From high rise to hard fall at Navillus: Why two Kerry siblings faced jail in New York
Skyline Mark O'sullivan E Should Been Their Is But Crashing The New Down Legacy Siblings An About The Left What On Have York Outstanding To
- This article is part of our Best of 2023 collection. It was originally publish on April 29, 2023. Find more stories like this here.
In the early 1980s, four Kerry siblings left their modest home in a sparsely-populated glen, high above sublime Ballinskelligs Bay, for a new life among the bright lights of a big city.
All in their early 20s, Dónal, Kevin, Leonard, and Helen O’Sullivan from Coom, The Glen, over the mountain from St Finian’s Bay, bade farewell to their parents Jack and Theresa O’Sullivan and headed for New York, where the brothers started out on building sites, like so many generations of Irish emigrants before them.
Within three short years, they had founded their own small tile company, called Navillus (the family name spelt backwards) Tile and over a couple of decades they built it into a major construction firm, winning prestigious contracts such as the 9/11 Memorial at the World Trade Centre, ultimately leaving their mark on the city’s iconic skyline.
However, what should have been an outstanding legacy is now about to come crashing down as two of those siblings, father-of-six Dónal, 61, and Helen, 62, as well as Navillus’ former financial controller Pádraig Naughton, 50, are facing the prospect of up to 20 years behind bars.
The trio are due to be sentenced over two days in late June, having been found guilty in 2021 of 11 counts of wire fraud, mail fraud, embezzlement from employee benefits funds, submission of false remittance reports to union benefits funds, and conspiracy to commit those crimes.
It’s looking like a sad end to what had been a tremendous personal success story for Dónal, who had gone from humble beginnings as a building site labourer to becoming CEO and president of a company that won prized contracts for work on superstructures such as One Vanderbilt, One Manhattan West, Grand Central Station, Madison Square Garden, the Apple flagship store in Manhattan, the Arthur Ashe Stadium in Queens, and many, many more.
In fact the siblings did so well that there was even money to invest back home, where they bought well-known Ballinskelligs hostelry Cable O’Leary’s, as well as the Ring of Kerry Hotel on Valentia Rd in nearby Caherciveen, which is run by Leonard, who left Navillus in 1998.
There are family connections too to the former nuns’ holiday home on the beachfront in Ballinskelligs, which, locals will tell you, was used a few years ago to host an extravagant 60th birthday bash for one of the O’Sullivans, and which was put to use more recently as accommodation for Ukrainian refugees.
There’s a Cork connection too, as Kevin’s company, Tower Holdings Group, is building the Prism, a €20m state-of-the-art glass office block in the city modelled on New York’s Flatiron building, and the company has permission for an ambitious redevelopment of the former Custom House/Port of Cork site, including a 34-storey hotel, which would make it Ireland’s tallest building.
The siblings weren’t slow either to invest in their New York community, supporting the Irish Arts Centre, the Kerryman’s Patriotic and Benevolent Association, and the Kerry Football Club of New York.
In a St Patrick’s Day tribute to Dónal in Real Estate Weekly in 2017, his “deeply charitable nature” was referenced in connection to the work Navillus did in the aftermath of Superstorm Sandy in 2012, when corporate volunteers helped with clean-up and recovery efforts at Rockaway (they subsequently won contracts to rebuild in Rockaway). The company also helped out in the wake of Hurricane Irma in Florida in 2017.
Their legacy in the building industry seemed assured, having grown Navillus Tile into Navillus Contracting, gradually expanding to commercial concrete, masonry, stone, and general contracting, for both public and private sector work.
In 2012, Dónal was included in magazine’s business honours list, which honours the “best and brightest Irish-American and Irish-born leaders, representing some of the most innovative and influential companies and corporations in the world”.
At the time, Navillus was one of the largest union contractors in New York City, employing an average unionised workforce of up to 1,000.
Two years later, everything imploded.
The unravelling of Navillus, or, more precisely, the life Dónal had built up for himself, began in 2014 when a number of unions launched a lawsuit against the company.
They argued that Navillus had violated federal pension law and multiple collective bargaining agreements (CBAs) through use of two non-union companies.
These were Time Square Construction (TSC), set up by Kevin O’Sullivan in 2006, with ownership split 50/50 between Kevin and Dónal until 2012, when Dónal sold his shares back to his brother, and Advanced Contracting Solutions (ACS), set up by a former Navillus employee, Eoin Moriarty, a fellow Kerryman, from Waterville.
Links between Navillus and ACS highlighted by the court included that ACS’s first mailing address was an apartment owned by Dónal’s wife and the fact that there was evidence that ACS and Navillus “shared important and expensive equipment... under circumstances that indicate the companies were operated as one business but working to disguise that connection by using intermediary companies”, the judge, Colleen McMahon, said.
She pointed out too that ACS had incurred a €1.5m loss on its first contract and that “unless it were a part of the O’Sullivan construction empire, a start-up like ACS would have gone under after such a fiasco”.
