City Takes First Step in Construction Wage Theft

Yesterday at the city council meeting, the city representatives discussed and took action on an alleged wage theft incident on a Sun Metro project. City council voted unanimously that “after conducting an investigation, has determined that there is good cause to believe that a violation of Texas Government Code Section 2258 has occurred in regard to the payment of individuals by Urban Associates Inc. through its subcontractor Beltran Electric Contractors, Inc. for the City project known as Sun Metro Operations Maintenance Facility, Contract No. 212-074.” Basically, the city believes that some employees of Beltran Electrical Contractors, Inc. were underpaid or not paid for their work in the city project.

I am not going to bore you with the details about the issue because since this issue has all of the city representatives in agreement and it gives each of them some good public goodwill it is likely the local news media will adequately report on it. Instead, I would like to take the opportunity to comment on certain issues and point out some interesting information that was disclosed.

As many of you already know much of the public corruption cases involved general contractors bribing government officials for work. It is common knowledge that the local contractors need government work to remain in business and other than the school districts and the city and county governments there is not much for all of the contractors to partake in. The federal government normally brings in outside contractors who then parcel out some work to the local contractors.

Interestingly enough, the prime contractor in this issue was congratulated by other local companies in 2011 for landing the city’s first federal multi-million contract. Urban Associates was awarded a $21.2 million contract to construct the Battle Command Training Center at Fort Bliss. This made Urban Associates the first locally based general contractor to land a federal job.

The lack of federal work going to local contractors has been a gripe from the chambers of commerce for many years. Without boring you with the details, the issue has been centered on the bonding capacity of the local contractors excluding them from the multi-million dollar contracts. It always struck me as odd that the contractors and their chamber proxies decried their inability to land large contracts yet their operations always seemed to betray a sense of mediocrity at its best.

El Paso always complains that it isn’t taken seriously but I believe El Pasoans continuously do it to themselves. Take for example what I found when I researched the two companies in question. I know that the federal government likes to see that those it awards federal contracts have a working website with at least basic information. Many of my clients come to me just because they need a website to meet this inferred requirement.

In the case of Urban Associates, it really didn’t surprise me that their website is one of the cheesiest examples of a 1990’s website I had ever seen. Getting past the cheesy, animated crane that no professional website designer has used in over 10 years, only made matters worse. The “Latest News” showed a posting dated July 12, 2001 stating “Urban Associates, LP unveils its newly redesigned web site.”

urban-cheesy

Clicking on the navigation buttons only made matters worse as none worked. In other words, the locally-based company that everyone was super-excited because a local firm had finally being awarded a multi-million dollar contract couldn’t be bothered to update the very vehicle that everyone outside of El Paso takes a look at when evaluating El Paso-based businesses. It wasn’t surprising to me because El Paso thrives in mediocrity and instead of striving for better; they instead rely on the local chambers to cry about how no one takes El Paso seriously.

Beltran Electric’s website does not exist. It used to have a free website on the Wix system but apparently, the cost of domain registration, which is about $20 a year, is too much for them because they let the domain name lapse.

This brings me directly to the issue at hand. El Paso’s mediocrity creates the problems the city faces today. In this particular case, an ongoing case of political mediocrity not only allowed the recent public corruption to manifest itself but it is likely continuing today. As you might remember, both Larry Medina and Sal Mena seem to have information about other general contractors that have bribed officials that have yet to be identified. Like the cases of public corruption, we have already seen, then, as today there were various signs that demonstrated something was amiss but some chose to ignore them while others accepted special favors to keep silent. The news media was nowhere to be found.

Look at the two companies involved yesterday and what the case is about.

According to the public commentary, two employees first complained about not being properly paid. When the city inquired about it, the two employees were then paid by the contractors. Then two more employees complained and again the contractors made additional payments except that this time it appears that instead of paying the employees directly they made a payment to a 401K account. Let’s dissect this.

The only reason we are privy to the details is that four employees had the courage to file a complaint. Do not make the mistake to underestimate the courage it took for these four employees to come forward because we all know there is exists a “blacklist” where employees, and companies for that matter, that don’t toe the line are routinely added to and eventually driven out of the marketplace.

