MEDIA – Two co-owners of a local construction business have been arrested on numerous criminal charges including the alleged misclassification of workers and defrauding the Delco Strong grant program aimed at assisting struggling companies during the COVID-19 pandemic.
Brian McGarrity, 40, of the 1000 block of Bon Air Road in Havertown, and Christopher Flanagan, 45, of the 8300 block of Delaware Avenue in Upper Darby, are both charged with workplace misclassification, making false statements, theft, receiving stolen property, deceptive business practices, insurance fraud, worker’s compensation fraud and conspiracy.
“When contractors misclassify workers, they are stealing on the hour, every hour,” said state Attorney General Josh Shapiro at a press conference outside the County Courthouse Thursday announcing the charges. “They’re taking wages and denying benefits, and often failing to provide workplace protections to people who are in need. That theft … causes real pain, causes real suffering.”
The two men are owners of Havertown-based Mid Ulster Construction LLC, which has performed work on numerous sites in and around Delaware County, including the Media Townhouse restaurant, an Amazon GO store in Haverford and the Tri-State Mall in Delaware, where two employees were seriously injured in December, according to an affidavit of probable cause written by Delaware County Detective Michele Deery. The affidavit notes Mid Ulster and Flanagan are also listed on a public records database as part owners of the Townhouse.
One of the two injured men, Sean Hughes, an Irish national who worked for Mid Ulster for approximately two years, is currently in hospice care and has been unresponsive since doctors reattached his skull earlier this year, the affidavit says. Another man suffered broken ribs and other injuries as a result of the fall. The two men were working approximately 20 to 30 feet off the ground with no fall protections in place, according to the affidavit.
“It is a stark reminder of those who are truly harmed by unscrupulous employers: The workers themselves,” said county District Attorney Jack Stollsteimer. “We cannot tolerate business practices that ignore the legal requirements for contractors and leave their workers vulnerable to this sort of tragedy.”
Deery spoke with numerous employees who received 1099 tax forms from Mid Ulster indicating they were “independent contractors” when they were actually employees who were paid in cash or checks with no tax withholdings taken out, the affidavit says.
Shapiro said this is a common tactic for businesses looking to dodge paying medical insurance, unemployment compensation, workers compensation, income tax and other benefits and wages. He noted that it not only impacts workers, but local schools and governments that do not receive taxes as well, reducing their ability to provide services to residents.
“It’s part of the ‘rip-off economy’ that treats workers as expendable and I refuse to accept that as normal,” Shapiro said. “I refuse to accept that as acceptable, because it is, after all, illegal.”
Deery reviewed bank statements, business receipts, employee checks and other documents showing Mid Ulster paid $819,275 in wages from 2018 through 2021, and that Flanagan and McGarrity committed workers compensation and unemployment compensation fraud in excess of $110,000, according to the affidavit.
The two men also allegedly committed insurance premium fraud by lying to their insurance carrier about the numbers and types of employees they have in order to lower premiums, the affidavit says. They allegedly falsely indicated Mid Ulster does not 1099 employees or pay employees in cash and that none of their employees work more than 15 feet in the air or on roofs.
Deery additionally found Mid Ulster had received a $10,000 grant from Delco Strong, the county-authorized entity distributing federal Coronavirus Aid, Relief, and Economic Security (CARES) Act funds to small businesses suffering from the impacts of coronavirus-related revenue losses.
McGarrity and Flanagan averred in an application for those funds that they have two full-time employees, no part-time employees and did not work from March 6, 2020 through June 14, 2020, according to the affidavit. Bank records indicate paychecks went out to numerous employees in May 2020, the affidavit says.
This is the second set of charges brought in Delaware County this year under Pennsylvania’s Act 72, the Construction Misclassification Act of 2010. Stollsteimer noted his office, in partnership with the Attorney General’s Office, was the first in the state to prosecute defendants under the statute since it was enacted more than 10 years ago. He signaled a commitment to continue that partnership in bringing similar charges to other companies accused of misclassifying employees.
Stollsteimer also commended Deery, the entire Criminal Investigation Division roster for helping execute search warrants and interview witnesses, and CID accounting intern Anna Marino and Department of Homeland Security Special Agents Louise Kennedy and Brian Golden for their assistance in crunching the data.
Stollsteimer also thanked Deputy District Attorney Douglas Rhoads, Assistant District Attorney Elizabeth Schneider, chief of the Economic Crimes Unit, and Chief Deputy Attorney General Nancy Walker for their assistance in bringing the charges.
Flanagan and McGarrity were arraigned Monday before Magisterial District Judge Wendy Roberts, who set bail at $200,000 unsecured. A preliminary hearing is scheduled for June 21.
