Chicago Laborers Contractor Pleads Guilty to Benefit Fraud, Wage Theft

liuna logoRipping off union benefits is big business. In the case of Yashvant Patel, that wasn’t even half the story. On August 11, Patel, a Chicago-based contractor, pleaded guilty in U.S. District Court for the Northern District of Illinois to mail fraud and financial concealment in connection with defrauding employees out of about $600,000 scheduled benefits and $1.3 million in wages. Many if not most of the shortchanged workers were residing illegally in this country. Patel had sought to escape the terms of a bargaining agreement with affiliates of the Laborers International Union of North America. He was arrested in May 2015 and indicted by a grand jury that August on four counts each of mail fraud and false statements. The actions follow a joint probe by the FBI and the Labor Department’s Office of Inspector General.

Yashvant Patel, now in his early 60s, a resident of St. Charles, Ill., owned a pair of construction companies located in Southwest Chicago, My Baps Construction Corporation and Vijay Construction. Each performed concrete and asphalt-related projects for the City of Chicago, among other clients. And each was bound by a collective bargaining agreement with certain affiliates of the Laborers International Union of North America (LIUNA) to pay specified wage rates and monthly contributions to three benefit plans sponsored by the Construction and General Laborers’ District Council of Chicago and Vicinity. As proprietor, Patel controlled operations and finances. According to federal prosecutors, he did more than control; he stole. The result was almost $2 million in never-received wages and benefits.

Nearly a third of the $600,000 withheld represented employee pension, health care and job training benefits subject to the Employment Retirement Income Security Act. According to the indictment: “Beginning not later than in or around January 2009 and continuing through at least October 2010, in the Northern District of Illinois, Eastern Division and elsewhere, Yashvant C. Patel, defendant herein, knowingly devised, intended to devise, and participated in a scheme to defraud and to obtain money and property from the Funds and from the employees of My Baps and Vijay, by means of materially false and fraudulent pretenses, representations, and promises, and the concealment of material facts.” To accomplish this, Patel knowingly underreported around 33,000 hours worked by several dozen employees on U.S. Department of Labor Form 5500 remittance reports.

To achieve the $1.3 million in wage thefts, Patel either paid wages in cash at less than contract levels or underreported the number of hours worked. According to the indictment:

It was further part of the scheme that defendant Yashvant C. Patel caused employees of My Baps and Vijay to work a substantial number of hours, including overtime and weekend hours, and knowingly and fraudulently: (a) caused certain of those employees to be paid in cash, or “under the table,” at wages that were less than those required by the collective bargaining agreements; and (b) underreported hours to the Funds in order to reduce the amount that appeared to be due to the Funds.

It was further part of the scheme that defendant Yashvant C. Patel caused employees of My Baps and Vijay to receive pay stubs that, as defendant Patel knew, fraudulently underreported the number of hours worked by the employees and fraudulently overreported the hourly wage received by the employees in order to deceive the employees and the Funds regarding the wages and benefit contributions to which the employees were entitled under their collective bargaining agreements.

It is important to note that Patel was able to get away with his scheme for as long as he did by hiring people here illegally and thus unlikely to complain. Count One of the indictment cited employees “individuals who were not lawfully entitled to work in the United States.” If Patel was aware of the status of these workers, he also could face prosecution for immigration fraud. There are all too many such cases across the country that await investigation.