Construction company skirted workplace law, DA says

A Bethlehem construction firm will be charged with violating Pennsylvania's Construction Workplace Misclassification Act and one of its principals will be charged with perjury following a Northampton County investigative grand jury's probe.

District Attorney John Morganelli said he is disappointed he can only charge Salukas & White with a misdemeanor, although Mark White will face a felony charge of perjury in addition to being charged with violating the act.

The company, based at 741 E. Ettwein St., was funneling hundreds of thousands of dollars through a pair of middlemen -- Tony's Drywall and Robert Leuber Drywall -- who then paid unauthorized workers in cash, Morganelli said.

In essence, the workers were employed by the company but were misclassified and paid as if they were independent contractors, Morganelli said.

A person who answered the phone Monday afternoon at the company said White was not available and the company had no comment.

Morganelli said the two "sham contractors ... acted as ATM machines paying workers" and saving the company from paying various taxes, including local fees and unemployment insurance.

The grand jury investigation began in April 2014 and covered the years 2011, 2012, and 2013, Morganelli said.

Jurors heard from a former company employee, two "so-called subcontractors" and a current employee, Morganelli said. Grand jurors determined those people gave credible testimony, while White did not, Morganelli said.

Charges will be filed over the next few days, according to Morganelli. Due to the nature of the charges, Morganelli said, he won't contest those charged being released on unsecured bail.

Over three years, authorities said, Antonio Garcia initially did business as Tony's Drywall and later funneled money to Robert Leauber Drywall, a company that wasn't on the job sites. Garcia, whose American wife would cash the checks, helped deliver $302,557, $281,000 and $300,697 -- minus a 10 percent cut to the subcontractor— to off-the-books workers, Morganelli said.

Garcia was actually an employee of Salukas & White and he and his wife testified before the grand jury, Morganelli said. Garcia will not face charges because he cooperated with the investigation, Morganelli said. Garcia admitted that some of the testimony he initially gave the grand jury was not truthful, the grand jury's report says.

The grand jury found Mark White "may have intentionally attempted to mislead the grand jury and provided inaccurate and false testimony regarding important and material information being investigated including stating he had no knowledge whatsoever of Leauber Drywall acting as a 'middleman' and/or taking a percentage or cut."

Larry Salukas, speaking with immunity before the grand jury, confirmed the 10 percent cut, according to the grand jury's report.

The grand jury also didn't believe White when he said he didn't know the individuals associated with Tony's Drywall. The company's clerk testified White issued payments to the people doing business as Tony's Drywall, and Garcia and his wife would come into the company to pick up their checks, Morganelli said.

In addition to recommending criminal charges against White and the company, the grand jury suggested the act be reviewed by the Legislature and it consider providing more resources to enforce the act and increase fines.

It can be cheaper, Morganelli said, to violate the law and pay a fine than to do business properly. The fine on the criminal side is $2,500 per instance and on the civil side, $1,000 per instance, Morganelli said.

The state Department of Labor and Industry should do spot-checks on the company to insure future compliance with the law, the grand jury said.

Complaints from local building trades pointed the grand jury toward Salukus & White, Morganelli said.

Kevin Lott, the business agent for the Lehigh Valley Carpenters Union Local 600, said after the news conference that the violations are "very unfair to the taxpayers and the businesses that play by the rules."

Lott and three other members of area unions sat in on the news conference.

Lehigh Valley carpenters union official Kevin Lott says paying workers under the table is "rampant" at some companies.

"This is one isolated case," Lott said. "It's a rampant practice of nonunion companies."

He claimed Salukas & White was doing something similar on a Monroe County job.

The company does mostly specialty work — such as drywall — in commercial settings such as hospitals and colleges, Morganelli said.

"We appreciate the district attorney looking into this," Lott said, adding that the unauthorized workers never earn money toward Social Security or Medicare. "It's something we run into all the time. ... It's a shame that (the charges are) misdemeanors, but they've got to start somewhere."

Lott, who testified before the grand jury, said scams such as the one the grand jury alleges came about early this century when companies were determining how to pay people who were not authorized to be in the United States.

"These people are being exploited," Lott said of the off-the-books workers.

Source: Lehigh Valley Live