Shorting workers $37K nets felony wage theft conviction for contractor
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A Hennepin County judge found a Twin Cities painting contractor guilty of deliberately underpaying five workers. The felony wage theft conviction of Frederick Leon Newell is believed to be the first under a 2019 Minnesota law.
Judge Michael Burns entered the conviction on Wednesday following a January bench trial. Burns also found Newell guilty of theft by swindle for deceiving the general contractor that hired him.
Newell, the owner of Integrated Painting Solutions, shorted five of his employees more than $37,000 in total for work on a Minneapolis apartment building, prosecutors said.
At a news conference Thursday, Hennepin County Attorney Mary Moriarty said wage theft is widely underreported nationwide.
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“Robberies in this country accounted for $598 million in losses in 2018, while workers lost in excess of $15 billion a year,” Moriarty said.
Under state guidelines, Newell, 59, faces a presumptive term of probation when he’s sentenced in June. Because the judge found that Newell committed “major economic offenses,” Moriarty said that some jail time is possible.
MPR News sent an email to a defense attorney listed for Newell.
Newell, of Lakeville, was hired as a subcontractor in 2020 to paint and clean The Redwell, an apartment building in Minneapolis’ North Loop for people who earn up to 60 percent of area median income. Because the project was partly financed with public funds, Newell was required to pay his workers a prevailing wage set by the state.
According to court documents, painters and general laborers were due around $36 per hour plus about $19 in benefits, but Newell paid the men between $15 and $25 per hour. He under-compensated one worker nearly $14,000.
In 2021, Newell reached an agreement with the city of Minneapolis Department of Human Rights to pay the workers the full amount that they were owed, “but never did,” wrote Judge Burns. The workers eventually received their back pay from Greiner Construction, the project's general contractor.
Burns found that Newell “acted with intent to defraud,” and falsely told his employees that they were not due the prevailing wage for minor touch-up work.
The judge also noted that while Newell was shortchanging his workers, he collected $329,174 from Greiner under the pretense that he was following the terms of the contract. Burns found that Newell’s business bank account was being used to pay a home mortgage, a law firm, and another loan.
Moriarty added that the case took several years to prosecute because the courts prioritize violent crimes over financial fraud.
“That is why we worked with the court, and I think we’ll be doing more of this, to encourage them to set aside a judge to hear these types of cases or to make sure that they are heard,” Moriarty said. “Because otherwise what happens, and did happen in this case, is it got continued many times."
In a separate case, Minnesota Attorney General Keith Ellison in February charged Richmond, Minnesota dairy farmer Keith Lawrence Schaefer with wage theft and racketeering over allegations that he underpaid at least 18 migrant workers. A hearing in Schaefer’s case is scheduled for June.
Use the audio player above to listen to a conversation with Hennepin County Attorney Mary Moriarity on Minnesota Now with Nina Moini. This conversation was produced by Alanna Elder.