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Fatal Collapse Spurs Fraud Charges

Wednesday, March 23, 2016

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A company previously indicted on criminal charges related to a construction site fatality in New York City is now facing fraud charges concerning workers and salaries.

Authorities allege Sky Materials Corp. and its owner Michael Cholowsky, 52, underreported more than $3 million in payroll in order to receive workers’ compensation insurance reductions.

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Photos: Manhattan District Attorney's Office

The fraud charges were filed in connection with an investigation into a construction site fatality, according to the Manhattan District Attorney's Office.

“In the construction industry, a lax approach to following proper procedures may be characteristic of a much more dangerous disregard for workers’ safety,” said Manhattan District Attorney Cyrus R. Vance Jr. in announcing the charges.

“Dishonest business practices hinder oversight and create potentially life-threatening hazards for workers and residents.”

Deadly Trench Collapse

The Attorney’s Office says the new indictment was filed in connection with the investigation into the death of 22-year-old Carlos Moncayo, a Sky Materials employee.

Moncayo was killed April 6, 2015, when an unsecured trench he was working in collapsed and fatally crushed him. Just moments before the cave-in, an alarmed safety inspector had reportedly ordered Moncayo and three others out of the trench.

Carlos Moncayo

Carolos Moncayo, 22, was killed April 6, 2015, at a building construction site in New York City.

In the wake of the incident, Sky Materials as well as the jobsite foreman and supervisor were charged with manslaughter in the second degree and criminally negligent homicide, for allegedly failing to heed and address unsafe work conditions leading to the death at the former location of Pastis restaurant in the Meatpacking District. The Attorney’s Office said a trial date has not yet been set for the case.

Prosecutors said Moncayo’s death was tragic, but also foreseeable.

Fraud Allegations

In the related fraud case, Cholowsky and Sky Materials Corp. are facing charges of insurance fraud in the first and second degrees as well as offering a false instrument for filing in the first degree. Cholowsky faces a maximum penalty of more than 25 years in state prison, according to authorities.

From April 2014 to April 2015, authorities say Cholowsky and his company concealed more than $3 million in payroll resulting in a premium reduction of over $1 million. The previous year, the company underreported $650,000 in payroll to obtain $100,000 in reductions, according to prosecutors.

In order to conceal the funds, payroll processing was done through a check cashing service and paid from the company’s operating bank account, the Attorney's Office reports.

Authorities also state the company filed documents claiming it employed fewer than 20 people when it really had more than 150 on staff.

The indictment is the latest product of the New York City Construction Fraud Task Force, formed in 2015 to investigate misconduct and prosecute wrongdoing in the construction industry, according to the Attorney’s Office.

   

Tagged categories: Commercial Construction; Construction; Criminal acts; Fatalities; Fraud; Health and safety; Insurance; Laws and litigation; Worker training; Workers

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