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ANALYSIS By Mike Hudson

The U.S. Department of Labor is going after the city's Code Enforcement Department following a complaint relating to payroll records for emergency demolitions performed by Regional Environmental Demolitions (RED), documents made available to the Niagara Falls Reporter show.

Under Department of Labor regulations, municipalities are required to keep payroll records in order to ensure that prevailing wages are being paid to workers on government projects, including demolitions. RED was recently fined $15,000 by the federal agency for failing to abide by the requirement on a set of non-emergency demolitions earlier in the year.

The fact that the company failed to pay the required wages was uncovered after officials from Laborers Local 91 submitted a Freedom of Information Law request to the city asking for the payroll records.

But when a FOIL request was filed by the Laborers to cover the emergency demolitions, officials said department director Dennis Virtuoso told them that the city wasn't required to keep the records.

Obviously, a company that's not paying prevailing wages can afford to do work more cheaply than a company that follows the law. And because all the demolitions are subject to a competitive bidding process by the city, a company like RED -- which has been shown to be in violation -- is able to submit lower bids than other contractors vying for the work.

Additionally, unlike other companies bidding for demolition work, RED is not bonded. Curiously, the city dropped its bonding requirement last year, just as RED started picking up the lion's share of the demolition work.

The principals of RED are Rico Liberale and Chuck Van Epps. Liberale was named as an unindicted co-conspirator in the U.S. Justice Department's 2005 racketeering case against the leadership of Local 91, and later served as an informant in the case. More recently, he was partner in a snowplowing business with Tony Fazzolari, who pleaded guilty to embezzling $6,970 from the Local 91 welfare fund in a complicated scheme that also involved Newfane dentist Scott Geise.

And as recently as this month, Van Epps had four outstanding arrest warrants on file with the city police department for repeated cases of aggravated unlicensed operation of a motor vehicle dating back to 2008.

Virtuoso's son, Vincent, once worked for RED, and Virtuoso himself accepted $700 in campaign contributions from Local 91 while Liberale was in charge of the union's political committee in 2009.

Of 10 emergency demolitions ordered by the city between Aug. 28, 2010 and March 14 of this year, eight of the contracts were awarded to RED. The dollar value of the two contracts awarded to companies other than RED was a combined $4,545, while the dollar value of the eight RED contracts was a combined $246,593, records show.

Both Virtuoso and Niagara Falls Mayor Paul Dyster have threatened to sue the Reporter over stories linking the administration to RED. In numerous interviews with newspaper, television and radio reporters, they have maintained that everything they've done has been open and above board.

But Laborers Business Manager Dick Palladino had harsh words for both Virtuoso and Dyster.

"I've been in this business for 52 years and I have never seen two guys go to such extremes to say they're not lying," he said.

Palladino said that, when he submitted a FOIL request for information on the insurance status of RED, he was given a document from the New York State Insurance Fund that stated specifically that the company was uninsured for demolition work. After the Reporter printed a copy of the document on the cover of the May 10 issue, Virtuoso called to say that there were actually many more insurance documents in his possession.

Those were made available to the paper later that week and appear to show the company was in compliance with the insurance requirements.

"Dennis Virtuoso told me personally that the documents he gave me were the only ones he had regarding RED," Palladino said. "Now, either he lied to me or he lied to the paper. There's no other explanation."

FBI agents and retired FBI agents from the Inspector General's office of Laborers International Union of North America have been looking into allegations that Liberale threatened Local 91 members who complained to the U.S. Department of Labor about RED's practice of not paying prevailing wage on the city demolition jobs.

Liberale served as Local 91's secretary-treasurer until last May, when he was voted out of office along with former business manager Rob Connolly. But back in 2005, he was identified by the Justice Department as a member of the local's "Goon Squad," a select group of enforcers who sabotaged worksites, administered beatings and conducted violent pickets at non-union construction jobs.

According to the federal indictment, Liberale was involved in destruction of property during the construction of the Target store and the Delta Sonic car wash on Niagara Falls Boulevard in 1996 and 1997.

Palladino said that both the mayor and Virtuoso reacted angrily over his role in newspaper stories linking the administration with RED. After the May 3 article appeared, Dyster canceled a long scheduled meeting with Laborers representatives 20 minutes before it was to have taken place, while Virtuoso launched into a tirade when Palladino and another union official visited his office to pick up some documents.

"I will never again subject myself to that kind of abuse," he said. "I don't need the hostility and I don't need the insults. Here's an elected official and he's acting like some 17-year-old kid."

Niagara Falls Reporter www.niagarafallsreporter.com May 24, 2011