Underground Empire


David Walentas is a silver-haired, Porsche-driving real estate tycoon who could have stepped from a Ralph Lauren ad. The 65-year-old developer likes to wear jeans to business meetings, but that’s as close to the blue-collar crowd as he wants to get. Over the past two decades, Walentas has made millions forcing industrial employers out of his buildings to make way for posh lofts in DUMBO, on Brooklyn’s waterfront. This holiday season, the developer has another gift for New York’s working classes: the city’s biggest-ever non-union construction project.

Using a contractor who has been at war with the city’s trade unions, Walentas launched work this month on a 500,000-square-foot, $100 million project at the corner of Atlantic and Court streets in Downtown Brooklyn. The politically connected Walentas was awarded the site—a former parking garage—last year by Bloomberg administration officials, who said his was the best of 10 proposals made to the city. The developer’s plans call for twin 11-story towers of offices and luxury rental apartments, including a new facility for the YMCA of Greater New York. Walentas’s Two Trees Management paid $16.5 million for the site and received $93 million in low-cost financing from the city’s Housing Development Corporation.

With Bloomberg’s deputy mayor Daniel Doctoroff at his side, Walentas broke ground on December 1 as members of the carpenters’, laborers’, teamsters’, and other construction unions hooted, jeered, and displayed a 12-foot-tall inflated gray rubber rat.

“We bid the different trades and then used the best people we could get, at the lowest cost,” the dapper developer told the Daily News‘ Hugh Son at the groundbreaking. “It’s the American way.”

“It’s hardly the American way to exploit people like this,” countered Anthony Pugliese, an organizer for the District Council of Carpenters who has led a series of protests at the site. “What he’s doing is taking advantage of his workers. And he’s not doing it because he doesn’t have the money, but in order to make more.”

Walentas’s choice for the project is IBK Construction, a new firm that has battled local trade unions over the past year. Its workforce is mainly composed of recent immigrants, many of them from Poland and the former Soviet Union. Wages at the firm, records show, range from $10 to $17 an hour, with the company chipping in a maximum of $150 a month for medical benefits. In contrast, union rates average $25 to $30 an hour with full benefits. IBK employees, according to the firm’s union foes, wind up relying on public hospitals and other taxpayer-supplied benefits.

“This is what we can afford to pay,” said Igor Kirtchakov, the Russian-born part-owner of IBK. “I can’t offer more. Maybe, as we grow, the benefits package will increase. But we have many happy workers who are with us a long time.”

Kirtchakov spoke in a construction shed high above the 40-foot excavation hole where his workers are building the project’s foundation. He has not been awarded the contract to build the superstructure of the building, although he is hopeful of winning a bid to do so.

Construction unions went head-to-head with IBK in a bitterly contested representation election last year, which ended in a tie vote. Former employees of IBK, who later quit the company and became union members, said Kirtchakov warned them against the union. “Some guys were really scared—that they would lose their jobs, get deported, something. They got everyone frightened,” said Jerry, a 44-year-old carpenter who asked that his last name not be used.

Gegi Kahiani, another former IBK employee, who is now a member of the laborers’ union, said that when he started with IBK two years ago, after arriving from the former Soviet republic of Georgia, he was paid $8 an hour. “This money sounds good when you are just coming here. What else do you know?” he said. “When you go there, they tell you you have health insurance, everything. Then when you need it, they say, ‘You know what? You got to pay $50 a week for that insurance.’ ”

Shortly after the contested election, IBK signed a contract with an independent union called the National Organization of Industrial Trade Unions. NOITU—pronounced NOY-too—is a kind of catchall organization that has been around New York’s labor scene for decades, frequently signing up employers facing organizing drives from AFL-CIO unions. Its contracts typically call for low wages and benefits and are dismissed as “sweetheart” deals by union organizers.

In the case of IBK, NOITU’s contract offers little in the way of on-the-job protection. Payment for family medical coverage, the contract states, “shall be the responsibility of the employee.” The agreement, signed by Kirtchakov and NOITU president Gerard Jones, shows that they eliminated a clause requiring a union-assigned shop steward. Jones did not return messages.

Kirtchakov said he had nothing to do with NOITU’s fortuitous appearance. “I guess they sent some organizers over to talk with the men and they liked it,” he said. Unlike his resistance to the carpenters’ and laborers’ unions, the builder said he was able to quickly reach an agreement with the group, one he acknowledged was much cheaper in cost.

“It was a business deal, like anything else,” he said.

The contract, said Pugliese of the carpenters, amounted to little more than window dressing. “These non-union companies are like an invisible empire, and the city doesn’t want to acknowledge it. They make their profit from the underground economy, using unskilled immigrants and public services, and then they take city subsidies besides.”

Walentas failed to respond to several messages left at his offices in Fulton Landing, the now upscale waterfront community of refurbished former warehouses and manufacturing buildings in DUMBO, near the East River. Since purchasing 10 buildings below the Manhattan and Brooklyn bridges at low prices in the early 1980s, Walentas has waged a steady battle of attrition to remove scores of small industrial employers from the area. In 1984, in an effort to stop Walentas from evicting employers of more than 1,800 manufacturing workers, then governor Mario Cuomo agreed to locate state offices in Walentas’s properties, including the state’s Department of Labor, which relocated to 1 Main Street.

Walentas fell out of political favor during the Koch administration, and his renovation efforts stalled. But in the late 1990s, he won several crucial approvals from Rudy Giuliani’s City Hall after he hired the law firm of Fischbein Badillo Wagner and Harding, which included Liberal Party leader and Giuliani political mentor Ray Harding. In 1998, Walentas began transforming his buildings, including 1 Main Street with its distinctive mansard-roofed clock tower, into luxury apartments.

Accusations of mob-orchestrated shakedowns continue to plague the city’s building-trade unions, and developers might reasonably complain they were trying to avoid such problems by going non-union. But Walentas has shown no such concern in the past.

One of his key contractors, union officials report, was a non-union builder named Larry Wecker who has long been accused of mob ties and who was a close associate of Anthony “Fat Tony” Salerno, the late cigar-chomping leader of the Genovese crime family. Unions say Wecker’s Lisa Construction handled the drywall installation at 1 Main Street and other sites for Walentas. Earlier this year, Wecker pleaded guilty in a state mob racketeering case and agreed to serve two years, concurrent with a separate sentence stemming from another conviction on federal tax fraud charges. Wecker’s attorney, Robert Franklin, refused to discuss the builder’s work for Walentas.

Last Thursday night, Pugliese and Tommy Atamanoff, an organizer from the Laborers union, took their inflated rat to DUMBO, where Walentas was having his corporate Christmas party. At one point Walentas taunted the protesters. “He said, ‘Should I bring my cat down to play with your rat?’ ” said Atamanoff. “I said, ‘Instead of making a joke, why don’t you sit down and have a serious conversation about how your workers can have a decent Christmas?’ “

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