A road construction company run by family members of convicted felon Sebastian “Sam” Palumbo has quietly grown into a significant state-government contractor — though the Illinois Department of Transportation has “paused” awarding it new highway projects amid concerns he was secretly involved in the business.
The same firm, Builders Paving LLC, and its affiliates have also become a force in Cook County government’s road construction program — securing more than $33 million in contracts from Cook County Board President Toni Preckwinkle’s administration this year alone, newly obtained records show.
Beyond that, the construction group has been paid more than $10 million by county government since 2020, not counting work performed as a subcontractor, records show.
Unlike IDOT, which has been investigating possible Palumbo connections to Builders since 2024, Preckwinkle’s administration has no plans to stop giving new contracts to Builders or any of its associated companies should they meet the bidding criteria.
The county “has awarded contracts to Builders Paving” and a sister business in Hillside called Builders Asphalt LLC “on several occasions when they have been deemed the lowest responsive bidder,” a Preckwinkle spokeswoman says.
Aware of the IDOT investigation, the “county’s Department of Transportation and Highways conferred with” state transportation department officials “before awarding our latest contract in July.”
“According to IDOT, as it pertains to local projects, Builders Paving prequalification is in good standing and is therefore eligible to bid with no restrictions on locally administered projects.”
That essentially means the firms — whose subsidiaries include a business formerly known as Arrow Road Construction Co. that was purchased by Builders Asphalt in 2023 — are allowed to keep bidding on county projects and working on them should they end up having the best proposals.
An IDOT spokeswoman says, “The hold on awarding contracts does not apply to projects let outside” of the state agency.
A lobbyist who’s been registered to work on behalf of Preckwinkle’s office, John Kelly, is a longtime Palumbo friend, and both men helped organize a 2023 campaign fundraiser in Clarendon Hills for DuPage County State’s Attorney Bob Berlin, a Republican. Supporters portrayed Berlin as a law-and-order incumbent in stark contrast to now-former Cook County State’s Attorney Kim Foxx, a Democrat and ally of Preckwinkle often portrayed as soft on crime.
Kelly’s Downers Grove-based lobbying firm, All-Circo Inc., has donated to Preckwinke’s campaign funds, including $1,500 in June to the Preckwinkle for President political committee and $5,000 in 2022 to the Cook County Democratic Party, which Preckwinkle runs. Officials say Kelly hasn’t worked for the county for roughly two years.
IDOT email to Cook County
A Preckwinkle aide said Kelly — whose name has surfaced as a possible election challenger to Mayor Brandon Johnson, another Preckwinkle political ally — had nothing to do with the county opting to keep the Builders group eligible for contracts amid the IDOT probe.
An arm of state government overseen by Gov. JB Pritzker, IDOT is allowing Builders to bid on state road projects, but for the time being isn’t awarding contracts on the jobs in which Builders was the apparent winning bidder.
That’s because agency officials say they’re still conducting an internal investigation to determine Palumbo’s connections to the Builders firms, if any.
That investigation was spurred by Chicago Sun-Times questions over Orange Crush LLC sharing a west suburban construction yard with the Builders firms, whose top executives include Ryan Gandy and his wife, Kaitlyn Palumbo Gandy. She is Palumbo’s daughter, who has been part of a firm called Five Sisters Management LLC that has served as a manager of Orange Crush. Her father has been a part owner of Orange Crush.
Palumbo, his brother Joseph and their father pleaded guilty in 1999 in a federal fraud case involving some of their construction firms at the time in which the men admitted to a scheme in which they shortchanged their union employees’ benefit plans. They each were sentenced to prison and permanently banned from future IDOT work.
Two of their companies, Palumbo Brothers Inc. and Monarch Asphalt Co., admitted to overbilling taxpayers on numerous road projects, improperly pocketing millions of dollars. Those two companies were also permanently banned from state and federal projects, as were “all existing or later created affiliates and successors,” records show.
IDOT says that includes Orange Crush, though an attorney for Palumbo, Builders and the Gandys has disputed that, and also insisted that Palumbo has had no involvement in the Builders firms.
Builders Paving sued IDOT in May to try to unclog the contract logjam, saying the pause in new contract awards could have dire consequences for the business.
“Over the last 14 years, over 90% of Builders Paving’s revenue has been derived from state and local government contracts,” the lawsuit says, accusing IDOT of “unjustifiably and unlawfully” refusing to award nine contracts since September totaling more than $21 million.
Builders is awaiting word on a number of pending IDOT projects beyond that, and its lawsuit is pending in the courts.