly scheming to avoid making payments to union benefit funds between 2011 and 2017, according to an indictment filed in Brooklyn federal court.

Despite having a collective bargaining agreement that required the use of union labor and contributions to the unions’ benefit funds, the O’Sullivans allegedly plotted to funnel more than $7.2 million to a consulting firm for construction work that it did not perform, authorities said. The consulting firm then paid certain Navillus employees with these funds, thereby concealing from the union benefit funds how many hours these employees worked — and how much the union was owed, according to the indictment. Navillus’ comptroller, Padraig Naughton, also faces charges related to the alleged scheme.

Attorney Sean O’ Shea, who is representing Donal O’Sullivan, called the indictment “a civil case dressed up in other garb.” He said the allegations were false, and he expects “full vindication at a jury trial.”

“It’s pretty sad when the government decides to act as a collection agency for these unscrupulous unions,” he said.

Unions whose benefit funds were allegedly circumvented include New York City District Council of Carpenters, Cement Masons, Mason Tenders, International Brotherhood of Teamsters 282, Cement and Concrete Workers District Council, Bricklayers and Allied Craft Workers Local Union No. 1 and the Pointers, Cleaners and Caulkers.

The arrests come after Navillus, one of the city’s largest concrete contractors, emerged from bankruptcy and settled what was considered a significant union lawsuit. In 2017, a federal judge ruled in favor of five union benefit and pension funds that had accused Navillus of using an alter-ego company owned by Donal O’Sullivan’s brother, Kevin, to evade agreements to use union labor on its projects. Navillus filed for bankruptcy two months after that ruling and appealed. The judgment in that case was initially $76 million, but Navillus ultimately had to pay $25.7 million.

The civil case was viewed as a warning to companies seeking to avoid the expense of organized labor — sometimes improperly — as competition from nonunion contractors increased. That case was brought by the pension and benefit funds of the International Operating Engineers and some of its local unions.

Navillus has worked on a number of major projects in Manhattan including the 9/11 Memorial and Museum, SL Green’s One Vanderbilt, Brookfield Properties’ One Manhattan West and the Eugene, and World Wide Group and Rose Associates’ 252 East 57th Street.

Write to Kathryn Brenzel at kathryn@therealdeal.com