Apartment contractor convicted of wage theft

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MINNEAPOLIS, MN — The owner of a commercial painting company has become the first person to be criminally convicted of wage theft in Minnesota. Wage theft became a felony in the state in 2019.

Frederick Leon Newell was convicted April 9 of wage theft and theft by swindle.

“This wage-theft conviction is the first of its kind in Minnesota. It is an important step forward in our efforts to protect workers,” commented Hennepin County Attorney Mary Moriarty. “This type of behavior will not be tolerated. Mr. Newell was entrusted with public funds to pay his staff for their labor on a public works project. Instead, he siphoned their money for himself.”

Newell, of Lakeville, owned and operated a commercial painting company, Integrated Painting Solutions (IPS). His company won a contract to paint and clean the Redwell apartment complex, which was completed in 2020 in north Minneapolis. The apartment building houses people who earn up to 60% of the area’s median income.

This project was partially financed by public funds, so IPS was informed that it needed to comply with the prevailing wage laws on the projects set by the state. Painters were to earn $55.62 per hour, while cleaners were to earn $54.95

But between June and December 2020, five employees of Newell’s company were underpaid $37,001.44 for painting and cleaning labor. One employee worked 32 hours for labor worth close to $2,000 but never received a paycheck. IPS was financially struggling, with unpaid taxes and a levy assessed against Newell. Nevertheless, Newell continued to accept the general contractor’s payments and did not pay employees a prevailing wage. Newell collected over $300,000 from the general contractor.

The Minnesota Legislature amended the state’s theft statute in 2019, explicitly recognizing wage theft as a criminal offense. It is now a felony in Minnesota to steal more than $1,000 in wages. The Hennepin County Attorney’s Office noted that workers lose more than $15 billion per year, while robberies, by comparison, only accounted for $598 million in losses in 2018.

There was a weeklong bench trial in January. The court delivered its verdict on April 9. Sentencing is scheduled for 10 a.m. June 6. Newell was convicted of one count of wage theft and one count of theft by swindle.

A stayed sentence of 21 months is the presumptive sentence under the Minnesota Sentencing Guidelines. The court also found that Newell had committed “major economic offenses,” according to the Hennepin County Attorney’s Office. This could result in a sentence more serious than the presumptive.

“This guilty verdict marks a historic milestone in our ongoing commitment to workplace justice,” said Rep. Cedrick Frazier, DFL-New Hope, who has introduced House File 689, under which county attorneys could issue administrative subpoenas for wage theft investigations. “The verdict … demonstrates what’s possible when we take wage theft seriously. Now, let’s provide our prosecutors with the proper tools they need to build upon this progress and ensure dignity and fairness in every Minnesota workplace.”

The case was originally filed in 2022, when Mike Freeman was the Hennepin County Attorney. The law went into effect in 2019. At a news conference, Moriarty said the case took that long because violent crimes are prioritized over financial fraud.

“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 added.

“We hope the state continues to pursue and take these cases seriously, and that it sends a message to those who benefit from the system of exploitation that exists in construction — like contractors and developers — that they also have a responsibility to take steps to prevent this from happening on their job sites,” said Brian Merle Payne, executive director of Centro de Trabajadores Unidos en Lucha (CTUL), a Minneapolis-based worker advocacy group.