These employees have risked their livelihoods, and that of their families, to correct a wrong. Six employees have been identified so far as having their wages withheld by the contractor, according to the city investigation.

The next thing to notice is that we are aware of the problem only because the city initiated an investigation based on the complaints. How many more “issues” with wages have occurred that no one complained on and the city hasn’t investigated?

Now we come to the crux of the whole issue – money. The city is notorious for forcing contractors and community members alike to question the process of issuing contracts. You might remember that there is currently some controversy with Basic IDIQ based on the notion that they severely underbid the San Jacinto project. The controversy is being led by other contractors. However, money is obviously central to this latest issue.

During the discussion, it was alleged that payroll was made to some of the employees via deposits to a 401K account. To the credit of city council, they seemed to understand the ramifications of this and although they alluded to it, they did not directly accuse the contractor of financial irregularities.

If in fact, the contractor, it is unclear from the commentary exactly which one but it is assumed it was Beltran Electric “paid” its employees by making a deposit to a 401k then this signifies some very serious financial problems for the company. Over simplified, “paying” the 401K is making an accounting entry on a ledger without having to actually make a cash payment to an employee. This is normally an indication that there are serious problems with the company because it tends to show it does not have enough cash to meet its financial obligations.

If this proves to be true then I will not be surprised to see, one or both firms in the news for financial problems in the near future. Now tie all of this with the websites I pointed out earlier and I believe you start to get a picture of how serious these two companies are about their business and their finances.

Beltran sent a lawyer to represent them. Urban Associates was represented by a company official, Michael Montes. In a January 1, 2010 “Special to the Times” report by Jenn Crawford, Montes’ father is quoted as telling Michael that he must always act as “the president of a multimillion-dollar company.” I wonder if their cheesy website is what he meant by that.

More importantly, though, is that Michael Montes implored city council not to group his company in with Beltran Electric because they were the general contractor and it was not their employees. Larry Romero correctly pointed out that Urban Associates was ultimately responsible for the actions of their subordinates, in this case Beltran Electric. Carl Robinson echoed this as well.

Yesterday’s city council action has resulted in city council withholding payment to Urban Associates and identifying a possible fine of $35,400 for the violations. The city also intends to notify the Department of Labor for the violations the city says it has uncovered.

Although I applaud the city for taking this step, I can’t help but wonder how many other cases are out there that have not been identified because no complaint has been filed. There is a general fear of a “blacklist” in El Paso and not too many individuals want to risk their family to defend their rights.

I realize some of you probably think I made too much of the websites but consider this for a moment. Today we are discussing companies being paid millions of taxpayer monies and they seem not too interested in their business presence online. Why is that?

Put yourself in the shoes of a federal contractor researching El Paso-based businesses for federal contracts and they land on those two websites. Would you add them to the list of companies capable of handling multi-million dollar contracts? Think about that the next time a politician or a chamber of commerce official complains that no one takes El Paso seriously.

6 thoughts on “City Takes First Step in Construction Wage Theft

  1. The biggest blacklist fear in El Paso is the Hunt-Foster axis of cronyism. It even intimidates the city council, not to mention the media.

    1. Paul Foster donated the Luther Building to the city for part of the City Hall relocation.
      Then Jordan Foster Construction got the contract for the remodel (cost of $11 million, you can find it on Jordan Foster website).

  2. Making sure a subcontractor pays their employees isn’t that straightforward. You can make them sign lien waivers indicating that funds will be used to pay suppliers and employees. You can even have them submit certified payrolls. However, these documents can be faked, forged or they can be signed but they are not always adhered to. Urban may or may not be corrupt in this matter but making sure another company’s employees are paid can be difficult to ensure.

  3. Peppers got it! El Paso has not progressed, it remains in the old west. The cattle barons own the town, mayor, sheriff and have their own enforcement people to handle those that dare to challenge.

    Big and new buildings don’t make cities, the people do. Change the attitude of the people and the city will change.

  4. Hear, Hear, is the old west and owned by those with dip pockets. The media reminds me everyday of little mice coming to feed on properly placed cheese. The Silent Majority needs to speak out. How can we give a free jail card to every-day-corrupt-theaving-attorneys and place everyday citizens in jail for stealing a beer.

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