A Chicago-area contractor that claims such clients as the Chicago Public Schools, Metra and the U.S. Dept. of Defense faces allegations it used sham front companies to keep employees off its payroll and avoid paying fair wages and taxes. Illinois Attorney General Kwame Raoul filed a lawsuit against Drive Construction Inc. Aug. 31 over the alleged scheme.
Officials say Bridgeview, Ill.-based Drive created a network of pass-through entities, which it used to funnel millions of dollars in illegally disguised wage payments between 2015 and 2020. The scheme enabled Drive to dodge paying legally required prevailing wage, overtime and benefits, according to the complaint filed in Cook County Circuit Court.
Drive worked on more than 100 public projects during the period in question. They included construction of Englewood STEM High School and a Jefferson Park mixed-use development in Chicago, renovations for public transit agency Metra, a library project in Geneva, Ill., and upgrades to public housing in Freeport, Ill.
Drive is led by brothers Gerardo and Eduardo Cortez, who are president and COO, respectively. Prosecutors say Eduardo Cortez and another brother, Jesus Cortez, formed a separate company, Cortez Accurate Construction LLC, in 2014. Officials say Cortez Accurate, and a reorganized entity named Accurate Construction LLC, with a different person acting as its public face, were actually just thinly capitalized fronts formed to shield Drive from liability.
Drive then formed a second layer of shell company subcontractors under Accurate, according to the complaint. Those companies—Infinity Construction LLC, R&L Construction of Illinois Inc. and A Lara Construction Inc.—were run by managers and superintendents employed by Drive. They distributed flat weekly payments to workers by cash or money order to avoid traceability, according to the complaint. The payments did not reflect the workers’ actual hours, and did not reflect Illinois’ prevailing wage or, in cases where employees worked over 40 hours in a week, its overtime laws.
Paying the workers in cash misclassified them as independent contractors, depriving them of rights under state law and depriving the state of income tax withholdings and unemployment insurance, the complaint states. Drive also created “an uneven playing field and undercut law-abiding businesses,” officials wrote.
“Misclassifying employees as independent contractors deprives workers of their right to be paid fairly and to be covered by workers compensation insurance in the event of workplace injuries,” Raoul said in a statement. “Employers that gain a competitive advantage by paying workers off the books and in violation of Illinois law create an uneven and unfair playing field for law-abiding businesses.”
Drive did not immediately respond to inquiries about the case.
Investigators said they traced payments from Drive, to Accurate, to the other companies, which split funds into $1,000 payments at a currency exchange business. Still, while the attorney general’s office was investigating the case, the defendants swore they had no communication with Accurate, officials said in the complaint.
Raoul’s office said in a statement that it was tipped off by the Mid-America Carpenters Regional Council, which has a collective bargaining agreement with Drive.
“The carpenters union aggressively pursues wage theft cases because they hurt working families, they hurt Illinois taxpayers and they hurt our signatory contractors who play by the rules and are at a major disadvantage against unscrupulous contractors who lowball bids by cheating the system,” Gary Perinar, executive secretary-treasurer of the union regional council, said in a statement.
The attorney general’s office is asking the court to award relief including return of any “ill-gotten gains,” plus an order for the defendants to submit to monitoring of their payment and record keeping practices.