“ACS was set up as, and at all relevant times was, Navillus’ alter ego,” the judge added.
On the use of TSC as an alter ego or front company, one example given in court was in reference to the Sugar Hill project, for which Navillus tendered.
The bid was rejected by Mountco, the company behind the project. Mountco’s CEO later testified that all things being equal, he would choose a non-union subcontractor over one that used union workers, because having a union could create conflict on the job site. Ultimately, the contract was awarded to Kevin’s company, TSC, which used non-union workers, even though it did not have the relevant expertise or equipment.
The contract was awarded at the exact price —just under $12m — of Navillus’ best and final bid. The judge said that Dónal was “the driving force” in the negotiation of the TSC/Sugar Hill contract, that he took part in conference calls, was copied on nearly every email, and that TSC’s lawyers took instruction directly from him.
“I cannot reasonably conclude on these facts that TSC won the bid for Sugar Hill on its own merits, independent of Navillus involvement,” the judge said.
Neither Navillus nor TSC made any fringe benefit contributions (eg pension pay, holiday pay, welfare fund, job training fund) for hours of work performed by employees at Sugar Hill, the judge said.
At the end of the day, the judge ordered Navillus to pay the unions $76m (€69m) and accused Dónal of perjuring himself about his relationship with ACS, as he had said in a deposition that he did not have shares in the company, when in fact he had given it loans of up to $1.8m for which he was given share options. The judge said she was “deeply troubled” by his behaviour, “in particular his false testimony to the court”.
After the judge’s order, the unions attempted to freeze Navillus’ bank accounts, but Navillus sought Chapter 11 bankruptcy, a process that allows a debtor to keep the business alive and pay creditors over time, while restructuring.
Ultimately, all parties agreed to use mediation in 2018 to reach a settlement, which meant the judgment was set aside and the legal record cleared, with the unions agreeing to take just $25.7m — most likely as they were unsecured creditors in the bankruptcy process and ran the risk of getting nothing, but probably also, as the judge pointed out, to keep one of New York City’s largest construction companies from going under and to protect the dozens of projects it was working on, preserving union jobs in the process.
There the matter might have ended had the government not followed up with a criminal case in 2020, charging Dónal, Helen (who ran internal payroll at Navillus), and Pádraig Naughton with running a multi-year scheme that defrauded union benefits funds of $1m.
Once the three were charged, they stepped down from their roles, saying they had no option “but to clear their name”.
The indictment stated that the three had engaged in a payroll scheme from 2011 to 2017 to avoid making various contributions to union benefits funds.
They had done this, it said, by using a consulting firm, DEM Consulting, trading as Allied, rather than their own internal payroll, to pay more than 150 Navillus workers for work carried out on its sites. While the workers were paid, the contributions owed to benefits funds on behalf of those workers were not. In addition, Mr Naughton had not disclosed the separate payroll system to the unions’ auditors, nor were the workers on the Allied payroll included in monthly remittance reports which the company was obliged to submit to the unions, showing all hours worked by both union and non-union workers.
One Navillus worker, Luis Gonzalez, who had immigration-related difficulties, and who was with the company for 10 years, was paid through the external scheme as John Michael Sugrue, the name of Mr O’Sullivan’s brother-in-law.
The court heard that Mr Gonzalez had asked Dónal about joining a union but had been told he (Dónal) needed to see Gonzalez’ permanent resident green card. Between 2011 and 2016, Gonzalez received 283 cheques in Sugrue’s name.
Navillus issued more than 200 cheques to Allied totalling over $7m, of which around 80 contained Dónal’s signature, even though he had made sworn statements that he did not believe he had “ever used an outside payroll company to process [Navillus] payroll”.
DEM Consulting/Allied was run by Irishman Kieran Lambe. It was not a signatory to any CBAs and thus did not owe benefits payments for its workers.
The court heard that Mr Lambe, who at the time was on an investor visa, had worked on various projects for Navillus and was under the impression that his company would be involved in subcontracted construction work for Navillus, on foot of a conversation with Dónal about getting more work so that he could remain in the country.
Mr Lambe was facing visa renewal difficulties as in order to renew it, he had to prove to immigration that his company was growing. The arrangement with Navillus appeared to demonstrate the growth he required.
His visa was renewed in 2011 and he continued to process Navillus employees on the Allied payroll for the next six years, even though he had never previously processed employee payroll.
He later pleaded guilty to visa fraud and entered into a co-operation agreement with the US government in connection with the Navillus case.
The court heard that it was the company’s financial comptroller, Pádraig Naughton, who supervised and helped Lambe in setting up Allied to provide payroll services to Navillus. The presiding judge, Pamela Chen, concluded that Naughton “knowingly and intentionally misled the union auditors for years by concealing the fact that Navillus was running part of its payroll through Allied and not paying union contributions for these employees”.
In relation to Helen O’Sullivan, who worked at Navillus’ internal payroll department, Judge Chen said the evidence established her “direct involvement in the daily management of the Allied payroll arrangement”.
