The Illinois Department of Transportation says in a court filing regarding a road construction business run by a daughter and son-in-law of Sebastian “Sam” Palumbo that he might be “involved” in the company’s “day-to-day operation.”
Palumbo is a felon who was banned forever from getting state or federal road projects. The company run by his family, Builders Paving LLC, has been a major state contractor.
But IDOT “paused” awarding Builders new contracts last year amid an internal investigation to determine whether Palumbo has played a role in the Hillside company or any affiliated businesses.
Builders sued IDOT this year to try to force the agency to move forward with millions of dollars in road projects that are now on hold, which Builders says it’s entitled to.
Aiming to get the lawsuit thrown out, IDOT filed documents in July saying the agency has “received reports that Palumbo is involved in the day-to-day operation of plaintiff’s business.”
The documents don’t give any details.
Builders’ attorney William Dwyer Jr. says IDOT’s claim is “false and unsupported by any evidence.”
Pointing to a sworn statement from Michael Prater, the agency’s chief counsel, Dwyer says: “The only reference in that affidavit to Mr. Palumbo’s possible connection” to Builders is a statement that IDOT “has received reports that Palumbo can be reached by calling” Builders.
He says any “report” refers to Chicago Sun-Times coverage that he says “in no respect supports an allegation that Mr. Palumbo is involved in the day-to-day operation of plaintiffs’ business.”
The Sun-Times has reported that Builders and a company associated with Palumbo, Orange Crush LLC, “shared a construction yard in Hillside and apparently some administrative functions.”
Dwyer says Palumbo wasn’t involved with Builders, that he “has never owned any interest, direct or indirect, or invested in either of the Builders Companies” — which includes Builders Paving and at least one affiliate, Builders Asphalt LLC — “and has not been an officer, director or employee.”
Dwyer won’t say whether Palumbo has served in any advisory role with Builders.
According to IDOT, Palumbo had an ownership interest until mid-2022 in another company associated with Builders — which hadn’t been disclosed in “prequalification” paperwork submitted to the agency. IDOT doesn’t name that company, but Dwyer says it’s Builders Concrete Services LLC.
“Mr. Prater was fully apprised of the history of Builders Concrete Services, LLC’s ownership history prior to Builders companies filing their suit against IDOT,” Dwyer says. “Mr. Palumbo owned a controlling interest in that company until July of 2022, when all his interest in the company was gifted to a trust for the benefit of his children and grandchildren.
“In 2024, BCS applied for and was prequalified by IDOT. Prior to 2024, BCS had never performed work on any state funded job.
“Until Mr. Palumbo’s gift in July 2022, BCS was not an affiliate of either Builders Asphalt, LLC or Builders Paving, LLC. IDOT filed that deliberately misleading statement.”
Officials with IDOT, which builds and maintains state highways, won’t comment.
In court records, the agency says officials are “concerned about the possibility of material omissions or inaccuracies in the prequalification application” and are “in the process of determining whether the plaintiff is a proper bidder.
“This determination is part of the department’s responsibility to protect the public fiscal resources and to prevent disbarred bidders from receiving transportation contracts.”
Builders “does not have a legal right to a contract procured through a prequalification process that was possibly tainted,” according to IDOT.
The agency says Builders, in its legal filings, “does not and cannot explain why the department does not have the discretion to determine whether plaintiff’s prequalification or bid applications violate the terms of Palumbo’s federal plea agreement or his agreed permanent debarment from participating in IDOT contracts.”
At a recent court hearing, Cook County Circuit Judge Joel Chupack decided not to dismiss the case as IDOT wanted but agreed to remove Prater as a named defendant.
The judge seemed concerned about a lack of clarity regarding IDOT’s probe, asking: “Isn’t Builders Paving in purgatory right now?”
It’s unclear when IDOT might wrap up its review, which was prompted by questions from the Sun-Times.
Palumbo, a brother and their father pleaded guilty in 1999 to a scam shortchanging their union employees’ benefit plans. Two of their companies, Palumbo Brothers Inc., and Monarch Asphalt Company, admitted over-billing taxpayers on road projects.