There will be an unusual volume of Christmas cards travelling from Co Kerry to a US federal prison in Pensacola, Florida, this year, addressed to a new inmate, Dónal O’Sullivan.
The Ballinskelligs native and owner, founder and former president of one of New York’s largest construction firms, Navillus (Sullivan spelt backwards), surrendered to the authorities on November 27th to start a six-month prison sentence for payroll fraud.
The sentence was handed down in June, more than 18 months after a jury in a New York court found O’Sullivan (62), his sister Helen (63) and another senior company executive Pádraig Naughton (52) guilty on 11 criminal counts, including wire fraud and embezzlement from employee benefits’ funds.
The payroll fraud, which took place over several years, was found to have deprived union workers at the company of legally required union benefits funds.
The three Irish-Americans had faced up to 20 years in jail, but transatlantic correspondence of a non-festive nature from O’Sullivan’s home county secured them far more lenient sentences than had been expected from the judge presiding over their case.
Sentencing them in June, Judge Pamela Chen appeared to have been influenced by testimonials within the large volume of letters – more than 400 in all, from family, friends, employees and former employees, as well as members of the wider Kerry community – sent to her in support of the O’Sullivans. It was “perhaps the most I have ever received” in relation to a case, she said.
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The judge spoke about the “extraordinary acts of kindness and generosity” throughout Dónal O’Sullivan’s life referred to in the letters and “noteworthy acts of philanthropy” in helping others, beyond family and friends. But before imposing sentencing, she said: “I do have to note though, that as many credits as he has earned, they don’t completely erase the bad.”
The letter-writers included Kerry TD Michael Healy-Rae and former Kerry footballer Maurice Fitzgerald, now a school principal in the county.
O’Sullivan was jailed for six months and will be subjected to two years of supervised release, and will also have to carry out 100 hours of community service. His sister Helen, the payroll administrator at Navillus, was sentenced to two years’ probation and fined $5,000 (€4,580). Naughton, the financial controller, was sentenced to one year and one day in prison.
The judge allowed O’Sullivan to delay his surrender to the authorities by two weeks so the father of six could spend the US Thanksgiving holiday with his family before his sentence started. US prison records show that O’Sullivan is being held at Federal Prison Camp Pensacola, a minimum security prison on Florida’s panhandle, while Naughton, originally from Nenagh in Co Tipperary, is serving his sentence in the low-security Federal Correctional Institute in Fort Dix, New Jersey.
In addition to his sentence, O’Sullivan must pay the first instalment of $1.2 million (€1.3 million) in restitution payments arising from his fraud at the start of January.
One Kerry man sending Christmas wishes to O’Sullivan in Florida was Des Cronin of the Ballinskelligs development agency, Coiste Forbartha na Sceilge. Cronin praised the good work and charitable donations made by O’Sullivan to his home community, including a €45,000 cheque the businessman wrote to buy a wheelchair-accessible car for the local community centre.
“A lot of people wrote in personal letters. It’s what they do in the background,” said Cronin.
In his own letter to the US judge, Cronin stressed “the good” the O’Sullivans had done “behind the scenes” in the community.
“It’s not seen, but they do an awful lot of good here,” he said.
O’Sullivan is known to have created employment for Kerry people, at home and abroad. He is co-owner of two local hotels, The Ring of Kerry Hotel in Cahersiveen and Cable O’Leary’s in Ballinskelligs. Many of the employees at Navillus in New York’s head office come from south Kerry.
Cronin said he will be putting pen to paper again for O’Sullivan, like many others in Kerry, this festive season.
“We’ll all be writing to him for Christmas,” said Cronin.
Healy-Rae will also be sending him a card this Christmas. The local TD said he had been “terrified” the three Navillus executives would receive lengthy sentences. He wrote two letters to the judge, giving the background of the O’Sullivan family he knew and asking that a custodial sentence not be imposed.
“I was adamant that a custodial sentence would only take them away from the good work they were doing and the people they were helping. I had no problem in the world with a monetary punishment – they are wealthy people – but just locking these people up for a prolonged period of time, everybody would lose,” he said.
In New York, O’Sullivan and his company were known for their construction on prestige projects such as the 9/11 memorial at the World Trade Center, the 2017 renovation of Grand Central Station and Apple’s flagship store in Manhattan. O’Sullivan and his siblings left Kerry for New York in their 20s, starting to work on building sites in the city before founding their company and building it up to become one of the city’s most prestigious contractors.
In more recent years, however, Navillus had become better known for the wrong reasons. The problems for the company began in 2014 when a number of trade unions in New York sued the company over allegedly breaching pension law and collective bargaining agreements by using non-union companies.
In September 2017, a federal judge in New York ruled on behalf of five union pension and benefit funds after a three-year legal battle.
The judge found that Navillus had operated a number of “alter-ego” corporations to access non-union labour. It found this allowed it to get around union agreements that provided for higher overtime payments and other benefits. The court ruled that the company owed $76 million to the workers.
The judge maintained that Navillus was actually supportive of trade unions but at the same time did not want to be shut out of the increasingly non-unionised market for residential property construction in New York City.
Navillus subsequently sought chapter 11 protection at the US bankruptcy court in New York. The company exited bankruptcy protection in 2018. It had earlier reached a settlement with the union benefits funds and trustees for a payment of $25.7 million.
Matters took a more serious turn when prosecutors in New York began a criminal investigation. In July 2020, Dónal and Helen O’Sullivan, along with Padraig Naughton, were arrested and charged in a 11-count indictment.
After they were convicted in October 2021, the US attorney for the eastern district of New York, Breon Peace, maintained that the defendants had “deliberately devised a fraudulent scheme to avoid making required contributions to union benefits funds on behalf of Navillus’s workers, in order to deprive the workers of benefits they had earned and deserved”.
He said Navillus was a signatory to multiple collective bargaining agreements that required it to make contributions to union benefits funds, such as health, pension and vacation funds, for all “covered work” performed by its workers at construction sites.
The three had, between 2011 and 2017, “engaged in a scheme to avoid making these required contributions by placing some of Navillus’s workers on the payroll of another company” which he described as “the consulting company”, the US attorney said.
Explaining the details of the fraud, he said the consulting company issued weekly pay cheques to the Navillus workers for work carried on Navillus construction jobs.
To conceal the scheme from benefits fund auditors, the three defendants “caused the consulting company to issue fraudulent invoices to disguise the fact that the funds Navillus had issued to the consulting firm were made to reimburse the consulting company for the wages the consulting company had paid to Navillus workers,” said Peace.
Dónal O’Sullivan and Naughton are appealing their convictions, though the judge denied their efforts to remain out of prison, on bail, pending the hearing of those appeals. The appeals are unlikely to be heard before the spring.
While the judge ruled the seriousness of the fraud warranted a custodial sentence for O’Sullivan, local residents remain full of praise for the businessman and his charitable and philanthropic assistance back in Co Kerry.
Ballinskelligs parish priest Fr Patsy Lynch said he was happy to write a pre-sentencing letter to the US judge given the prospect of a long jail term that Dónal O’Sullivan was facing. O’Sullivan and his family contributed money to install a hearing loop system for the hard of hearing at St Michael’s Church along with the construction of an outside toilet.
In the midst of his legal battles, O’Sullivan had also contributed money for a new live-streaming system currently being installed in the church, the priest said.
“He would have helped the community and so many of us down here in south Kerry,” said Fr Lynch.
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