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Post date: July 1 2003

Painting Contractors To Pay Over $500,000 In Back Wages

State Attorney General Spitzer and New York City Department of Investigation Commissioner Rose Gill Hearn today announced an agreement with two painting contractors who will pay over $500,000 in back wages to workers who performed work at apartments operated by the New York City Housing Authority (NYCHA).

The joint investigation revealed that Aegean General Contracting, Inc., of Flushing, underpaid eight employees and that Sprucewood Painting Corp, of Massapequa, underpaid 41 employees between 1998 and 2002. The back wages, ranging between a few hundred dollars to over twenty-five thousand dollars, will be paid to the employees with interest from the date of the underpayment.

"The Attorney General's office is committed to pursuing employers who violate New York's labor laws, " Spitzer said, "We will continue to prosecute contractors who exploit workers and violate the law, and seek to debar a contractor from bidding on public work in the future whenever we can do so."

DOI Commissioner Gill Hearn said: "These contractors unjustly chose to enrich themselves rather than pay employees their rightful wages. DOI will not tolerate this type of fraud or other acts of dishonesty and will investigate them with vigor. Upon uncovering any improprieties, DOI will seek to prevent the company in question from obtaining future contracts with the City. Additionally, DOI has been and will continue to work with NYCHA to make sure that its contractors adhere to prevailing wage laws."

Under the agreement, Aegean General Contracting, Inc. and its principal, George Begakis, will pay over $120,000 in back wages and interest to eight laborers. The underpayments arose out of contracts Aegean had with the NYCHA to paint apartments at the Throggs Neck and Breukelen Housing Projects.

The work was subject to federal and state prevailing wage laws, which dictate the hourly rate that must be paid to laborers on public work projects. As a result of the prevailing wage violations uncovered by the joint investigation, a $10,000 penalty was imposed. In addition, Aegean General Contracting, Inc., Aegean Marble Co., Aegean Marble Contracting Co., and any company in which George Begakis is a principal shareholder will be prohibited from bidding on or being awarded any public work contract in New York City or the State of New York until March of 2008.

The investigation of Sprucewood Painting Corp. focused on painting contracts involving NYCHA apartment buildings at Independence Towers, Farragut Houses, Red Hook East and West Houses, the Polo Grounds, Grant Houses, Unity Plaza, and Wagner Houses. Over a four year period, Sprucewood failed to pay its employees the prevailing wages required by law. Forty one employees will be paid $418,909.31 in back wages and interest. As part of the agreement, Sprucewood Painting Corp., and any company in which Nikolaos D. Varelakis, Susan E. Varelakis, or John Varelakis is a principal shareholder will be prohibited from bidding on or being awarded any public work contract in New York City or the State of New York until February of 2007. Sprucewood will also pay $20,000 to cover the cost of the investigation.

The case was handled by Assistant Attorneys General Richard Balletta and James W. Versocki of the Attorney General's Labor Bureau, which is under the supervision of Bureau Chief M. Patricia Smith, along with Department of Investigation Assistant Commissioner Steven A. Pasichow and Judith F. Abruzzo and Irene Serrapica of the New York City Housing Authority Inspector General's office.