She added that “of all people, Helen O’Sullivan knew that the Allied payroll arrangement made no sense, yet she painstakingly executed it every week for six years, even using her own checks [sic] and money to perpetuate it for five months”.
Moreover, she knew that many of the employees paid through Allied were in trades covered by collective bargaining agreements, yet she never disclosed the Allied payroll arrangement in the monthly remittance reports to the unions, the judge said.
Unlike his siblings, father-of-five Kevin, a graduate in construction management at Tralee Technical College, was not convicted of anything. While he and Dónal had owned Navillus 50/50 after Leonard left, he sold his shares to Dónal in 2015, after the unions launched their lawsuit.
For his part, Dónal had held equal shares in TSC until 2012, when he sold his shares to Kevin. Despite the evidence that Kevin allowed his brother to use his non-union company as a front to get a contract which kept his own company, TSC, afloat, there was, the court heard, “insufficient evidence of his [Kevin’s] personal participation in the troubling facts cited to impose personal liability on him”.
There is sympathy in some quarters for the O’Sullivans. Various New York-based commentators have pointed out that, ironically, Navillus was one of the biggest contributors to union benefits funds in the city. Between 2011 and 2017, the company contributed a whopping €145m.
Even Judge Chen said that there was “no evidence in the record of overt anti-union animus on the part of ACS or Navillus”.
“The evidence is to the contrary. Navillus is a strongly pro-union company, but it did not want to be shut out of the increasingly non-unionised market for residential real estate construction in New York,” she said.
Thomas Kennedy, the attorney who represented the unions in the civil case, and whose grandparents hail from Ballyheigue in Kerry, told the that after Navillus agreed to pay them $25.7m, the unions were satisfied.
“As far as I’m concerned, they paid the money owed to the unions and we had no further beef with him [Dónal],” Mr Kennedy said.
He added that they had dropped Helen as a defendant in the civil case “as we felt she wasn’t a decision maker and we didn’t have the evidence against her”.
Mr Kennedy also said there had “never been a doubt about Navillus’ efficiency and achievements vis-a-vis building projects”, adding that “ironically, for a long time it was the biggest contributor to the unions”.
Others in the building industry point out that unionised contractors are increasingly losing out to non-unionised contractors, and are pushed out entirely from residential building projects. In such circumstances, unionised contractors may be tempted to get creative.
There’s sympathy on this side of the Atlantic too. Ballinskelligs residents are mainly favourable towards the O’Sullivans, albeit some would have liked if they’d done more with the properties they bought here.
Locals told the on condition of anonymity that they were broadly sympathetic with the plight of Dónal and Helen, both of whom have been permitted by the courts to return to Ireland on a number of occasions since they were convicted. Dónal was home again as recently as March of this year — to visit his 94-year-old mother Theresa and his aunt Kitty, who is 101.
The visited Ballinskelligs to gauge local feeling towards the O’Sullivans and the feedback was largely positive.
“No one here bears any ill-will towards them,” said one local man, a retired politician, out for a stroll on Ballinskelligs beach.
“There’s only sympathy. They’ve looked after the Kerry boys and girls over the years,” he said, adding “it’s awful what’s happening to them”.
Dónal’s bail conditions include a $750,000 bond, secured by $500,000 in liquid assets. As well as being permitted to visit his mother in Ireland, whom he hadn’t seen for two years during the pandemic, he has been permitted to travel anywhere in New York for business purposes, as well as New Jersey, Massachusetts, Florida, and California.
Following a petition to the court, he was also given permission to change his place of residence from Queens, New York, to Florida.
Last December, he was given permission to travel to Salt Lake City in Utah for a couple of days. No reason was given for the trip.
One of the requests to travel home to see his mother, in May 2022, outlined how Dónal’s roots in the US were very strong, that he was a US citizen who had lived in the country for his entire adult life, during which he had six children, Jack, Donal, Katie, Caroline, Mike, and Kelly, ranging in age from mid-teens to mid-20s, all of whom live in the US “and with whom he has been and is close to”.
Helen was given permission to return to see her mother last August after her attorney wrote to the judge, saying: “As the court well knows, this may be Ms O’Sullivan’s last chance to visit her mother and see her aunt before her sentencing."
She also planned to see her aunt Kitty. The court was given an undertaking that Helen would remain at her mother’s home for the duration of the visit.
The caught up with Helen while she was home, but she did not want to be drawn on the case, other than to say there was “another side to the story”.
She was at her mother’s house, a modest bungalow set back off Skellig Ring road, behind an immaculate lawn.
The area is one of staggering natural beauty, the antithesis of Big Apple bustle and glitz. If Dónal and Helen are given a lengthy jail term, they may never see Ballinskelligs again.
It will be a sad and bitter end to their American dream.
“Being part of the Navillus team means being a part of something to be remembered forever” says the company’s website, but for Dónal and Helen, it could mean being remembered for all the wrong reasons, an American dream left in tatters.