Ex-Navillus CEO sentenced to prison in union scheme

Former Navillus CEO Donal O’Sullivan was given six months in prison for his role in a scheme that prosecutors say cheated construction unions out of more than $1 million.

O’Sullivan was sentenced on Friday and ordered to report to prison term on Nov. 13. His sister, Helen O’Sullivan, the firm’s former treasurer, was also sentenced this week to two years of probation.

Navillus’ former comptroller, Padraig Naughton, faces one year in prison. Restitution in the case has not yet been determined, though the judge found that the unions lost out on $1.2 million.

“The sentences reflect the Court’s understanding of the context of the case given Donal and Helen’s lifelong service to others,” Ilene Jaroslaw, an attorney for O’Sullivan, said in a statement. “Both Donal and Helen are fundamentally good people who still have more to contribute to the good of society.”

The trio were convicted in October 2021 on multiple counts of wire fraud, mail fraud, embezzlement from employee benefits funds, submission of false remittance reports to union benefits funds and conspiracy to commit those crimes.

The three were accused of scheming to avoid making payments to union benefit funds between 2011 and 2017. Despite having a collective bargaining agreement that required the use of union labor and contributions to the unions’ benefit funds, the trio funneled more than $7.2 million to a consulting firm, Allied, for construction work that it did not perform, authorities said.

Allied then paid certain Navillus employees with these funds, hiding hours worked by those employees from the union benefit funds.

In a sentencing memorandum on O’Sullivan’s behalf, his attorneys enumerated his charity work over the years and said he gained respect in the industry as he built up Navillus from a tile and masonry business launched in the late 1980s. The firm eventually grew to one of the city’s largest concrete contractors, performing work for signature towers such as SL Green Realty’s One Vanderbilt.

“Donal spent his life building a company that grew from a small subcontractor to an important New York City construction company, providing employment and opportunities to thousands of working men and women — and since his arrest he can work there no longer,” his attorneys wrote.

“Taking this away from me was like taking a child away from its mother; that’s what it felt like after my indictment,” O’Sullivan said, according to his lawyers.

The memorandum also calls the case “highly unusual,” pointing to other fraud cases against construction giants that did not result in any criminal charges against individuals.

In a sentencing memo, prosecutors point to the “brazen, methodical, and long-running nature of the criminal scheme.” They also scold O’Sullivan for downplaying the case as a “breach-of-contract civil dispute.”

“This is not a situation involving a bona fide dispute over the terms of a particular [collective bargaining agreement]. The defendant and his co-conspirators deliberately and painstakingly hid a portion of their payroll from the Benefits Funds for the sake of avoiding contribution payments for a period of years,” the memo states.

Unions whose benefit funds involved in the case 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.

Navillus is now led by Colin Mathers, who had been chief operating officer.

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 of using an alter-ego company owned by O’Sullivan’s brother, Kevin, to evade agreements to use union labor on its projects.