Calverton excavation company and its owner face felony insurance fraud charges

A Calverton company and its owner are facing felony insurance fraud charges in New York County.

Sky Materials Corp., located on Middle Country Road in Calverton and its principal, Michael Cholowsky, were indicted on charges of insurance fraud in the first and second degrees, as well as a charge of offering a false instrument for filing in the first degree, Manhattan District Attorney Cyrus Vance Jr. announced yesterday.

Cholowsky, 52, pleaded not guilty yesterday in State Supreme Court in Manhattan, where he was remanded on $300,000 cash bail or bond, according to online court records.

The Manhattan DA said Cholowsky and Sky Materials Corp. concealed information about payroll and submitted false information about the number of workers employed by the company.

The indictment was filed in connection with an investigation into a construction site fatality and criminal charges announced last year by the Manhattan district attorney’s office, the New York City Department of Investigation and the New York City Police Department.

Last August, Sky Materials was one of two companies indicted on manslaughter, criminally negligent homicide and reckless endangerment charges in the April 2015 death of a Sky Materials employee at a Ninth Avenue construction site. Sky Materials and the other company, Harco Construction, along with two supervisor employees were accused of “failing to heed and address repeated warnings about unsafe work conditions at an active construction site,” according to a press release issued by the DA on Aug. 5. The worker who died was crushed when an unsecured trench in which he was working collapsed, prosecutors said.

Vance called the worker’s death “a tragic and foreseeable casualty” that resulted from the indicted defendant’s negligence. “In today’s case, one of the same companies and its owner are charged with falsifying information about the number of workers it employed, as well as their salaries,” Vance said in the press release. “My office and our partners will continue to investigate and prosecute those who risk the safety others in order to profit financially.”

“In the construction industry, a lax approach to following proper procedures may be characteristic of a much more dangerous disregard for workers’ safety,” the district attorney said. “Dishonest business practices hinder oversight and create potentially life-threatening hazards for workers and residents.”

According to the indictment and documents filed in court, in 2015, Cholowsky, the owner of Sky, an excavation subcontractor, received premium reductions by underreporting payroll to the New York State Insurance Fund, a workers’ compensation carrier, in two separate filings pertaining to two distinct policy periods.

For the period between April 2013 and April 2014, Cholowsky and Sky concealed more than $650,000 in payroll, resulting in a premium reduction of more than $100,000, according to the indictment. For the period between April 2014 and April 2015, Cholowsky and Sky concealed more than $3 million in payroll, resulting in a premium reduction of well over $1 million, the indictment alleges. The defendants concealed the funds by processing payroll through a check casher and paying employees through the company’s operating bank account, according to the indictment. In addition, Cholowsky is charged with submitting false documents regarding the company’s registration and employees to the New York City Business Integrity Commission. In two different applications, Cholowsky claimed that Sky employed fewer than 20 workers, when in fact, SKY employed at least 50 individuals between 2012 and 2014, and employed more than 150 individuals between 2014 and 2015, the indictment charges.

Cholowsky pleaded guilty in 2000 to a federal conspiracy charge following his testimony the year before in the criminal trial of former Suffolk County Republican leader John Powell. Cholowsky, who wore a wire to secretly record conversations with Powell for the government, was the star witness for the prosecution in Powell’s trial on federal extortion charges. Cholowsky testified that he paid cash to the party leader to maintain access to the Brookhaven Town landfill.

Cholowsky and a company he ran were in litigation with the Town of Riverhead for years in the 1990s and 2000s over a sand mine operation on a 50-acre site adjacent to the Sky Materials property. The company, Calverton Industries, was owned by his brother Robert and paving contractor John Montecalvo.