The owner of Mequon-based Cedarburg Landscaping was sentenced to six months in prison this week for failing to pay employees prevailing wages to employees on public Department of Transportation projects.
Scott Devereux was also sentenced to three years of supervised release, including six months of home confinement. He was ordered to pay $242,394 in restitution and has already provided $200,000.
Federal sentencing guidelines called for 27 to 33 months in prison and up to $60,000 in fines. U.S. District Court for Eastern Wisconsin Judge J. P. Stadtmueller waived the fine and prosecutors recommended an eight month sentence, citing the upfront restitution payment.
Devereux was indicted on 16 fraud related counts in January and entered a guilty plea in May to two of them. The rest of the charges were dismissed as part of a plea agreement.
According to the plea agreement, Devereux did not always pay required prevailing wages on public projects. Fifty employees were underpaid a combined $242,394 based on analysis by the Department of Workforce Development.
Devereux would file false payroll reports with the state, understating the hours employees worked and overstating their hourly wage. He also underreported hours in monthly reports to the Wisconsin Laborers Union to reduce the amount he had to pay into the fringe benefit fund and in some cases preventing employees from becoming eligible.
The union sued Cedarburg Landscaping in 2014 for failure to pay fringe benefits. That case was settled earlier this year for $70,000.
According to the plea agreement, Cedarburg Landscaping employees told investigators they spent 75 to 80 percent of their time on prevailing wage projects. They were usually paid under $20 per hour when the prevailing wage was usually more than $40 per hour.
Devereux admitted to overstating wages and understanding hours on reports, but also said he sometimes guessed at hours and claimed to not understand what hours were reportable.
“Mistakes can be made by anyone on occasion but the defendant’s underreporting of hours on prevailing wage jobs happened consistently, month after month in 2014 and 2015,” the plea agreement says.
In his sentencing memorandum, Michael Fitzgerald, Devereux’s attorney, sought a sentence of only probation, describing his client as “a hardworking, law abiding, productive member of society.”
“Although it is fair to say that the prevailing wage law has been subject to criticism, in that it requires small business owners like Mr. Devereux to pay over $40/hour for landscape work that would otherwise pay $15/hour, the fact remains that this is a federal law and Mr. Devereux violated it,” Fitzgerald wrote. “If a contractor does not want to pay the prevailing wage rate, or finds it too onerous to pay that rate and make a profit, then the contractor simply should not accept prevailing wage work.”
Fitzgerald said the $200,000 Devereux already put towards restitution was all the money he could put together at this point and he needed to continue working on Cedarburg Landscaping jobs in progress to pay the remaining amount.
Fitzgerald also pointed to the case of Scott Watry, which involved roofing and siding work on Milwaukee’s Westlawn public housing project. Fitzgerald argued that case involved a larger loss of wages and Watry encouraged employees to lie to investigators. Watry was sentenced to probation with 180 days of house arrest in 2015. He contended sentencing Devereux to probation would avoid a disparity in sentencing.