December 30, 2011: The owners of a New York City construction and demolition debris trucking contractor have been indicted on charges that they engaged in a scheme to skirt a collective bargaining agreement and embezzle more than $1 million in union benefit fund payments, prosecutors announced Dec. 22. (United States v. Fusella, E.D.N.Y., No. 11-CR-844, indictment issued 12/22/11).
In an indictment unsealed in the U.S. District Court for the Eastern District of New York, defendants Gerardo P. Fusella and Vincent J. Fusella Jr. were charged with embezzlement, mail fraud, tax violations, and other crimes in the alleged scheme. Their companies, Fusella Group LLC and Alpine Investment Group Inc., trucked debris between construction sites and landfills in New York City, Long Island, New Jersey, and elsewhere, prosecutors said.
The alleged scheme, running from 2007 to 2009, stemmed from a 2007 contract to remove dirt and debris from the World Trade Center reconstruction site in lower Manhattan, prosecutors said.
The contract required the company to pay hourly wage rates and make contributions to union welfare, pension, annuity, job training, and vacation and sick leave trust funds as specified in a 2007-2008 collective bargaining agreement with International Brotherhood of Teamsters Local 282, based in Lake Success, N.Y., they said. Fusella Group submitted false certifications that it had paid union wages and benefits, they charged.
Allegedly Bribed Shop Steward
The contractor also paid off a union shop steward to allow it to hide the true work hours of drivers to avoid the contract requirements, prosecutors charged. In 2008, the owners began shifting a substantial portion of their trucking business to Alpine Investment to avoid making benefit fund payments in violation of the Employee Retirement Income Security At, prosecutors alleged.
They kept more than $1 million in fund payments for themselves in 2009, embezzling the money, prosecutors said.
Operating a union company and a nonunion company within Local 282's jurisdiction violated the labor contract, the indictment said. The owners operated the two companies out of the same East Hanover, N.J., yards, using the same drivers, mechanics, and office employees, according to the indictment.
The owners also were charged with avoiding payroll tax and Social Security deductions by classifying truck drivers as independent contractors. They also failed to report salary paid to their office workers and mechanics, prosecutors charged. Instead, the owners reported the pay as deductible business expenses, the indictment said.
Overall, the owners failed to make more than $150,000 in Social Security contributions between 2007 and 2009, prosecutors alleged.
“It is imperative that employers provide the wages and benefits to which their employees are legally entitled,” U.S. Attorney Loretta Lynch said in a statement. ‘‘America's workers rely on their benefit funds to set aside hard-earned dollars for an uncertain future. They rely on their employers to properly move monies into those accounts on their behalf, as required by law.”
Investigators Cite Deterrence
Robert L. Panella, special agent-in-charge of the New York regional office of the Office of Labor Racketeering and Fraud Investigations in the U.S. Department of Labor's Office of Inspector General, said, “Today's indictment should serve as a deterrent to those who would defraud unions and their employee benefit funds and submit false wage and tax documents in order to conceal their crimes. These alleged actions were done for personal enrichment.”
Douglas Shoemaker, special agent-in-charge of New York investigations in the U.S. Department of Transportation's Office of Inspector General, said that the probe “demonstrates that ensuring employment integrity in the transportation industry is a top priority” in his office and the department.
Representatives of the defendants could not be reached for comment.
Text of the indictment may be accessed here.
By John Herzfeld BNA Daily Labor Report.