Suburban Chicago Contractor Execs Plead Guilty to Wage and Benefit Fraud

Road construction laborersContractors over the years have devised numerous ways of fleecing unionized workers out of their wages and benefits. Joseph Lampignano and John Traversa probably rank as among the more creative of the bunch. On June 3, Lampignano, co-owner and vice president of a Chicago-area construction firm, A Lamp Concrete Contractors Inc., pleaded guilty in U.S. District Court for the Northern District of Illinois to one count of mail fraud for the purpose of facilitating a scheme to avoid paying workers about $2.6 million in wage and benefit contributions. Traversa, the company superintendent, pleaded guilty that same day to one count of lying to investigators. Each had been charged on May 18. The actions follow a joint probe by the FBI, the Labor Department and the Cook County Sheriff’s Office.

A Lamp Concrete Contractors, based in the northwest Chicago suburb of Schaumburg, Ill., was a successful road builder. Part of its success, unfortunately, owed to its practice of stiffing dues-paying workers out of wages and benefits. The company and an affiliate of the Laborers International Union of North America had a collective bargaining agreement in force for a number of government-funded road construction projects. Lampignano, 43, a resident of Itasca, Ill., had other plans. During 2008-13, in violation of the agreement, he allegedly underpaid employees by more than $1.5 million. He also underreported the number of hours they worked, so as to minimize contributions to their union pension and welfare funds. The benefits avoidance resulted in account shortfalls in excess of $1 million.

A number of laborers grew suspicious. In response, their union filed suit demanding back compensation. Eventually, in 2013 the union and the contractor reached an out-of-court settlement, in which A Lamp Concrete Contractors would pay about $1.5 million. Management was not happy about writing those checks. Following their distribution, Joseph Lampignano demanded around $140,000 in kickbacks from two dozen workers. He had provided Giovanni “John” Traversa, now 46, a resident of Bartlett, Ill., with a list of the names of workers from whom he wanted payments, specifying the amounts sought. After paying $545,357 in back wages to two dozen employees, Lampignano and Traversa requested that the workers repay a portion of their settlements. This resulted in “contributions” from 11 employees in the combined sum of around $64,000. At that point, workers, through their union, filed a federal criminal complaint. In January 2014, agents from the FBI and the U.S. Labor Department’s Office of Inspector General interviewed Traversa about his role in soliciting the kickbacks. Traversa responded that he had no knowledge of the scheme. The feds smelled a lie.

It only was a matter of time before the contractor’s house of cards would come down. On June 3, Lampignano pleaded guilty to one count of mail fraud in the court of U.S. District Judge Sara Ellis. On the same day, Traversa pleaded guilty to one count of lying to federal investigators. Sentencing guidelines recommend prison sentences of 51 to 63 months for Lampignano and 12 to 18 months for Traversa. Yet they might avoid serving time given that prosecutors acknowledged the defendants’ promptness in pleading guilty and their “recognition and affirmative acceptance of personal responsibility for their criminal conduct.” Each has been free after posting $4,500 bond. Sentencing is scheduled for September 20.

This case wasn’t A Lamp Concrete’s first trip to court. Back in 2008 and 2011, the company was cited and fined a combined $170,000 for trench safety violations. But the company was truly prolific when it came to filing suit themselves. Back in 2006, the firm sued the City of Brookfield, Ill. over not having been awarded an expected contract. Brookfield attorneys said that A Lamp had filed 55 lawsuits during 1999-2005, a key reason for the City’s rejection of the bid. Lampignano’s attorney in the current case is Joseph Duffy, perhaps best known for defending Tony Rezko, the political fundraiser for former Illinois Democratic Governor Rod Blagojevich, now doing time in federal prison on corruption charges. Rezko himself was convicted in 2011 for extorting funds from state contractors. With the convictions this June, A Lamp might see the light.