Lakeville painting company found guilty of wage theft

A man Lakeville who owns and operates a commercial painting business has been charged with wage theft after failing to compensate employee for their labor – the first prosecuted under a new law.

Frederick Leon Newell, 57, is charged with Wage Theft of more than $35,000 and theft by swindle (over $35,000). 

According to the complaint, Newell owns and operates a commercial painting company known as Integrated Painting Solutions (IPS), which secured a bid to provide painting labor and materials in 2019 for the Redwell apartment complex in north Minneapolis.

Due to the City of Minneapolis approving tax increment financing (TIF) for the development of the apartment complex, contractors and subcontractors were required to pay employees a prevailing wage rate, according to the complaint. 

Rules and Regulations for the project advised that all contractors must comply with prevailing wage laws, and required IPS to provide the prevailing wage for painting of $55.62 per hour and $54.95 for cleaners. The initial cost of the labor and materials for the painting job was $223,681.00.

IPS subsequently signed a contract to provide cleaning services for the apartment complex in 2020.

However, despite receiving the funds due under the terms of the contract, charges state that Newell and IPS intentionally withheld payments to employees.

One victim worked as a painter for 32 hours in June 2020, labor worth approximately $1,779.84, but he did not receive a paycheck for that work. IPS filed a document with the City of Minneapolis indicating that the individual had not worked those hours. 

Later that summer, in August 2020, five employees performed painting and cleaning duties but were underpaid by a total of $35,221.60.

In total, the general contractor paid IPS a total of $299,174 for labor and materials for the painting and cleaning contracts at the Redwell apartment complex. The general contractor also paid $30,000 directly to the IRS on behalf of IPS so that the company would be released from a tax levy. 

Newell continued to accept payments from the general contractor over the course of the painting and cleaning projects despite knowing his company was in financial distress, was not paying a prevailing wage, and was concealing hours worked by his employees.