A federal judge has dismissed a RICO action brought against the owner of a Burr Ridge-based construction company accused of fraudulently inflating how much it was paying minority subcontractors in order to win contracts for the Chicago Park District.
In November 2014, U.S. District Judge Manish S. Shah determined the plaintiffs in the case, subcontractors Faith Construction 4 Inc. and Annointed Development Inc., failed to state a claim under the federal Racketeer Influenced and Corrupt Organizations (RICO) Act against Thomas W. Girouard and his business, All-Bry Construction, as the plaintiffs failed to demonstrate how the actions they alleged against the defendants actually harmed them.
Faith and Annointed filed suit March 12, 2014, in Cook County Circuit Court against Girouard and All-Bry, as well as fellow named defendants Steven T. Cho, Frances Hofbauer and Lisa J. Finlay. Defendants removed the suit to federal court in April 2014.
The plaintiffs claim the Girouard and his associates for years used falsified documents certifying participation by minority-owned contractors to first win public construction contracts, and then used more faked documents and “connections” in the local governments to skim hundreds of thousands of dollars owed to actual minority-owned subcontractors for themselves.
The suit centers on a series of construction projects at parks in the City of Chicago in the 2009-2010 year. The park improvement projects, for which the Chicago Park District agreed to pay millions of dollars, were all awarded to All-Bry.
Faith Construction 4 and Annointed Development were included on all or most of the projects, listed on bid documents as subcontractors scheduled to work on the projects and later in financial documents filed with the Chicago Park District, as minority-owned businesses receiving payment.
Faith Construction 4, headquartered in Worth and run by company president Danny Santos of South Holland, provides construction-related services, including excavation, sewer, demolition and concrete work.
Annointed Development was operated as a joint venture between Santos’ Faith Construction and another company, so as “to have trucks available to Faith” and “increase potential job opportunities for Faith,” according to the suit filed in circuit court.
While both companies were included on the documents filed by All-Bry with the Chicago Park District, Santos’ companies allege they were never paid anywhere near the amount All-Bry purported to pay them.
Santos’ companies claim All-Bry used his businesses to obtain contracts and payment from the Chicago Park District, but kept a third to half of all the money the minority subcontractors should have been paid based on what was reported to the park district.
Further, the plaintiff companies alleged that Girouard and other employees of All-Bry routinely forged Santos’ signatures on documents necessary to elicit payment from the park district for the projects.
When confronted about the practices, the suit contends Girouard told Santos kickbacks were “the cost of doing business with his company,” and his subcontractors “were expected to remit back a portion of their contract price to him and ignore what was listed on the lien waiver submitted to the Chicago Park District if he wanted to remain a subcontractor with his company.”
The plaintiff companies’ contend the actions were likely not isolated and demonstrated “a pattern of racketeering” and fraud by All-Bry.
Santos’ companies in the suit filed in circuit court sought damages in the amount of $792,660 for violations alleged under the federal Racketeer Influence and Corrupt Organizations (RICO) Act, and $264,220 in damages for fraud. They also asked for $2 million more in punitive damages.
In dismissing the case, Shah said noted the "plaintiffs’ theory of harm is unclear."
"If All-Bry inflated
the amount of work that plaintiffs had done, and thus how much money they were
owed, then any fraudulently received money would belong to the park district, not
plaintiffs," he wrote. "If, on the other hand, plaintiffs actually did the amount of work that All-Bry
told the park district they did, it is unclear how All-Bry’s reports were fraudulent.
complaint nor plaintiffs’ response brief suggests how their entitlement to payment
from All-Bry relates directly to All-Bry’s alleged fraud on the Park District."
Faith Construction 4 and Annointed Development were represented in the action by attorney James F. Wisniewski in Orland Park.
Girouard and All-Bry Construction were represented by attorneys James F. Rohlfing, David J. Lloyd and Mark B. Grzymala, all of James T. Rohlfin & Associates in Chicago.