Three Queens construction companies forced to pay back thousands to employees due to payroll fraud

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Three Queens-based construction companies pleaded guilty today to misclassifying their workers in the payroll to avoid paying them overtime.

According to New York State Attorney General Eric Schneiderman, the employees at these companies lost out on thousands of dollars in wages. Lotus-C Corporation, Johnco Contracting Inc. and RCM Painting Inc. all committed payroll fraud by classifying full-time painters and carpenters as contractors.

Schneiderman’s investigation found that between 2012 through 2017 the companies repeatedly failed to pay overtime to more than 150 employees. The employees were required to sign a form identifying themselves as independent contractors even though under New York state labor laws, they were considered employees.

The companies also underreported the number of employees working at these corporations during this period and also falsified their New York State Quarterly Combined Withholding, Wage Reporting and Unemployment Insurance Return forms, which led to “significant” underpayment of unemployment contributions to the Department of Labor.

The companies, located in Jackson Heights, Bayside and Maspeth, respectively, pleaded guilty to felony counts of fourth-degree grand larceny and first-degree falsifying business records.

As part of the plea agreement, the companies are required to pay a total of $371,447.01 for unpaid wages and $359,747.86 in unpaid unemployment contributions to the New York State Department of Labor.

The defendant corporations are also required to dissolve the businesses. The principals of the corporations, Cesar Agudelo of Lotus-C Corp. and John Massino of RCM Painting Inc. and Johnco Contracting Inc., will be barred for five years from bidding on public works contracts in New York.

“Led by pure greed, the defendants in this case attempted to sidestep the law — misclassifying their employees as a way to stiff them on the overtime pay they rightfully earned,” Schneiderman said. “My office will continue to crack down on those who seek to steal from their workers in order to line their own pockets.”



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