Public Works Contractor To Forfeit Profits
Attorney General Spitzer today announced that he has reached an agreement that requires a Rensselaer County company to forfeit any profits made on public work contracts that it should not have obtained.
Spitzer concluded that the company, Authority LLC of Troy, was formed in an attempt to evade a previous debarment order of the State Commissioner of Labor.
An investigation by the Attorney General’s office found that the new company is a successor and affiliate of LaCorte Inc., an electrical contractor that was barred in May 2000 from performing public work jobs in New York State, based on its willful violations of the state’s prevailing wage law.
Under the terms of the agreement, Authority LLC must discontinue business and forfeit profits on illegally obtained public work contracts.
"A contractor that is debarred from performing public work cannot avoid penalties by hiding behind a successor company or related entity formed to continue public work operations," Spitzer said. "We take debarment provisions of the prevailing wage law seriously and any company attempting to violate this law should know it will be pursued and forced to forfeit any ill-gotten profits."
Spitzer’s settlement is the first time a contractor has been forced to forfeit profits on public work contracts obtained illegally. In 1998, New York enacted legislation to strengthen labor-law protections by extending debarment of companies that knowingly fail to pay prevailing wages to substantially-owned affiliated entities, shareholders and some company officers.
LaCorte Inc. was reportedly the largest electrical contractor in upstate New York when it was barred from accepting public work projects for a period of five years. Immediately following the debarment, Authority LLC was formed to carry out projects for LaCorte's public work clients, using LaCorte's managers, workers, equipment, funding and reputation. LaCorte was debarred as a contractor for failing to pay prevailing wages and benefits to employees on public work projects. At the time of the debarment order, public work was reportedly more than one-third of LaCorte’s business.
The Attorney General's investigation revealed that LaCorte's sole owner, Eileen LaCorte, established a trust in June 2000 with her children as the beneficiaries. The trust became the owner of the newly formed Authority LLC. The new company hired employees and managers from LaCorte and immediately took on millions of dollars in highway electrical work from which LaCorte had just been barred, despite having no work record or credit history, virtually no funding and no equipment of its own.
The case is being handled by Assistant Attorney General Seth Kupferberg in the AG’s Labor Bureau, under the direction of Labor Bureau Chief M. Patricia Smith; and Assistant Attorney General Richard Ernst in the AG’s Criminal Prosecutions Bureau.