Navillus CEO temporarily steps down amid fraud allegations

The CEO of Navillus Contracting is temporarily stepping down amid claims that he and others cheated various construction unions out of more than $1 million.

In an Aug. 3 letter to clients, obtained by The Real Deal, Donal O’Sullivan said he — along with his sister Helen O’Sullivan, the company’s treasurer, and Padraig Naughton, Navillus’ comptroller — will “temporarily step aside.”

The three were indicted last week on charges that they schemed to avoid making more than $1 million in payments to union benefit funds between 2011 and 2017. Navillus’ chief of operations, Colin Mathers, will take over as interim CEO, according to the letter.

“These allegations are against us personally, and we have no choice but to commit ourselves to clearing our names,” O’Sullivan states in the letter.

O’Sullivan notes that while his company has “worked hard over the past three decades to build strong relationships with the vast majority of New York unions,” there are “a select few who seem determined to tear apart the Navillus family.”

Representatives for the company declined to comment.

According to the indictment, the O’Sullivans and Naughton paid more than $7.2 million to a consulting firm for construction work that it did not perform. 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 authorities. Navillus’ collective bargaining agreements required the use of union labor and contributions to the unions’ benefit funds, according to the indictment.

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.

In Monday’s letter, O’Sullivan states that Navillus paid $204 million to union benefit funds between 2011 and 2017 and that the indictment “falsely claims that unions were shorted by less than one-half of one percent of that amount.”

The last few years have been challenging for Navillus. The company emerged from bankruptcy in 2018 after settling 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, one of the city’s largest concrete contractors, 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 civil judgment in that case was initially $76 million, but Navillus ultimately had to pay $25.7 million.

Write to Kathryn Brenzel at kathryn@therealdeal.com