St. Charles Businessman Faces Federal Charges in $1.9 Million Union Fraud Scheme

A St. Charles man, who was the former president of a Chicago construction company, faces federal charges for paying off-the-books cash wages to workers and under-reporting their hours as part of a scheme to defraud the benefit funds of the employees’ labor union, according to a federal indictment.

Yashvant C. Patel was arrested Friday morning and is charged with four counts of mail fraud and four counts of making false statements in documents required to be kept pursuant to the Employee Retirement Income Security Act (ERISA). He is expected to make an initial court appearance in Chicago Monday morning. A federal indictment seeks forfeiture of $1.9 million from Patel, according to an FBI press release.

Patel is accused of paying less-than-union-scale wages to dozens of employees, including illegal aliens, in order to reduce the employer contributions to the benefit funds of the Construction and General Laborers’ District Council of Chicago and Vicinity, according to the indictment.

The FBI alleges he falsely reported that My Baps and a sister company, Vijay Construction Corp., owed approximately $600,000 less to the benefit funds and approximately $1.3 million less to the companies’ employees than what was required by collective-bargaining agreements with the union, according to the news release.

Patel could face up to 20 years in prison and $250,000 in fines for each mail fraud count and up to five years in prison and a $250,000 fine for each count of making a false statement.

The FBI reports the following details surrounding the allegations against Patel:

From January 2009 through October 2010, Patel controlled the daily operations and finances of My Baps and Vijay, both of which operated as concrete and asphalt contractors while sharing a principal place of business at 7601 S. Kedzie Ave. in Chicago, the indictment states.

Patel had authority over the bank accounts of both companies, and he approved expenditures to outside entities, including monthly payments to the benefit funds, according to the indictment.

The benefit funds, in turn, provided union members with pension, health and training benefits. Pursuant to collective-bargaining agreements, My Baps and Vijay were required to pay their employees certain wages, and to provide the benefit funds with monthly remittance reports identifying the hours worked and the total contribution due for each covered employee, according to the indictment.

The indictment charges that Patel under-reported approximately 33,000 hours of work performed by his employees, some of whom were not lawfully entitled to work in the United States, resulting in purportedly lower employer contributions into the union’s benefit funds.

Patel paid many of these workers in under-the-table cash payments, at wages that were less than what was required by the collective-bargaining agreements, the indictment states.