IDOT clears suburban road builder to resume work after investigation, lengthy 'pause' on contracts

Builders Paving LLC, a Hillside road contractor run by a daughter and son-in-law of felon Sebastian “Sam” Palumbo, is being cleared to once again work on Illinois Department of Transportation projects as part of a just-announced agreement that appears to end a dispute that had threatened the company’s financial health and raised questions about potential fraud to taxpayers.

Overseen by Gov. JB Pritzker, IDOT gave little detail about the agreement — including why it was reached and what IDOT found while investigating Builders and its suspected ties to Palumbo.

While helping oversee a decades-old family road-building empire involving other Chicago area companies, Palumbo, a brother and their father pleaded guilty in 1999 to a scam shortchanging the benefit plans for their union workers.

Two of the family’s companies back then, Palumbo Brothers, Inc., and Monarch Asphalt Company, also admitted to overbilling taxpayers on numerous road projects.

Those two companies were permanently banned from state and federal projects, as were “all existing or later created affiliates and successors,” including a Hillside-based business called Orange Crush LLC, according to IDOT.

Palumbo also was barred from participating in state or federal road projects.

While Palumbo was running Orange Crush more recently, records filed with the Illinois secretary of state’s office showed his daughter Kaitlyn Palumbo Gandy was part of a firm called Five Sisters Management LLC that served as a manager of Orange Crush.

Gandy and her husband were, and remain, top executives with Builders Paving and a larger consortium called Builders Companies, which also includes Builders Asphalt.

The Chicago Sun-Times asked IDOT officials in 2024 whether they were aware of the father-daughter business connection — and that Builders and Orange Crush appeared to share a construction yard in the west suburbs and some administrative functions. The agency launched an investigation and put a “pause” on awarding new contracts to Builders.

The company, though, was allowed to continue bidding, and it ended up the low bidder on two dozen road projects totaling more than $50 million that weren’t allowed to begin amid the inquiry.

IDOT tried to determine if and how Palumbo was involved with Builders in violation of the debarments.

William Dwyer, a lawyer representing Palumbo and Builders, has insisted that Palumbo was not involved in the Builders operation, but he also refused to say whether Palumbo had ever served as an advisor, even if unpaid, for Builders or helped launch the enterprise years earlier.

Dwyer has also disputed IDOT’s claim that Orange Crush was subject to IDOT’s debarment.

“Facts and the truth have won out over your malicious campaign,” Dwyer told a reporter Tuesday.

Gandy’s husband, Ryan Gandy, recently addressed the settlement by writing to employees:

“The long-fought battle to defend our integrity and preserve our ability to contract with IDOT is a humbling reminder of the fragile prequalification process when contracting with governmental agencies. Our victory validates our internal control procedures and strict adherence to job specific specifications.”

“We will now begin the process of reviewing subcontractor pricing, capacities to perform, material and labor pricing on the 24 pending IDOT contracts. In the near future we will provide a more detailed update.”

It’s unclear if and how the projects that have been delayed will rise in price.

Portraying the long-running dispute as "distractions," Gandy's statement said IDOT determined that "based on its review of the companies' corporate records, IDOT's own records, and the Builders Companies' certifications, IDOT has concluded there is insufficient evidence to support the conclusion that the Builders Companies were not responsible bidders under the Illinois Procurement Code."

Pritzker’s transportation secretary, Gia Biagi, wouldn’t comment.

Her office released a statement saying:

“Throughout this process, the department has prioritized the integrity of the procurement process and the best interests of taxpayers. Both sides in this matter have reached terms of an agreement.”

“They include dismissing the appeal, pending court order” — Builders sued IDOT last year to try to end the logjam — “as well as waiving any other claims, allowing contracts that have been put on pause to be awarded and providing guidance for future participation on projects under certain conditions.”

“We look forward to enacting a solution and getting to work on another historic construction season in Illinois.”