Another generation of the Palumbo family becomes a larger player in regional road construction

The Palumbo family once oversaw a road building empire in Illinois — until a criminal prosecution in the 1990s sent the family's patriarch and two sons to prison, and led to a ban on their companies participating in future construction projects involving state or federal funding.

More than two decades later, a younger generation of the family is running another, newer construction group called the Builders Companies that appears to be growing and flourishing — with an arm of the group called Builders Paving, LLC, sharing in more than $80 million in work from the Illinois Department of Transportation over the last five years, records show.

That includes more than $30 million in 2024 alone, including for resurfacing projects and other taxpayer-funded road improvements in Arlington Heights, Mount Prospect, Wood Dale, and Lake and McHenry counties, according to the state agency.

As of September, Builders Paving was also working as a subcontractor on five contracts for the Illinois State Toll Highway Authority, officials say, with four of them on the Tri-State Tollway where equipment for an affiliate, Builders Asphalt, LLC, was also being utilized.

Records show top Builders executives include Ryan Gandy and wife Kaitlyn Palumbo Gandy — a daughter of Sebastian “Sam” Palumbo who with his brother Joseph and their late father Peter 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 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 the state transportation department, sometimes known as IDOT.

While neither Sebastian Palumbo nor the Gandys would comment, the lawyer they share says Palumbo is not and has never been involved in the Builders enterprise, and that Builders is not subject to the contract “debarment” implemented by the state’s transportation department in 1999.

“Sebastian Palumbo has never owned any interest, direct or indirect, or invested in either of the Builders Companies and has not been an officer, director or employee of the Builders Companies and has never received compensation from the Builders Companies,” says William Dwyer Jr., an attorney representing them. “The Builders Companies are wholly independent of Sebastian Palumbo.”

A spokeswoman for the state transportation department says Builders Paving and Builders Asphalt “have been prequalified by the Illinois Department of Transportation and met the criteria to do business with the state based on the information that was provided in their applications.”

The department, which oversees and maintains state roadways and answers to Gov. JB Pritzker, “is diligently examining further to confirm that all of the rules and regulations concerning any firms prohibited from working with IDOT have been met and are being followed.”

Recent visits to a west suburban construction complex used by Orange Crush showed some Builders equipment also parked at the site.

A main building at the site includes an emblem of Palumbo Brothers and its iconic slogan, “The Earth Moves With Palumbo.” A slogan for the Builders Companies is “Keeping the Earth Moving.”

Records filed with the Illinois secretary of state’s office show Kaitlyn Palumbo Gandy is part of a firm called Five Sisters Management, LLC, that serves as a manager of Orange Crush.

Dwyer describes her father as “a part owner of Orange Crush” but won’t identify any other owners.

Until earlier this year, Orange Crush’s web site said the firm is “owned and managed by Sebastian (Sam) Palumbo” and with “five asphalt plant and crusher facilities” is “one of the largest asphalt producers in Illinois.”

In January 1999, Palumbo pleaded guilty to enforcing Palumbo Brothers’ “policy of fraudulently reducing the number of hours” worked by the firm’s union employees “as reported to” worker benefit plans, resulting in the company “paying less in employer contributions . . . than was due under collective bargaining agreements,” according to court records.

Palumbo agreed in the plea deal with federal prosecutors he’d never again “serve as an officer, director, employee or direct or indirect holder of greater than five percent of the shares of, or as a consultant to, any business that contracts to build or repair public highways, roads and bridges, where such construction or repair is funded in whole or in part” by federal and state government agencies.

Dwyer says that several months after that plea deal, “Peter, Joseph and Sebastian Palumbo together with Palumbo Bros. Inc. and Monarch Asphalt Company entered into Administrative Settlement Agreements with IDOT agreeing to the permanent debarment of the three individuals and the two companies from participating in any contract let by IDOT.”

Dwyer disputes that Orange Crush is subject to the same “contractor debarment,” saying “Orange Crush has voluntarily not participated” in IDOT contracts “so as not to violate Sebastian Palumbo’s plea agreement or his Administrative Settlement Agreement with IDOT.”

Dwyer adds that: “Whether (Kaitlyn) Palumbo was, at one time, an official of the Builders Companies and Orange Crush is irrelevant. The fact that the president of the Builders Companies is Sebastian Palumbo’s son-in-law is irrelevant. Whether the Builders Companies and Orange Crush park vehicles in the same lot pursuant to agreements with the owners of that lot is irrelevant. Whether or not the Builders Companies and Orange Crush are ‘affiliates’ is irrelevant.”

“Orange Crush is not a party to the Administrative Settlement Agreements with IDOT, so its affiliates, if any, are not debarred from participating in IDOT contracts.”

Dwyer says, “The Builders Companies have never subcontracted with Orange Crush to provide any labor or materials in connection with any IDOT contract. Whether those companies do any business with each other unrelated to IDOT contracts or highway work is irrelevant.”

Builders Asphalt was started in 2005 with five or so employees, according to a company timeline provided by Dwyer. Builders Paving was formed in 2010.

The Gandys both attended college until 2007, according to their LinkedIn profiles.

Within the last year or so, Builders Asphalt bought Arrow Road Construction, and the Builders group’s annual sales now tops $200 million, according to the company.

Builders and affiliates have given more than $150,000 to local campaign funds over the years, including roughly $28,000 in 2023 and so far in 2024, records show.

Arrow has also contributed around $150,000 over the years.